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Income Tax Appellate Tribunal, ALLAHABAD BENCH ‘SMC’ ALLAHABAD
Before: SHRI VIJAY PAL RAO
This appeal by the assessee is directed against the order dated 04.09.2015 of CIT(A) for the assessment year 2011-12. However, the only effective grounds are ground No. 1 to 3 which are reproduced as under:- “1. That the learned Commissioner of Income Tax (Appeals) has erred both in law while upholding the order rejecting the application u/s 154 of the Act resulting into denial of the credit of TDS of Rs. 5,89,348/- on the income declared and assessed in the hands of the assessee. 2. That the order u/s 154 of the Act dated 13.01.2014 is perse bad in law as without granting statutory reasonable opportunity of being heard provided u/s 154 of the Act and is contrary to principle of natural justice.
ITA No. 262/Alld/2018 2 2.1 That the observation of both the authority below that credit of TDS certificate which is appearing in the name of assessee’s husband cannot be given as return of income not filed in capacity of legal heir is arbitrary, illegal and not in accordance with facts of the case. 2.2 That aforesaid observation of learned Assessing Officer is erroneous and without appreciating the admitted facts that income on which TDS has been deducted has been offered for tax in the return of income filed by the assessee and assessed as such u/s 143 (1) of the Act and therefore this TDS is belongs to the assessee only and credit of TDS certificate which merely appears in the name of husband cannot change the entitlement of credit of TDS towards assessee. 3. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts while upholding the order of learned Assessing Officer rejecting the application u/s 154 of the Act.”
The other grounds raised by the assessee are only in the nature of arguments and contentions and not raising any issue to be adjudicated. The only issue arises in this appeal of the assessee for consideration and adjudication of the Tribunal is denial of TDS credit of Rs. 5,89,348/- which was deposited by the deductor in the PAN account of deceased husband of the assessee, who was earlier the proprietor of M/s Gupta Electric Works and after his death on 11.03.2009, the assessee being the legal heir succeeded the proprietorship concerned. The assessee is a proprietrix of M/s Gupta Electric Works and filed the return of income on 30.03.2012 declaring total income of Rs. 7,72,960/-. The assessee claimed TDS credit of Rs. 5,89,348/- and refund of Rs. 5,01,190/-. The return of income was processed by the Central Processing Unit (CPC) u/s 143 (1) on 20.03.2013, whereby an adjustment on account of TDS credit was made and raised a demand of Rs. 1,17,880/- . The TDS credit was denied due to the reason that as per the Form No. 26AS the TDS was not in the name of assessee but it was in the name of deceased husband, who die on 11.03.2009. The assessee filed an
ITA No. 262/Alld/2018 3 application u/s 154 of the Act for grant of TDS credit of Rs. 5,89,348/-. The said application was rejected by the Assessing Officer vide order dated 13.01.2014 passed u/s 154 of the Act. The assessee challenged the said order of the Assessing Officer by filing the appeal before the Ld. CIT (A) however, could not succeed.
Before the Tribunal, the Ld. AR of the assessee has submitted that the assessee has declared the income on account of commission income received from M/s Unitech Wireless (East) Pvt. Ltd., which was subjected to TDS however, the deductor deposited the TDS in the PAN of the deceased husband of the assessee Late Ram Vishal Gupta. The Ld. AR has pointed out that for the assessment year 2010-11, the return of income was filed by the assessee as a legal heir after the death of her husband the proprietor of M/s Vijay Electric Store and the said return of the income was accepted u/s 143 (1) of the Act therefore, the assessee was duly brought on record as a legal representative substituting the deceased husband. The Ld. AR has referred to the return of income filed by the assessee, wherein the TDS credit of Rs. 5,89,348/- was claimed by the assessee. He has also referred to the death certificate of her husband Shri Ram Vishal Gupta died on 11.03.2009 which was also acknowledged by the Assessing Officer. All the relevant facts were available with the Assessing Officer and therefore merely because the TDS amount was wrongly deposited by the deductor in the PAN of the deceased husband instead of the assessee, the credit of the TDS cannot be denied in support of his contention, the Ld. AR has also referred to the section 199 read with rule 37BA of Income Tax Rules and submitted that when the income shown in the TDS Certificate was offered to tax by the assessee then TDS credit is allowable on the basis of TDS mentioned in the certificate irrespective of the fact that the TDS certificate was not in the name of the assessee. The wrong submission of PAN does not debar the claim of TDS deducted
ITA No. 262/Alld/2018 4 particularly when the income is included and assessed in the hands of the assessee. The Ld. AR has also referred to the Circular No. 22 of 1961 dated 08.08.1961 and submitted that the Government has accepted the recommendation of the Direct Tax Administration Enquiry Committee for granting credit/refund due to the estate of a deceased person and shall be paid to his son/widow or other legal heir on their furnishing an indemnity bond without production of succession certificate or letters of administration. The Ld. AR has pointed out that the assessee has duly produced a succession certificate granted by the Competent Court. Thus, denial of TDS credit to the assessee is unjustified and arbitrary. He has relied upon the decision of the Co-ordinate Bench of this Tribunal in case of Income Tax Officer vs. T.G. Veerarabhvan (Cochin) 108 ITD 288 and submitted that that an identical issue has been considered by the Tribunal and decided in favour of the assessee by holding that so long, the assessee is holding a certificate for the entire tax deducted at source the credit and refund shall be given to the assessee. The Ld. AR has also relied upon the decision of Hon'ble Andhra Pradesh High Court in the case of CIT vs. Bhooratnam & Company (AP) 357 ITR 396 and submitted that the Hon'ble High Court after considering the rule 37BA of Income Tax Rules framed u/s 199 (3) of the Income Tax Act has held that once the receipt mentioned in the TDS certificate is assessed as income of the assessee, then the credit has to be granted to the assessee. He has also referred to various other of decisions on this point. Hence, the Ld. AR has submitted that the TDS credit of Rs. 5,89,348/- shall be allowed to the assessee.
