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Facts
The assessee, as the legal heir of her deceased husband, filed an income tax return reporting interest income earned by her husband and claimed TDS credit of Rs. 52,913/-. The CPC initially denied the credit due to a mismatch, as the TDS was reported against the deceased's PAN while the return was filed under the legal heir's PAN. The CIT(A) upheld this denial, leading to the current appeal.
Held
The Tribunal held that the denial of TDS credit was based on mere technical grounds. Since the interest income had already been offered to tax by the legal heir, the corresponding TDS credit should also be granted to avoid unjustified partial acceptance of the transaction. The Tribunal directed the CPC to grant the impugned TDS credit to the assessee and revise the tax demand, deeming it unfeasible to require the deductor to revise TDS statements for an old assessment year.
Key Issues
Whether a legal heir is entitled to claim TDS credit for income earned by the deceased when the income is offered to tax by the legal heir, but the TDS is reported under the deceased's PAN.
Sections Cited
Section 154, Section 143(1)
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Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH
Before: HON’BLE SHRI LALIET KUMAR, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2019-20 arises out of an order of learned Addl. / Joint Commissioner of Income Tax (Appeals)-9, Mumbai [CIT(A)] dated 11-10-2025 in the matter of an rectification intimation issued by CPC U/S 154 on 04-03-2021. The sole grievance of the assessee is denial of TDS Credit for Rs.52,913/-. Having heard rival submissions, the appeal is disposed-off as under.
The assessee is a legal heir of her deceased husband Shri Vinod Kumar Gupta. The assessee’s husband earned interest income of Rs.5,23,957/- during this year on which impugned TDS of Rs.52,913/- was deducted by the payer. The assessee, as a legal heir of her husband, offered the interest income on behalf of her husband in her income tax return and accordingly, the assessee claimed credit of corresponding TDS. The credit was denied by CPC while processing the return u/s 143(1) on 24-01-2020. The assessee filed rectification on 17-02-2020 which is still pending. The assessee had filed revised return of income which was processed u/s 143(1) on 16-04-2020 against which another rectification was filed by the assessee on 22-02- 2021. This rectification was rejected by CPC on 04-03-2021 on the ground that TDS claim related to deceased person and there was no return of income for deceased PAN. Aggrieved by rejection of rectification, the assessee preferred further appeal.
The Ld. CIT(A) observed that TDS claimed in the return of income was not reflected in Form 26AS against the PAN of the assessee. The TDS was deducted and reported by the deductor against the PAN of the deceased assessee. As per Rule 37BA, the TDS credit would be given to the person in whose name it is reported by the deductor in the TDS statement. Since TDS was reported against the PAN of the deceased whereas the return of income was filed under the PAN of legal heir, thereby using the PAN of the legal heir, there was a mismatch in the system. The TDS credit could be allowed to legal heir only if the deductor revises the TDS statement to reflect the PAN of the legal heir which was not done. Therefore, the appeal of the assessee was dismissed against which the assessee is in further appeal before us.
The undisputed fact is that the assessee is a legal heir of her deceased husband. The interest income earned by the deceased husband has been offered by her in the capacity of a legal heir. The denial of TDS credit is merely on technical grounds. Once the income has been offered to tax, corresponding TDS credit would also be available to the assessee since accepting a part of the transaction cannot be held to be justified. Requiring the legal heir to approach the deductor to revise TDS statements, at this stage, may not be feasible / possible considering the fact that the TDS statement pertain to AY 2019-20. Therefore, we direct CPC to grant impugned TDS credit to the assessee and revise the tax demand.