ITAT Allows TDS Credit on Reimbursement Received From NHAI
The Income Tax Appellate Tribunal (ITAT), Hyderabad, has held that TDS credit must be allowed on reimbursements received from NHAI, even when no income is taxable for the year.
The assessee, Ranchi Expressways Ltd., filed its Income Tax Return (ITR) for the assessment year 2014-15, declaring nil income and a refund claim of Rs. 64,95,260. However, during the assessment, the AO noticed that the company had claimed TDS credit without offering matching income. This TDS credit was denied, and an addition of Rs 69,49,930 was made towards the refund of tax along with interest under section 244A of the Income Tax Act, 1961, was issued in the order dated 30.12.2016.
The assessee filed an appeal before the CIT(A), which dismissed the appeal, ruling that TDS credit can only be claimed if the income is offered to tax. Aggrieved by this order, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), Hyderabad.
The company submitted that the National Highway Authority of India (NHAI) paid it a reimbursement of expenses, and the shifting charges received from NHAI are without the markup of income, and the assessee did not derive income from the contact and therefore it offered nil income. The assessee also submitted that the NHAI deducted TDS on this reimbursement, and the company has rightly claimed the TDS credit under Section 199 of the Income Tax Act, 1961.
The Income Tax Appellate Tribunal (ITAT) reviewed the case and found that the reimbursement from NHAI was not income but an expense reimbursement. It referred to section 199 and Rule 37BA(3), which says that TDS credit should be allowed only if the income is assessable in that year. the tribunal observed that the transactions related to TDS deducted on the reimbursement of expenses have been recorded in the books of account. As there was no income assessable for the year, the Tribunal held that the assessee must be allowed the TDS credit based on the certificate issued by NHAI (Deductor).
The Tribunal said the CIT(A) misunderstood Section 199 and Rule 37BA, and because of that, he confirmed the additions made by the Assessing Officer. Based on these facts, the additions towards the refunds issued to the assessee were deleted.
Case Cutation: M/s. Ranchi Expressways Vs The Income Tax Officer (ITAT Hyderabad); I.T.A.No.1594/Hyd/2019; 07/11/2025; 2014-15
