No TDS credit can be claimed in returns if the corresponding income, on which TDS was deducted, not shown in returns. Further such TDS amount shall be treated as deemed to be income received by invoking section 198.
In ANDHRA PRADESH HIGH COURT, Sri Y. Rathiesh Versus The Commissioner of Income Tax-I
Assessee gave loan to the two companies. The 1st company was just showing the accumulated interest, in its account books without making actual payment to assessee. further, the 1st company deducted tax at source (TDS) on the amount of interest payable and issued TDS credit certificates, in relation thereto. whereas the second one was paying interest regularly.
In the returns filed by him, the appellant was adopting a hybrid system. While in respect of his transaction with the 1st company, he adopted cash system and with regards to the transaction with the 2nd company, he adopted the mercantile system. The result was that he did not pay the tax on the interest payable to him by the 1st company, even while he enjoyed the entire benefit of TDS credit made in that behalf. Continue reading
The liability towards leave encashment is allowed even though they may not be in a position to give the accurate details. However, leave encashment claimed in an arbitrary manner without there being any supportive material shall not be allowable to assessee.
In the decision reported in  245 ITR 428 Bharat Earth Movers v. Commissioner of Income-tax, the Apex Court has crystallised the law, which reads as follows:
“The law is settled : if a business ( leave encashment ) liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in presentiment though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.” Continue reading