TDS Credit on Late Part-Payment Cannot Be Denied Once Entire Sale Value Was Taxed

TDS Credit on Late Part-Payment Cannot Be Denied Once Entire Sale Value Was Taxed

The tribunal ruled that if a taxpayer has already paid tax on income in an earlier year, they should still get credit for TDS deducted later by the buyer; the seller shouldn’t be penalised for the buyer’s delay in payment.

The current appeal has been filed by a taxpayer named Yogesh Gandhi (Appellant), against the ACIT, Circle (Respondent), in the Income Tax Appellate Tribunal (ITAT) Benches ‘D’ New Delhi, before Shris.Rifaur Rahman, (Accountant Member) and Shri Yogesh Kumar U.S., (Judicial Member). The case is related to the assessment year 2023-24 and was decided on November 12, 2025. The assessee challenged an order dated March 11, 2025, passed by the Learned Commissioner of Income-tax (Appeals), Delhi -42 [“Ld. CIT(A)”].

Background of Case

The assessee is a non-resident of India (NRI) and has an income source from rent and interest. In assessment year 2019-20, the assessee sold his of the properties at Rs. 2,97,50,000, and mentioned it in its income while filing income tax return (ITR) for the assessment year 2019-20. He declared the entire sale amount and capital gains in his return for AY 2019-20 and paid full tax on it.

However, the assessee received some part of the sale amount (Rs. 1 crore) later in the assessment year 2023-24. When the buyer made this delayed payment, they deducted TDS of Rs. 23.92 lakh at that time and deposited it with the government.

Dispute:

In assessment year 2023-24, the assessee declared this TDS credit of Rs. 23.92 lakh in his ITR, since the buyer had deducted it that year. However, the Income Tax Department only allowed a small portion of it, i.e., Rs. 8.69 lakh of that TDS, on the grounds that the income is related to an earlier assessment year, i.e., AY 2019-20.

The aggrieved assessee then approached the CIT(A); however, it too rejected his appeal, saying that the assessee had not submitted his ITR copies for the assessment years 2019-20 and 2023-24 for the purpose of verification.

However, the assessee argued that he already paid the tax on the entire property sale amount in the assessment year 2019-20. Only the TDS was deducted late in the assessment year 2023-24 when the final payment was made by the buyer. He should not lose the TDS credit just because the buyer did not pay it payment timely. The tax is already paid on the income in the assessment year 2019-20; the same income cannot be taxed twice.

ITAT’s Decision

When the case was taken before the Income Tax Appellate Tribunal (ITAT Delhi), the tribunal agreed with the arguments of the assessee and concluded that the assessee is entitled to claim full TDS credit of Rs. 23.92 lakh in the assessment year 2023-24. The CIT(A) was wrong in rejecting the claim without properly examining the evidence.

Thus, in the final decision, the ITAT allowed the appeal of the assessee and directed the Revenue to give the assessee full TDS credit of Rs. 23.92 lakh for the assessment year 2023-24.