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ITAT: TDS Credit Can Be Claimed in the Year Income Reported and Can’t Be Carried Forward to Subsequent Years

In a significant case, DCIT vs Cicon Engineers Private Limited, the Income Tax Appellate Tribunal (ITAT Bangalore) delves into the intricate relationship between Tax Deducted at Source (TDS) credit and income reporting under the Income Tax Act of 1961. The case, pertaining to the Assessment Year 2017-18, revolves around the contentious issue of allowing TDS credit concerning the reporting of income by the taxpayer.

Case Background:

The dispute centres on the treatment of TDS amounts related to the reporting of income in the AY 2017-18, raising crucial questions about the alignment of TDS credit with the assessment year.

Major Arguments Related to TDS Credit

Management of TDS on Sales from the Previous Year:

The revenue contends that TDS credit should align with the previous year’s sales, emphasising a correlation between TDS and income in the same assessment year. The taxpayer, however, asserts that TDS must be credited in the deduction year, irrespective of when the corresponding income was reported.

Analysis of Organising Advance:

The issue involves mobilisation advances received in FY 2016-17 but accounted for as income in subsequent years. The revenue seeks TDS credit allowance in the present assessment year for these advances.

Legal Interpretation for TDS Credit

Section 199 and Rule 37BA:

Section 199(3) read with Rule 37BA(3) stipulates that TDS credit must align with the year in which the income is declared for taxation. It emphasises that TDS credit should not be deferred to a different assessment year if income is earned in the current year.

Case Law Guideline and Concepts:

Reference to precedent cases highlights the principle that TDS credit cannot be delayed if income has been reported in an earlier assessment year.

Court’s Decision

Assessing Officer Remittance:

The case is remitted to the Assessing Officer for reconsideration concerning the alignment of TDS credit with reported income.

TDS Credit Requirements:

The taxpayer is eligible for TDS credit for the AY 2017-18, subject to specific conditions, including no double claiming of TDS credit and providing an undertaking by the taxpayer.


The case underscores the importance of aligning TDS credit with income reporting under the Income Tax Act, ensuring transparency and adherence to the legal framework. The decision provides clarity on TDS credit regulations, emphasising their association with the year of income accrual and discouraging undue deferral or double claiming of credits.

Monika Shanmugam