Discussion related to the credit of the TDS

1.When Assessee is not getting full credit of the TDS receivable appearing in the Books of Accounts, Whether deduction can be claimed by the Assessee on writing off the TDS Receivable A/C and charing the same to P&L A/C ?.


1. Nowadays neither CPC, Bangalore Nor Ao is allowing TDS credit unless and until the TDS amount is not reflected in FORM 26AS.

2.Where Assessee after due efforts is not getting the total credit of the TDS amount equals to the TDS amount reflected in ‘ TDS RECEIVABLE A/C’, and AO or CPC are allowing SHORT TDS credit, because of that ‘ TDS RECEIVABLE A/C ‘ showing Debit Balance.

3.In such cases where Assessee is not getting the Full Tds credit and there occurs some short Tds credit, Assessee has the option to ” Write-off ” the unadjusted balance amount in ” TDS RECEIVABLE A/C” and debit the same to P&L A/C as ” BAD DEBT” u/s 36(1)(vii) r w s 36(2).

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This view is upheld by Courts in favour of the Assessee in the following Case laws:

  • CIT vs. Shreyans Industries Ltd (P&H HC).
  • DCIT vs. AGC Network Ltd ( Mum. Trib).
  • ACIT VS. Kelly Services India Pvt Ltd ( Del.Trib).

4.Once the ‘ TDS RECEIVABLE ‘ amount is written off in books of accounts, AO can not insist proof of Correspondence with the Deductor as held by SC in the case of ” CIT vs. TRF LTD”.

5.When in future any TDS credit was allowed relating to the TDS RECEIVABLE which was written off, same has to be offered to tax u/s 41(1).

Nut Shell:

1.Once is not getting Full Tds credit and short TDS credit is shown in ” TDS RECEIVABLE A/C”, Assessee can avail the benefit of Bad Debt u/s 36(1)(vii) r.w.s 36(2).

What is the date of Effective Voluntary Cancellation of Registration under the IT ACT?

2.For the availing benefit of ” BAD DEBT” assessee shall ensure that income relating to that unravelled TDS was put to tax in earlier previous years.

I think this article may help you to fulfil your professional endeavours. Please, read and circulate.


CA M R Sahu
(Expert Advisory in Dir. Tax, Intl. Tax, Transfer Pricing).
Location: Delhi & NCR. Odisha.
MNO: 9958062648
EMAIL: [email protected]