Tax credit for Tax deducted in current financial year on payment basis income already offer for tax

SUNIL KUMAR JAIN (CA IN PRACTICE) (51 Points)

04 August 2023  

My client had purchased 8% Government of India Bonds in 2016.  The interest on bonds has already been offered for tax on accrual basis and included in income tax returns for A.Y. 2017-18 to A.Y. 2022-23. Now in the financial year 2022-23 relevant to assessment year 2023-24 the bonds have matured and payment has been made with accumulated interest.  At the time of payment TDS has been deducted under section 193 on the entire accumulated interest of six years.  In the income tax return for A.Y. 2023-24 interest of financial year 2022-23 was included and entire TDS was claimed. CPC has issued a defective return notice u/s 139(9) requiring the assessee to either offer for tax entire interest or claim proportionate TDS.  Please suggest the right course of action from our side.   Please also suggest whether newly inserted sub section 20 to section 155 of Income Tax act which is effective from 01/10/2023 will be applicable for A.Y. 2023-24, in case we have to claim only proportionate T.D.S. deducted u/s 193.

                                                               Thanks,

                                                                                                         C.A. SUNIL JAIN