AKASHBHAI RASHMINBHAI SAVANI,SURAT vs. ITO, WARD-3(2)(1), SURAT, SURAT

That the learned CIT(A) has wrongly applied Rule 37BA (2) without considering the unique facts of the case, resulting in denial of legitimate TDS credit and causing undue hardship to the appellant.

The brief facts of the case are that the assessee was partner in the firm of M/s Paramhansh & Co. He had filed his return of income for A.Y. 2018-19 on 25.01.2019 declaring total income of Rs.4,46,372/- and claimed credit of TDS u/s 1941A of Rs. 13,82,653/-. Thereafter, an intimation u/s 143(1) dated 05/12/2019, the return was processed at the same income i.e. Rs.4,46,372/-, however as per the appellant the credit of TDS of Rs. 13,82,653/- was not given. Further, the assessee filed the rectification request on 08/10/2020 stating that rejecting the claim of the TDS u/s 1941A of Rs. 13,82,653/- was not justified for the reason that the TDS was reflected in the 26AS of the assessee and the mistake was apparent from record.

Heard the argument of both the parties and perused the material available on record.

At the outset, both the parties fairly submitted that the issue raised by the assessee in the present appeal stands covered by the order of the Tribunal in the case of Nirav Bipinbhai Vaghasiya Vs. ITO in - 3– ITA No.90/Srt/2022 for AY 2018-19 dated 16.01.2023. For the sake of ready reference, the operative portion of said order is reproduced as under:

1 have considered the submission of Ld. Senior Departmental Representative (Ld. Sr-DR) for the Revenue. and perused the materials available on record and the orders of lower authorities carefully. I find that in the return of income the assessee claimed refund of TDS reflected in his Form-26AS. the CPC denied such refund in its intimation dated 08.10.2018. The assessee filed application for rectification under section 154. In the application under section 154, the assessee claimed such refund on the ground that during the financial year, immovable property was sold by said partnership firm (M/s Shri Hari Agri.) which was acquired by the partnership firm from its own source. The sale deed was executed by the assessee in the capacity of partner. The property was reflected in the balance-sheet of partnership firm. The TDS was made by purchaser and credited to the account of assessec (PAN). As the property was owned by the partnership firm, the capital ITA No.90/8RT/2022 (AY 18-19)gain was offered in the return of income of partnership firm. though document was executed by partner in its fiduciary capacity. No sale consideration was shown in case of assessee, however, such TDS was shown in Form-26AS. The assessee stated that there is no provision to transfer the credit of TDS to the partnership firm. No credit of TDS was claimed by partnership firm and assessee claimed such TDS credit in his case to avoid double taxation. The assessee claimed credit of such TDS reflected in Form-26AS. The capital gains of sale of immovable property was offered by partnership firm and there is no loss to revenue if credit /refund of TDS is given to assessee. The NFAC/Ld. CIT(A) dismissed the application under section 154 vide intimation dated 23.10.2020 by taking view that provisions of section 199 and Rule 37BA, the credit can be claimed only in the year in which such income is assessable in the hand of the person other than deductee. It was also held that claim of credit can only be considered in the hand of firm as the income is assessable in the hand of partnership firm. The assessee executed the sale deed on behalf of the firm in the representative capacity as a partner. The assessee has not Nirov B Voghaniy filed any declaration that as per Rule 37BA the credit be given to the partnership firm. I find that there is no dispute that the TDS was deducted on the sale consideration of the asset, which was owned by partnership firm. Further, there is no dispute that the assessee is partner in the said firm and signed the sale deed on behalf of partner in fiduciary relationship. It is also admitted fact that the TDS was credited in the account of (PAN) of assessee. However, from the fact of the present case, it is not clear that any tax liability was created against the firm on transfer of such asset, which was owned by firm. Thus, - 4– keeping in view all the facts and circumstances of the case. I deem it appropriate to restore the case to the file of assessing officer, with the direction to adjudicate the issue afresh. The assessee is also directed to move appropriate application under section 199 read with Rule 37BA for claiming the credit of such TDS with required declaration, undertaking of other condition prescribed therein. On filing such application with required declaration, the assessing officer shall decide the same in accordance with law. Needless to direct that before passing the order afresh the assessing officer shall grant proper and fair opportunity to the assessee. The assessee is also directed to make proper compliance on the notice of assessing officer in time. With these directions, all the grounds of appeal raised by the assessee are allowed for statistical purpose.

In the absence of any change in factual matrix and legal proposition brought to our notice, the appeal of the assessee is hereby allowed.

""थ" / The Respondent. 3. संबंिधत आयकर आयु" / Concerned CIT 4. आयकर आयु"(अपील) / The CIT(A)- 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Surat. 6. गाड" फाईल / Guard file.