On the other hand, the Ld. DR has submitted that the assessee filed the return of income as a Proprietor M/s Gupta Electric Works. The said return of income was processed by the CPC u/s 143 (1) and an adjustment was made due to the reason that the TDS was not credited in the name of the
ITA No. 262/Alld/2018 5 assessee but it was in the name of the husband of the assessee. Therefore, the A.O. as well as the Ld. CIT (A) is justified in denying a TDS credit to the assessee, it was the duty of the assessee to pursue the deductor to file the rectified TDS statements under the correct PAN of the assessee instead of the PAN of the husband of the assessee. He has relied upon the orders of the authorities below. 5. I have considered the rival submissions as well as the relevant material on record. There is no dispute that the assessee has offer the income of Rs. 7,72,959/- to tax which was received as commission income from M/s Unitech Wireless (East) Pvt. Ltd. The contract income was subjected to TDS and is assessed in the hands of the assessee as a proprietrix of M/s Gupta Electric Works then the TDS on the said income even if deposited in the PAN of the deceased husband of the assessee due to inadvertence or mistake, it would not lead to denial of the claim of credit to the assessee, who has offered the said income to tax. Rule 37BA of Income Tax rules, 1962 also provides the credit of tax deducted at source and paid to the Central Government, if the income on which tax is deducted at source and paid to the Government is offered to tax by the assessee and the deposit is made in the name of other person. The Hon'ble Andhra Pradesh High Court in case of CIT vs. Bhooratnam & Company (supra) has considered this issue in para 12-17 as under:- “12. Heard Sri J.V.Prasad, learned Senior Standing Counsel for the Income Tax Department and Sri C.P.Ramaswamy, learned counsel for the assessees. 13. S.199 (1) of the Act provides that any deduction of tax made in accordance with the provisions of Chapter XVII of the Act and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made. Under sub section (3) of Section 199, the CBDT may, for the purpose of giving credit in respect of tax deducted at source or paid in terms of the provisions of Chapter XVII of the Act, make such rules as may be necessary, including the rules for the purpose of giving credit to a person other than those referred to in sub section (1) and sub section (2) and also the assessment year for which such credit may be given.
ITA No. 262/Alld/2018 6 14. Rule 37BA of the Rules framed under Section 199(3) of the Act (introduced with effect from 01-04-2009 by Income Tax (Sixth Amendment) Rules, 2009 by the CBDT) is as follows: "Credit for tax deducted at source for the purposes of section 199. 37BA. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority. (2) (i) If the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for tax deducted at source shall be given to the other person in cases where- (a) the income of the deductee is included in the total income of another person under the provisions of section 60, section 61, section 64, section 93 or section 94; (b) the income of a deductee being an association of persons or a trust is assessable in the hands of members of the association of persons, or in the hands of trustees, as the case may be; (c) the income from an asset held in the name of a deductee, being a partner of a firm or a karta of a Hindu undivided family, is assessable as the income of the firm, or Hindu undivided family, as the case may be; (d) the income from a property, deposit, security, unit or share held in the name of a deductee is owned jointly by the deductee and other persons and the income is assessable in their hands in the same proportion as their ownership of the asset: Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1). (ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. (iii) The deductor shall issue the certificate for decuction of tax at source in the name of the person in whose name credit is shown in the information relating to
ITA No. 262/Alld/2018 7 deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody. (3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. (ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax. (4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of - (i) the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority: and (ii) the information in the return of income in respect of the claim for the credit, subject to verification in accordance with the risk management strategy formulated by the Board from time to time." 15. By the Income Tax (8th amendment) Rules, 2011, the CBDT amended Rule 37 BA and in sub rule (2), for clause (i), the following clause was substituted: "(i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee" 16. This amendment has done away with the specified four clauses in the pre- amended Rule 37BA which restricted the benefit of the rule only in four specified situations. It has thus widened the scope of the rule 37 BA thereby enabling the credit of taxes to the actual payee in whose hands the income is assessable and not restricting this benefit only to the specified four situations. 17. In our view, the CIT (Appeals) and the Tribunal have rightly held that the assessee is entitled to the credit of the TDS mentioned in the TDS certificates issued by the contractor, whether the said certificate is issued in the name of the Joint Venture or in the name of a Director of the assessee company. They have considered the terms of the agreement dated 12-03-2003 among the parties to the joint venture and held that credit for TDS certificates cannot be denied to the assessee while assessing the contract receipts mentioned in the said certificates
ITA No. 262/Alld/2018 8 as income of the assessee. The income shown in the TDS certificates has either to be taxed in the hands of the joint venture or in the hands of the individual co-joint venturer. As the joint venture has not filed return of income and claimed credit for TDS certificates and the TDS certificates have not been doubted, credit has to be granted to the TDS mentioned therein for the assessee.”
