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Facts
The assessee, the sole beneficiary of a trust, offered income earned from the trust to tax in his hands. The deductor deducted TDS in the name of the trust, which appeared in the trust's Form 26AS, not the assessee's. The CPC denied TDS credit to the assessee because it was not reflected in his 26AS.
Held
The Tribunal held that while the assessee should ideally ensure TDS is deducted in their name, the current situation results in the TDS remaining with the government and a demand against the assessee, which is inequitable. The Assessing Officer is directed to facilitate the transfer of TDS credit from the trust's 26AS to the assessee's 26AS and grant the credit.
Key Issues
Whether the assessee can claim TDS credit when TDS was deducted in the name of a trust of which the assessee is the sole beneficiary, but not reflected in the assessee's Form 26AS.
Sections Cited
161(1), 199, 143(1), 37BA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
This appeal has been preferred by the assessee against order dated 30.09.2024 passed by the Ld. Commissioner of Income-tax (Appeals) [in short ‘the Ld. CIT(A)’] for assessment year 2023-24, raising following grounds:
1. The Appellant objects to the demand 1. The Appellant objects to the demand determined of Rs. determined of Rs. 11,41,190/-. .
2. The Commissioner of Income Tax (Appeals) erred in 2. The Commissioner of Income Tax (Appeals) erred in 2. The Commissioner of Income Tax (Appeals) erred in upholding that the Centralized Processing Centre (CPC) has upholding that the Centralized Processing Centre (CPC) has upholding that the Centralized Processing Centre (CPC) has rightly not granted TDS credit to the extent of Rs. 12,38,459/ rightly not granted TDS credit to the extent of Rs. 12,38,459/ rightly not granted TDS credit to the extent of Rs. 12,38,459/- claimed in the return of income only on the basis claimed in the return of income only on the basis claimed in the return of income only on the basis that the same did not appear in the 26AS of the Appellant. same did not appear in the 26AS of the Appellant. same did not appear in the 26AS of the Appellant.
3. Both the learned Commissioner of Income Tax (Appeals) 3. Both the learned Commissioner of Income Tax (Appeals) 3. Both the learned Commissioner of Income Tax (Appeals) and CPC erred in not considering the fact that the income from and CPC erred in not considering the fact that the income from and CPC erred in not considering the fact that the income from the assets held in the Trust created for the Appellant's sole the assets held in the Trust created for the Appellant's sole the assets held in the Trust created for the Appellant's sole benefit, is re benefit, is required to be taxed u/s 161(1) of the Act in the quired to be taxed u/s 161(1) of the Act in the Appellant's own hands. Appellant's own hands.
4. The learned Commissioner of Income Tax (Appeals) and 4. The learned Commissioner of Income Tax (Appeals) and 4. The learned Commissioner of Income Tax (Appeals) and CPC erred in upholding that CPC has rightly not granted TDS CPC erred in upholding that CPC has rightly not granted TDS CPC erred in upholding that CPC has rightly not granted TDS credit of Rs. 12,38,459/ credit of Rs. 12,38,459/-, inspite of assessing income of Rs. , inspite of assessing income of Rs. 74,66,005/- from the trust in which the Appellant is the sole from the trust in which the Appellant is the sole beneficiary, ignoring the provisions of section 199 of the Act beneficiary, ignoring the provisions of section 199 of the Act beneficiary, ignoring the provisions of section 199 of the Act read with rule 37BA. read with rule 37BA.
The learned Commissioner of Income tax (Appeals) erred in 5. The learned Commissioner of Income tax (Appeals) erred in 5. The learned Commissioner of Income tax (Appeals) erred in upholding that CPC has rightly not granted TDS credit of upholding that CPC has rightly not granted TDS credit of upholding that CPC has rightly not granted TDS credit of Rs. 12,38,459/- despite acknowledging the fact that the trust had despite acknowledging the fact that the trust had not claimed the TDS credit in the return of income filed by the not claimed the TDS credit in the return of income filed by the not claimed the TDS credit in the return of income filed by the trust.
