Section 199(3) and Rule 37BA – Credit for TDS allowed in the year of deduction even when related revenue was booked in subsequent year(s)

2. HCL Comnet Limited vs. DCIT (Delhi) Members: O.P. Kant (A.M.) and Kuldip Singh (J.M.) ITA No. 1113/Del./2017 A.Y.: 2012-13 Date of order: 4^th September, 2020 Counsel for Assessee / Revenue: Ajay Vohra, Aditya Vohra and Arpit
Goyal / S.N. Meena

Section
199(3) and Rule 37BA – Credit for TDS allowed in the year of deduction even
when related revenue was booked in subsequent year(s)

FACTS

The assessee
was in the business of selling networking equipment and installation and
provision of after-sales services. In respect of after-sales services, the
customers would make payment which covered 
a period of three to four years. The assessee would recognise revenue
from such services on a year-to-year basis. However, the customer would deduct
TDS on the entire amount at the time of payment as per the provisions of the
Act. Relying on the decision of the Visakhapatnam bench of the Tribunal in the
case of Asstt. CIT vs. Peddu Srinivasa Rao (ITA No. 324/Vizag./2009, CO
No. 68/Vizag./2009, dated 3^rd March, 2011), the assessee
claimed that it was eligible to claim the entire TDS in the year of deduction
(even when the related revenue was booked in subsequent financial years).
Reliance was also placed on the decision of the Mumbai Tribunal in the case of Toyo Engineering India Limited vs. JCIT (5 SOT 616)
and of the Delhi Tribunal in the case of HCL Comnet Systems and Services
Ltd. vs. DCIT (ITA No. 3221/Del./2017 order dated 31^st December,
2019). However, the A.O. rejected the claim of the assessee.

HELD

The Tribunal,
following the order passed by the coordinate bench of the Tribunal in the case
of HCL
Comnet Systems and Services Ltd., held that the TDS credit is to be
granted irrespective of the fact that related revenue is booked in subsequent financial years. Accordingly, the assessee’s
claim for credit of the TDS in the year of deduction was allowed.