EXECUTORS OF THE ESTATE OF LATE BOMAN MANECKJI MIRZA,HYDERABAD vs. INCOME TAX OFFICER, WARD-5(1), HYDERABAD

Brief facts of the case are that one Boman Maneckji Mirza was an individual and his PAN Card Number was AAEPM9098G. He died on 17/03/2020 and under a Will, he nominated three persons as the Executors of his estate. According to the Executors, as pleaded before the learned CIT(A), on the death of Boman Maneckji Mirza, they made an application to the income tax department for issue of PAN card in the name of the Executors of the estate of late Boman Maneckji Mirza and while disabling the PAN card AAEPM9098G, a PAN card No.AABAE6947N was issued on the name of the Executors of the estate of late Boman Maneckji Mirza (assessee).

According to the assessee, interest of Rs.10,57,720/- was accrued on the Bank of India fixed deposits, Rs.33,87,703/- accrued on the deposits with SBI, and a sum of Rs.90,285/- was dividends from companies and mutual funds in respect of which, TDS was made on the PAN AAEPM9098G. After the issuance of PAN AABAE6947N, while filing the return of income, in respect of the income of Boman Maneckji Mirza, in the capacity of the Executors of the estate of late Boman Maneckji Mirza, the assessee claimed the same with PAN AABAE6947N.

While processing the return of income under section 143(1) of the Act, the TDS credit was denied to the assessee, and when assessee appealed, the first appellate authority declined to grant such a credit stating that the TDS credit cannot be allowed to the person other than the person on whose name such deduction was made, in the absence of any succession certificate, lest, it will create legal issues.

Learned AR submitted that the there is no dispute as to the income belonging to Boman Maneckji Mirza, or his death on 17/3/2020 leaving behind a will appointing the assessee as Executors of his estate, the assessee applying for a new PAN number by furnishing the death certificate of Boman Maneckji Mirza, Department disabled the PAN of the deceased and granted a new PAN to the assessee, and assessee filed the return of income in respect of the income of Boman Maneckji Mirza and offered the income of the deceased and claimed the corresponding TDS on the PAN issued to them. Learned AR placed reliance on the provisions under section 168 of the Act and also the decision of a coordinate Bench in the case of Mirant Naveenbhai Parikh vs. DCIT in by order dated 22/4/2022 for the proposition that when the successor filed the return of income in respect of the deceased and claims the TDS credit, which was deducted in the PAN of the deceased, the successor is entitled to get the credit of TDS.

Per contra, learned DR submits that assessee did not offer any explanation as to whether any other person including the Executors of the estate of late Boman Maneckji Mirza have claimed the credit of TDS, and as rightly pointed out by the First Appellate Authority, in the absence of any succession certificate to avoid any legal issues thereafter, TDS cannot be allowed in the name of the deceased person to the assessee.

We have gone through the record in the light of the submissions made on either side. There is no dispute as to the income in question belonging to Boman Maneckji Mirza, or that the TDS was effected in respect of such income attributable to Boman Maneckji Mirza, because without raising any dispute in that respect the return of income was processed under section 143(1) of the Act, but without allowing the TDS credit. It is also not in dispute that claiming to be the Executors under the will executed by Boman Maneckji Mirza, the assessee applied for surrendering the PAN AAEPM9098G, and also to issue a new PAN in their favour in the capacity of Executors of Boman Maneckji Mirza by enclosing a copy of death certificate of Boman Maneckji Mirza. Without raising any issues, the Department disabled the PAN standing on the name of Boman Maneckji Mirza and issued a new PAN AABAE6947N in the name of the assessee.

On the face of these undisputed facts, it goes without saying that when Boman Maneckji Mirza died, the said fact was informed to the Department by furnishing a copy of the will executed by Boman Maneckji Mirza with a prayer to issue a new PAN on the name of the assessee, the PAN standing on the name of the deceased was disabled and the new PAN was issued in the name of the assessee, basing on which the return of income of the deceased was furnished, and the credit of the TDS deducted in the PAN of the deceased was claimed. In this situation filing of the return with the PAN of the deceased does not arise, and apart from this, it is a verifiable fact and the Revenue could have verified whether any return of income was filed with the PAN of the deceased claiming the credit of TDS. It’s not the case of Revenue that any such return was filed nor any credit of TDS was claimed by anyone else. Filing of succession certificate does not arise in this matter because succession certificate is necessary only in respect of debt or security.

In these circumstances, the learned Assessing Officer is directed to verify whether any return of income was filed with the PAN of the deceased claiming the credit of TDS, and if no return of income was filed claiming credit of TDS, then allow the claim of the assessee in respect of TDS credit. Grounds of appeal are allowed accordingly.

Facts in appeal number ITA 502 /Hyd/ 2024 and ITA 503/Hyd/2024 are identical to the facts involved for the assessment year 2021-22, and therefore, while following the view taken for the assessment year 2021-22 relevant appeals for 2022-23 and 2023-24 are allowed.

Coming to the assessment year 2023-24, apart from the issue relating to the TDS credit, there is another issue relating to the maximum marginal rate and surcharge at 37%. While processing the return of income of the assessee for the assessment year 2023-24, the assessee was not granted the credit of TDS deducted on the PAN of the deceased Boman Maneckji Mirza and when the assessee preferred appeal against such act of not granting TDS credit, while dismissing the appeal, the learned CIT(A) directed the Assessing Officer to tax on normal income at the rate of 30% and held that surcharge is applicable at the rate 30% as the tax is chargeable at MMR.

Challenging this direction, assessee preferred this appeal. Learned AR placed reliance on the decision of coordinate Bench of this Tribunal in the case of Estate of Late Harkishin Bhojraj Chanrai Vs. DCIT in dated 29.06.2022 and submitted that under section 168(1)(b) of the Act, the income has to be charged to tax as per normal slab rates applicable to an individual assessee as per Para A of Part I of the First Schedule of the Finance Act,2019.

In the case of Estate of Late Harkishin Bhojraj Chanrai (supra), there were two Executors of estate of Mr.Harkishin Bhojraj Chanrai and they formed into an AOP. The Tribunal after considering these facts held that the income was to be charged as per normal slab rates applicable to an individual assessee as per Para A of Part I of the First Schedule of the Finance Act,2019. Following the same, we direct the Assessing Officer to calculate the tax as per normal slab rates applicable to an individual assessee as per Para A of Part I of the First Schedule of the Finance Act relevant for assessment year 2023-24.

In the result, appeals of the assessee for the assessment years 2021- 22, 2022-23 and 2023-24 are allowed. Order pronounced in the open court on this the 20th day of September, 2024.