Having regard to the facts and circumstances of the case, 6. Having regard to the facts and circumstances of the case, 6. Having regard to the facts and circumstances of the case, the Appellant submits that the CPC be directed to grant T the Appellant submits that the CPC be directed to grant T the Appellant submits that the CPC be directed to grant TDS credit to the tune of Rs. credit to the tune of Rs. 12,38,459/-.
Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its return of income for the year under consideration declaring total return of income for the year under consideration declaring total return of income for the year under consideration declaring total income at Rs.99,82,560/ income at Rs.99,82,560/-. The return of income filed by the . The return of income filed by the assessee was processed by the Central Processing Centre (CPC) u/s sed by the Central Processing Centre (CPC) u/s sed by the Central Processing Centre (CPC) u/s 143(1) of the Income 143(1) of the Income-tax Act, 1961 (in short ‘the Act’) vide order tax Act, 1961 (in short ‘the Act’) vide order dated 11.10.2023, wherein the CPC accepted the total income wherein the CPC accepted the total income wherein the CPC accepted the total income returned but credit for the claim of tax deducted at source returned but credit for the claim of tax deducted at source returned but credit for the claim of tax deducted at source amounting to Rs.12,38, amounting to Rs.12,38,459/- was not granted. On further appeal, was not granted. On further appeal, the Ld. CIT(A) directed the Assessing Officer to verify the claim of the Ld. CIT(A) directed the Assessing Officer to verify the claim of the Ld. CIT(A) directed the Assessing Officer to verify the claim of the assessee and allow as per the provisions of the Act. Aggrieved, the assessee and allow as per the provisions of the Act. Aggrieved, the assessee and allow as per the provisions of the Act. Aggrieved, the assessee is in appeal before the Tribunal. the assessee is in appeal before the Tribunal.
We have heard rival submiss We have heard rival submissions of the parties and perused ions of the parties and perused the relevant materials on record the relevant materials on record. A private trust namely trust namely ‘Jamshed Bilimoria trust’ was created by the parents of the assessee vide deed was created by the parents of the assessee vide deed was created by the parents of the assessee vide deed of trust dated 15.12.2004 in which the brother of the assessee is a of trust dated 15.12.2004 in which the brother of the assessee is a of trust dated 15.12.2004 in which the brother of the assessee is a trustee along with other two professionals. The assessee is the sole ther two professionals. The assessee is the sole ther two professionals. The assessee is the sole beneficiary of the said trust. According to the assessee in terms of beneficiary of the said trust. According to the assessee in terms of beneficiary of the said trust. According to the assessee in terms of section 161(1) of the Act income from the assets held in the said section 161(1) of the Act income from the assets held in the said section 161(1) of the Act income from the assets held in the said trust was required to be taxed in the hands of the assessee. The trust was required to be taxed in the hands of the assessee. The trust was required to be taxed in the hands of the assessee. The assessee accordingly offered following income e accordingly offered following income in his hand in his hand:
Gross TDS Interest Income Interest Income 22,70,305 249,120 249,120 Dividend Income Dividend Income 51,95,700 9,89,339 9,89,339 74,66,005 12,38,459 12,38,459 Short Term capital Gain Short Term capital Gain 1,65,374 NIL Long Term Capital Gain Long Term Capital Gain 10,11,364 NIL Long Term Capital Long Term Capital Gain 16,48,619 NIL 3.1 Although the deductor deducted the TDS in the name of the 3.1 Although the deductor deducted the TDS in the name of the 3.1 Although the deductor deducted the TDS in the name of the trust as said investments were made by the trust, but the assessee trust as said investments were made by the trust, but the assessee trust as said investments were made by the trust, but the assessee claimed relevant TDS credit claimed relevant TDS credit in his return. The said TDS were The said TDS were appearing in the Form No. 26AS appearing in the Form No. 26AS [i.e. a form prescribed by the prescribed by the Income-tax Department under Income tax Department under Income-tax Rules 1962 (in short ‘the tax Rules 1962 (in short ‘the Rules’) for acknowledging Rules’) for acknowledging the TDS credit of each person], of the