The assessee, a joint venture engaged in undertaking construction contracts, entered into an agreement with HPCL for setting up an ethanol plant in India. Subsequently, due to technical issues, HPCL decided not to pursue the project, and therefore, same was cancelled as per the mutual decision between the assessee and HPCL Since the assessee had already offered income to extent of certain amount in AY 2020-21, only balance amount was offered in AY 2021-22. However, the amount of advance received by the assessee (including TDS deducted on it) was required to be refunded back to HPCL by the assessee. Since HPCL did not wish to revise the TDS return, the assessee had claimed the credit for the tax deduction.

Held that the assessee was entitled to claim a refund of TDS deducted from the entire advance given by HPCL, as the contract was terminated and the advance (including TDS) was refunded. However, the AO was directed to verify that HPCL had not already claimed a refund by filing a revised TDS return before allowing the brought-forward TDS credit to the assessee.(AY. 2021-22)