The Hon'ble High Court has held that the assessee is entitled to the credit to TDS mentioned in the TDS certificate issued by the contractor, whether the said certificate is issued in the name of Joint Venture or in the name of Director of the assessee company. The TDS credit cannot be denied to the assessee when the contract receipt mentioned in the TDS certificate is assessed as income in the hand of the assessee. In the case of in hand, there is no dispute that the contract/commission receipts on which the TDS was deducted by the deductor and deposited in the PAN of the deceased husband of the assessee was assessed in the hand of the assessee. Therefore, merely because the amount of TDS was deposited under the PAN of the deceased husband of the assessee, TDS credit cannot be denied to the assessee when the said receipt was assessed as income in the hand of the assessee. The Co- ordinate Bench of this Tribunal in the case of Income Tax Officer vs. T.G. Veerarabhvan (supra) has held in para 6 as under:-
“6. I have heard rival submissions and considered the facts and materials on record. There is no dispute about the fact that there were four co-owners receiving the rent but the certificate for tax deducted at source was issued in the name of the assessee only. There is also no dispute about the fact that the other co-owners have not claimed the credit of their share of tax deducted at source. It is also not disputed that the amendment to section 199 permitting to adjust the tax deducted at source proportionately in the hands of the co-owners has been brought in the statute book only with effect from the assessment year 1997-98. In other words, the amendment has been brought into the statute with prospective but not retrospective effect. In these facts and circumstances I find that the lessee has issued certificate for tax deducted at source under section 194(1) deducting the tax of Rs. 2,25,000 in the name of the assessee, Shri T.G. Veeraraghavan, even though he was only a co-owner. Before the
ITA No. 262/Alld/2018 9 amendment to section 199, which was brought into the statute book with effect from the assessment year 1997-98, normally credit for tax deducted at source was given to the person in whose name the certificate was issued. As rightly pointed out by the learned counsel for the assessee before the Commissioner of Income-tax (Appeals) if such full credit is not given to the assessee, who is holding the certificate, an anomalous situation would arise as under : (a)neither the assessee holding the certificate under section 203 got the credit for the entire tax deducted; (b)nor are the other co-owners not possessing the certificate in their favour entitled to the credit in the absence of such a certificate. It is not fair on the part of the department also to say that it would not give credit to anybody in respect of the tax deducted at source in respect of the remaining co-owners, even after taking the entire TDS into its treasury, so long as the assessee is holding a certificate for the entire tax deducted at source in his name. So long as the assessee is having a certificate in his name for the amount higher than the tax due to be paid by him, the excess tax is to be refunded to the assessee. If credit was not given for the entire amount mentioned in the certificate, it would definitely amount to denial of the refund due to the assessee. In this view of the matter, I do not find infirmity in the order of the first appellate authority and as such I confirm the same.”
Accordingly, by following the judgment of Hon'ble Andhra Pradesh High Court as well as considering the facts and circumstances of the case, the denial of TDS credit to the assessee is not justified. The impugned orders of the Assessing Officer passed u/s 154 as well as Ld. CIT (A) are set aside and the claim of the assessee for TDS credit is allowed. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 22nd March, 2021. Sd/- (VIJAY PAL RAO) Allahabad Judicial Member Dated: 22/03/2021 A.K., PS Copy forwarded to: 1. The Appellant 2. The Respondent
ITA No. 262/Alld/2018 10 3. The CIT(A) 4. The CIT 5. The DR, I.T.A.T. 6. Guard File
By Order (I.T.A.T., Allahabad) True copy