the TDS credit of each person], of the trust. The trust filed return of income declaring nil income The trust filed return of income declaring nil income The trust filed return of income declaring nil income. The assessee claimed that claimed that in the prescribed form for filing return of rm for filing return of income of the trust, it was trust, it was demonstrated that the TDS credit was the TDS credit was not claimed. Thus the assessee Thus the assessee urged that since income was offered that since income was offered for the tax in the year under consideration in the hands of the for the tax in the year under consideration in the hands of the for the tax in the year under consideration in the hands of the assessee, the corresponding TDS cred the corresponding TDS credit should have been allowed to it should have been allowed to the assessee in the same year. The Ld. CIT(A) after considering the the assessee in the same year. The Ld. CIT(A) after considering the the assessee in the same year. The Ld. CIT(A) after considering the submission of the assessee and provisions of the law directed the submission of the assessee and provisions of the law directed the submission of the assessee and provisions of the law directed the Assessing Officer to verify the claim of the assessee and allow the Assessing Officer to verify the claim of the assessee and allow the Assessing Officer to verify the claim of the assessee and allow the TDS as per provisions o TDS as per provisions of the Act observing as under: f the Act observing as under:
“In the present appeal under consideration, it is observed “In the present appeal under consideration, it is observed “In the present appeal under consideration, it is observed that income and TDS is related with the Trust and ITR has that income and TDS is related with the Trust and ITR has that income and TDS is related with the Trust and ITR has also filed by the Trust showing Nil income and no TDS was also filed by the Trust showing Nil income and no TDS was also filed by the Trust showing Nil income and no TDS was claimed by the Trust in the ITR filed for the Asstt claimed by the Trust in the ITR filed for the Asstt claimed by the Trust in the ITR filed for the Asstt. Year 2023-24. The Appellant in the capacity of Individual filed 24. The Appellant in the capacity of Individual filed 24. The Appellant in the capacity of Individual filed ITR for the Asstt. Year 2023 ITR for the Asstt. Year 2023-24 showing income related to 24 showing income related to Trust and claimed TDS, which was also shown in the Form Trust and claimed TDS, which was also shown in the Form Trust and claimed TDS, which was also shown in the Form 26AS of the Trust. 26AS of the Trust. In view of the above discussion, the restriction of TDS b In view of the above discussion, the restriction of TDS b In view of the above discussion, the restriction of TDS by the CPC Bengaluru is held to be correct, because no TDS is the CPC Bengaluru is held to be correct, because no TDS is the CPC Bengaluru is held to be correct, because no TDS is reflected in Form 26AS of the Appellant, hence no credit reflected in Form 26AS of the Appellant, hence no credit reflected in Form 26AS of the Appellant, hence no credit was allowed by the CPC. Further, the appellant has was allowed by the CPC. Further, the appellant has was allowed by the CPC. Further, the appellant has submitted that as per Trust deed dated 15 submitted that as per Trust deed dated 15-12- -2004, the appellant himself is the sole be appellant himself is the sole beneficiary in the said Trust. neficiary in the said Trust. Hence, the AO is directed to verify the claim of the Appellant Hence, the AO is directed to verify the claim of the Appellant Hence, the AO is directed to verify the claim of the Appellant and and and allow allow allow the the the TDS TDS TDS as as as per per per provisions provisions provisions of of of the the the Income Tax Act, 1961.” 3.1 The issue before us pertains to the denial of credit for Tax The issue before us pertains to the denial of credit for Tax The issue before us pertains to the denial of credit for Tax Deducted at Source (TDS) to the a Deducted at Source (TDS) to the assessee, who is the sole ssessee, who is the sole beneficiary of a trust, on the ground that the tax was deducted in beneficiary of a trust, on the ground that the tax was deducted in beneficiary of a trust, on the ground that the tax was deducted in the name of the trust and, consequently, was reflected in Form No. the name of the trust and, consequently, was reflected in Form No. the name of the trust and, consequently, was reflected in Form No.
