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Facts
The assessee, an HUF, claimed TDS credit of Rs.3,08,750/- on dividend income of Rs.30,87,500/-. The credit was disallowed by the CPC and CIT(A) because the TDS appeared in the Karta's individual PAN (Form 26AS) instead of the HUF's PAN, citing non-fulfillment of Rule 37BA(2) conditions.
Held
During the tribunal proceedings, the assessee demonstrated compliance with Rule 37BA(2) by filing declarations and getting the TDS reflected in the HUF's Form 26AS. Since this new evidence was not available to lower authorities, the Tribunal remanded the matter to the Assessing Officer for verification of these documents and to grant the TDS credit if compliance is confirmed.
Key Issues
Whether an HUF is entitled to TDS credit for dividend income when the TDS was deducted in the Karta's individual PAN, and if subsequent compliance with procedural requirements of Rule 37BA(2) rectifies the initial disallowance.
Sections Cited
250, 143(1), 199, 37BA(2)
AI-generated summary — verify with the full judgment below
Order PER LALIET KUMAR, J.M: This appeal by the assessee is directed against the order of the Ld. CIT, Appeal Addl/JCIT(A)-2, Noida, dated 13.03.2025, passed under section 250 of the Income Tax Act, 1961 for the Assessment Year 2022–23. 2. In the present appeal Assessee has raised the following grounds:
1. That the Ld. Additional / JCIT Appeal-2 Noida, has wrongly upheld the variation made while processing the return for not allowing the credit of TDS at Rs. 308750/- on the dividend income shown and assessed during the year, in the hands of the assessee, on the basis that the TDS has been deducted in the hands of the Karta in his individual capacity.
2. That the Ld. Additional / JCIT Appeal-2 Noida, has failed to appreciate that the assessee is the “beneficial owner” of shares of M/s Hero Moto Corp Ltd. (formerly known as Hero Honda Motors Ltd.) for last more than three decades and dividend declared has always been shown & accepted as assessee’s income.
3. That the Ld. Additional / JCIT Appeal-2 Noida, has failed to appreciate the fact that neither the income of dividend nor the TDS deducted thereon has been shown and claimed in the hands of the Karta as an individual.
4. That the Ld. Additional / JCIT Appeal-2 Noida, has failed to allow the credit of TDS of Rs. 308752/- as per provisions of section 199 but has wrongly rejected the claim only on the basis of procedural lapse.
The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing.
3. Briefly the facts of the case are that the assessee, a Hindu Undivided Family (HUF), filed its return of income declaring total income of Rs.46,08,750/– and claimed TDS credit of Rs.4,57,068/–. The CPC, Bengaluru, while processing the return under section 143(1), allowed credit of Rs.1,48,318/– only, thereby disallowing Rs.3,08,750/– which pertained to dividend income of Rs.30,87,500/– received from M/s Hero MotoCorp Ltd. The reason for disallowance was that the said TDS appeared in Form 26AS of Shri Yogesh Chander Munjal (Individual) and not in the PAN of the assessee HUF.
4. Against the order of the AO the assessee went in appeal before the Ld. CIT(A). Ld. CIT(A) confirmed the action of the CPC holding that the appellant had not fulfilled the conditions of the proviso to Rule 37BA(2) of the Income Tax Rules, 1962, namely (i) filing of declaration with the deductor, and (ii) reporting of tax deduction by the deductor in the name of the other person.
5. Against the order of the Ld. CIT(A) the assessee preferred in appeal before the Tribunal.
During the course of hearing the Ld. AR reiterated the factual background and submitted that the procedural requirements under Rule 37BA(2) have now been duly complied with. It was pointed out that, pursuant to the observation/directions of the Bench during the last hearing, the assessee approached M/s Hero MotoCorp Ltd. and furnished the requisite declaration under Rule 37BA(2) through Shri Yogesh Chander Munjal (Individual), being the deductee, requesting the company to report the corresponding TDS in the name of Yogesh Chander & Sons (HUF), the beneficial owner of 32,500 shares.
6.1 The learned AR drew our attention to the letter dated 14.10.2025, filed before the Tribunal, enclosing the following: Annexure–1: Copy of declaration filed with Hero MotoCorp Ltd. by Shri Yogesh Chander Munjal (Individual) Annexure–2: Updated Form 26AS of the assessee (HUF) showing reflection of TDS of Rs.3,08,750/– as of 07.10.2025 Annexure–3: Earlier Form 26AS dated 11.06.2022 for comparison 6.2 It was submitted that since both mandatory conditions of the proviso to Rule 37BA(2) now stand complied, and the dividend income has been duly offered to tax by the HUF, denial of TDS credit would amount to unjust enrichment of the Revenue. Reliance was placed on judicial precedents including: ITO v. Gopal Das HUF (ITAT Delhi), Rajeev Goyal HUF v. ITO (ITA No. 312/JP/2021), and M.M. Fish Products Pvt. Ltd. v. ITO [(2018) 94 taxmann.com 305 (Hyd-Trib.)], wherein it was held that TDS credit cannot be denied on mere technical or procedural lapses once income is taxed in the hands of the correct person. The learned AR therefore pleaded that the matter be restored to the file of the AO to verify the declaration and updated Form 26AS and allow the TDS credit.
Per contra, the learned DR supported the findings of the CIT(A) and submitted that at the time of passing the appellate order, the assessee had failed to furnish any evidence showing compliance with Rule 37BA. However, he fairly conceded that if the assessee has now produced the declaration filed with the deductor and the updated Form 26AS reflecting the TDS in the name of the HUF, the matter may be remitted to the AO for verification of the factual position in accordance with law.
We have heard the rival contention of the parties and perused the material available on the record. It is evident from the material now placed before us that the assessee has filed a declaration with M/s Hero MotoCorp Ltd. as envisaged under the proviso to Rule 37BA(2) and that the corresponding TDS of Rs.3,08,750/– has been reported in the Form 26AS of the assessee HUF. These documents, being material to the adjudication of the dispute, were not available before the lower authorities. The issue thus requires verification by the Assessing Officer.
8.1 In such circumstances, and keeping in view the principles of natural justice, we deem it appropriate to set aside the impugned order of the CIT(A) and restore the matter to the file of the Assessing Officer with the following directions:
1. 1. The AO shall verify the authenticity of the declaration filed by Shri Yogesh Chander Munjal (Individual) with M/s Hero MotoCorp Ltd. in favour of the appellant HUF and the corresponding reflection of the TDS in the HUF’s Form 26AS.
2. If upon such verification it is found that the dividend income of Rs.30,87,500/– has been offered to tax by the appellant HUF and the corresponding TDS of Rs.3,08,750/– is duly reported, the AO shall grant the TDS credit in accordance with section 199 read with Rule 37BA(2).
The AO shall provide reasonable opportunity of being heard to the assessee and pass a reasoned order thereafter. 8.2 We clarify that we have not expressed any opinion on the merits of the issue and the AO shall decide the matter afresh in accordance with law.