TDS on Audit fee accounted for in more than one F Y

Dear Sandeep,

Yours is a case where the payee owing to the method of accountingfollowed by him ends up spreading his income over a number of years.But the payer that follows the accrual basis of accounting has madethe TDS on the entire amount only on one occasion when it providedfor the expense. In such a situation a question indeed does arise:How would the payee claim credit for the TDS that's been deductedand deposited in one particular A Y relating to one particular F Y?Can the payee claim the amount of TDS on instalment basis, staggeredover a period of time, ending in the year in which he fully realizesthe amount of income?Let's see what the CBDT Circular No 5/2001 02.03.2001titled "Problems faced by assessees in getting due credit for taxdeducted at source under section 199" says in this regard. Thiscircular was issued to address the problem faced by the landlordswho were having a hard time linking up the TDS on rent with theirrental income. Section 194I requires TDS be made even on advancerent, and even on the amount of security deposit if it partakes ofthe character of rent. How were the landlords supposed to claim theTDS in such cases when they weren't going to account for thoseamounts as income in the year they received it?Although this circular was brought out to mitigate the payeescovered under Section 194I, I don't see any reason why we can'textend the same logic to cases involving other TDS sections also.In para 3 (i) the circular says:[Where advance rent is spread over more than one financial year andtax is deducted thereon, credit shall be allowed in the sameproportion in which such income is offered for taxation fordifferent assessment years based on the single Certificate furnishedfor tax so deducted on the entire advance rent.]This circular was referred to by the Tribunal in the case of PradeepKumar Dhir v. Asstt. CIT [2007] 107 ITD 118 (Chd.) (TM) I citedearlier. That case related to commission income, which is subjectedto TDS u/s 194H.Clearly, we have the law on our side on this one. TDS deducted on asingle occasion can be claimed by the payee-assessee on aproportionate basis if owing to his method of accounting being whatit is, he happens to account for that income over a 2-3 year period.Thanks,CA Sanjeev Bedi--- In http://finance.groups.yahoo.com/group/ICAI_CIRC_MEERUT_CA/post?postID=paA1w8XOmwznmmVlyE9c8poIVLJzcceguHQvKjClq7yZcBfr2gDCDH4caKy_CiYDOSL63nWZlyHQMfezZlrdA7Jsh7raCs-lHC4, SANDEEP GOEL wrote:>> *Sanjeev Bedi ji,> Your reply is to the point and well supported by relevant sectionand case> laws,> thanks for a truely professional answer.> I am claiming the TDS in my own return in the same way for last somany> years and getting refunds too. I used to give note of relevantsection at> the end of Computation sheet> but the same is now not possible as now no paper is enclosed withthe ITR.>> Now my question is that usually fees are received in next year of> provisioning but if the fees is received after 2 or 3 years , canwe still> claim it . e.g. provision is made in a pvt ltd co B.sheet for YE31.3.2006> for an amount of RS 27,500 and TDS deducted in previous year 2005-06 but> fees was recd in financial year 2007-08 partly Rs 17,500 andpartly in> financial year 2008-09 Rs 10,000> I accounted for my income on cash basis Rs 17,500 in FY 2007-08and Rs> 10,000 in 2008-09 **> what will be the position of claiming the TDS credit in such acase , TDS> certificate is one only ?> Can i claim in one finacial year or in 2 years and can i claim TDScredit> even after 2-3 years of deduction ?> **>> CA Sandeep Goel*