High Court of Gujarat in case of Devarsh Pravinbhai Patel v/s Asst Commissioner Of Income Tax vide order dated 24th September 2018 has held that TDS credit needs to be given by Income-tax authorities to the deductee even if TDS is not deposited by the deductor.

Where employer deducted tax at source on salary payments made to the Assesse however did not deposit such tax with the credit of Central Government, Department could not deny the benefit of tax deducted at source by the employer of the Assesse and Credit of such tax would be given to the Assesse for the respective years

Assesse was an individual employed as a pilot. During the relevant period, the employer deducted tax at source on salary payments made to the assesse. However, the employer did not deposit such tax with the credit of Central Government. In this regard, the question under consideration was that can the Department seek to recover such amount from the assesse or whether the assesse was correct in contending that he had already suffered the deduction of tax, the mere fact that the deductee did not deposit such tax with the credit of Central Government could not permit the Income Tax Department to recover such amount from assesse.

High Court of Gujarat held that, under the circumstances, by allowing these petitions we hold that the Department cannot deny the benefit of tax deducted at source by the employer of the petitioner during the relevant financial years. The credit of such tax would be given to the petitioner for the respective years. If there has been any recovery or adjustment out of the refunds of the later years, the same shall be returned to the petitioner with statutory interest.