Section 199 — Credit for Tax Deducted

Section 199 of the Income-tax Act, 1961, provides for the credit of tax deducted at source (TDS) to the person from whose income the deduction was made. This section ensures that the tax deducted by the payer is credited to the payee's account, thereby reducing the tax liability of the payee. The credit is given in the assessment year for which such income is assessable. The significance of this section lies in preventing double taxation and ensuring that the taxpayer receives due credit for taxes already paid on their behalf. The statutory test involves verifying the TDS certificate issued by the deductor and matching it with the income reported by the taxpayer. The burden of proof lies with the taxpayer to substantiate the claim of TDS credit through proper documentation, such as Form 16 or Form 16A.

Common Litigation Flashpoints

1. Mismatch between TDS certificate and Form 26AS
2. Non-receipt of TDS certificate from the deductor
3. Incorrect assessment year for TDS credit
4. Discrepancies in TDS amount claimed and allowed

Judgments on Section 199 — Credit for Tax Deducted

• Vodafone International Holdings B.V. vs Union of India & Anr. — SC,
  Section 9 of the Income Tax Act does not cover indirect transfers of capital assets situated in India.
• The Authority for Advance Rulings (Income Tax) and Others vs Tiger Global International II Holdings — SC,
  The DTAA between India and Mauritius allows capital gains to be taxed only in Mauritius, provided the entity holds a valid TRC.
• Aditya Birla Nuvo Limited vs The Deputy Director of Income-tax — HC,
  The beneficial ownership of shares, despite being registered in the name of a permitted transferee, determines the taxability of capital gains in India.
• Interglobe Technology Quotient Private Limited vs ACIT — ITAT, 2024
  CSR contributions can be eligible for deduction under section 80G if they meet the necessary conditions.