26AS of the trust rather than in the Form No. 26AS of the assessee. 26AS of the trust rather than in the Form No. 26AS of the assessee 26AS of the trust rather than in the Form No. 26AS of the assessee It is the settled position t It is the settled position that the Department grants credit for TDS hat the Department grants credit for TDS only if the said amount appears in the Form No. 26AS of the only if the said amount appears in the Form No. 26AS of the only if the said amount appears in the Form No. 26AS of the relevant assessee. Since the TDS credit in the present case was not relevant assessee. Since the TDS credit in the present case was not relevant assessee. Since the TDS credit in the present case was not appearing in the Form No. 26AS of the assessee, the Assessing appearing in the Form No. 26AS of the assessee, the Assessing appearing in the Form No. 26AS of the assessee, the Assessing Officer, relying strictly Officer, relying strictly on procedural compliance, declined to grant on procedural compliance, declined to grant such credit. Ideally, the assessee ought to have ensured that the such credit. Ideally, the assessee ought to have ensured that the such credit. Ideally, the assessee ought to have ensured that the deductor deducted tax in the hands of the assessee rather than in deductor deducted tax in the hands of the assessee rather than in deductor deducted tax in the hands of the assessee rather than in the name of the trust. However, the crux of the matter is that the the name of the trust. However, the crux of the matter is that the the name of the trust. However, the crux of the matter is that the Department has neither granted credit for the TDS in the hands of as neither granted credit for the TDS in the hands of as neither granted credit for the TDS in the hands of the trust nor in the hands of the assessee. As a result, the tax the trust nor in the hands of the assessee. As a result, the tax the trust nor in the hands of the assessee. As a result, the tax deducted at source continues to remain with the Government, deducted at source continues to remain with the Government, deducted at source continues to remain with the Government, while, at the same time, a demand has been raised against the while, at the same time, a demand has been raised against the while, at the same time, a demand has been raised against the assessee. This amounts to an inequitable situation, which cannot amounts to an inequitable situation, which cannot amounts to an inequitable situation, which cannot be countenanced in law. be countenanced in law. We note that the Ld. CIT(A) Ld. CIT(A) has already directed the Assessing Officer to verify the assessee’s claim and directed the Assessing Officer to verify the assessee’s claim and directed the Assessing Officer to verify the assessee’s claim and grant TDS credit in accordance with the provisions of the Income- grant TDS credit in accordance with the provisions of the Income grant TDS credit in accordance with the provisions of the Income tax Act, 1961. If such credit has not been granted till the date of tax Act, 1961. If such credit has not been granted till the date of tax Act, 1961. If such credit has not been granted till the date of passing of this order, we hereby direct the passing of this order, we hereby direct the Assessing Officer to take Assessing Officer to take necessary steps to address the request of both the assessee and the necessary steps to address the request of both the assessee and the necessary steps to address the request of both the assessee and the trust for the transfer of TDS credit from the Form No. 26AS of the trust for the transfer of TDS credit from the Form No. 26AS of the trust for the transfer of TDS credit from the Form No. 26AS of the trust to the Form No. 26AS of the assessee and, thereafter, to allow trust to the Form No. 26AS of the assessee and, thereafter, to allow trust to the Form No. 26AS of the assessee and, thereafter, to allow the credit in accordance w the credit in accordance with law. The grounds of appeal of the The grounds of appeal of the assessee are accordingly allowed for statistical purposes. assessee are accordingly allowed for statistical purposes. assessee are accordingly allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on nounced in the open Court on 21/02/2025. /02/2025.