SIRAJ ABDEALI MUN,MUMBAI vs. ITO 24(1)(2),

The captioned appeal by assessee for Assessment Year [AY] 2009-10 assails the order of Ld. Commissioner of Income Tax(Appeals)-34 [CIT(A)], Mumbai dated 14/02/2014 qua denial of TDS credit of Rs.1,90,657/- to the assessee.

Briefly stated, the assessee is a resident individual assessee who filed his return of income for impugned AY on 28/07/2009 declaring total income of Rs.14,56,520/- which was picked up for scrutiny assessment u/s 143(3) vide Assessing Officer [AO] order dated 23/12/2011 wherein total income was determined at Rs.14,92,710/- after making certain additions. The assessee received rental income of Rs.11,21,803/- from ICICI Bank and reflected the same under the head ‘income from other sources’. However, he transferred the entire amount as ‘rent paid’ to his wife, who was the real owner of the property. This resulted into ‘Nil’ income being offered to tax from this source of income. The assessee claimed TDS credit of Rs.1,90,657/- against the rental received which was not allowed by the AO on the premises that no income was offered as rental income and the assessee was not the owner of the property. Aggrieved, the assessee assailed the stand of AO before First Appellate Authority and explained his claim. However, not convinced, CIT(A) confirmed the stand of the AO vide order dated 14/02/2014 against which the assessee is in appeal before us. 3. The Ld. Counsel for Assessee [AR] contended that the property was initially owned by one company namely ‘M/s Hertz Chemicals Private Limited’ and the assessee was lessee of the property in question since 1999 and sub-leased the same to ICICI Bank on long term basis for 10 years. The assessee earned rental income from the property since then. However, the property was sold by the owner to assessee’s wife namely ‘Mrs. Tasneem Siraj Mun’ Shri Siraj Abdeali Mun Assessment Year : 2009-2010 vide ‘agreement for sale of shop’ dated 24/03/2000 and as per clause 7 of this agreement, the tenancy benefits of the property was also transferred in wife’s favour. Therefore, whatever rental income was being received by the assessee, the same was transferred to the wife as the owner of the property. It was not practical to change the arrangement with bank and introduce assessee’s wife as lessor of the property and therefore, the assessee continued to receive the rent from the bank and paid the same to the wife. Due TDS was deducted on rental payment by the bank qua the assessee. The rental income has duly been reflected in the wife’s return of income and paid due taxes thereupon and as both assessee and his wife fall in the same tax bracket, the whole exercise was tax neutral and the assessee stood to gain nothing to undertake the transaction in this manner. It was only due to practical difficulties in substituting new lease agreement with the bank with wife as the true owner, which led to the present issue in hand. The lease agreement between assessee and the bank expired in the impugned AY after which new lease agreement was entered into between the Bank and assessee’s wife. Further, the wife has not claimed the TDS credit of Rs.1,90,657/- and the same has rightly been claimed by the assessee. The revenue in earlier years, accepted the TDS claim of the assessee in various 143(3) assessment and rule of consistency demands that similar view is taken in this year also on identical sets of facts. Our attention has been drawn to various papers and documents placed in the paper-book.

Per contra, the Ld. Departmental representative asserted that as no income has been offered to tax by the assessee and therefore, the benefit of TDS could not be given to him. TDS credit could be claimed only by that person to whom the income actually belonged and hence the lower authorities rightly denied the claim of the assessee.

We have heard the rival contentions and perused the relevant material on record. A perusal of the TDS certificate reveals that the assessee received last rental payment on 04/11/2008 whereas the assessee’s wife started receiving rental payment from the bank since 27/01/2009. A perusal of respective return of income of impugned AY reveals that both Shri Siraj Abdeali Mun Assessment Year : 2009-2010 assessee and his wife fall in the same tax bracket. Further, the rental income received by assessee from the bank was duly reflected by the wife in her return of income and without claiming impugned TDS credit, paid due taxes thereupon. The property in question along- with tenancy benefits was transferred by the owner in favour of assessee’s wife for total consideration of Rs.26.82 Lacs vide ‘agreement for sale of shop’ dated 24/03/2000. On the basis of all these observations, we find strength in the arguments and explanation offered by the Ld. AR and conclude that TDS credit of Rs.1,90,657/- was rightly claimed by the assessee and the same was allowable to him. We direct so.

The assessee’s appeal stand allowed.