Whether creditd of TDS can be claimed on accural basis while

This query is : Resolved 

Querist : Anonymous (Querist) 05 June 2010

As under Income Tax Act credit of TDS can be claimed only when the income against the TDS has been disclosed in the return i.e. credit of TDS can be availed only in the year in which the income against the TDS has been reported.

Suppose a firm following the Cash basis of accounting (as generally follows) shows their PGBP income only when the same is received, but from their client they receive the TDS certificate on accrual basis ( i.e TDS deducted on all the invoices raised to client) and the entire amount of TDS is claimed in the Income Tax Return.
So is this valid under the Income Tax Act, 1961.

Further because of following above practice; TDS claimed in the Income Tax Return and TDS reflecting in the books of accounts dose not match.

Whether the above practice is tenable in the eye of law?

kantijain (Expert)
05 June 2010

Dear ???

Sec 199 of the Act read along with Rule 37BA will provide an answer to ur query.

You have to claim the credit of TDS in the financial year in which u have offered ur income.

the above mentioned practice of claiming TDS credit w/o offering income is not tenable in the law.

Shyam Lal Naik (Expert)
05 June 2010

The practice is contrary to Rule 37BA(3).

For the reason cited in the opening para of your query, the TDS claim should be defered till realisation of the income.

CA Devanshi Gandhi (Ajani) (Expert)
05 June 2010

agree with the experts

Querist : Anonymous (Querist) 05 June 2010

i too agree wid ur views.
but plenty of ca firms are using the same pratice...

so wat u think if we wait till the receving the payment(actual receiving of payment) since the cash basis is followed.. the income tax deptt. will definitely raise an issue because the TDS claim will not match the form 26AS...

if u are having the cash basis of accounting..what do u do in ur case????

Querist : Anonymous (Querist) 08 June 2010

Still not solved....

kantijain (Expert)
08 June 2010

Dear ???

Yes there is practical problem on hand, however if u are able to reconcile form 26AS then the same can be resolved. also the firm must not use this mechanism for double credit of tds as this will attract penal provisions of the act.

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