TaxTMI 
TaxTMI 
TaxTMI 
In Sidhesh Mohan Raikar Versus Deputy Director of Income Tax, Centralized Processing Centre, Bangalore - 2025 (12) TMI 972 - ITAT PUNE, the appellant, in the present appeal, filed his return of income for the Assessment Year -2023-24 on 17.07.2023 declaring income of Rs. 1,72,59,110/-. The said return was processed under section 143(1) of the Income Tax Act, 1961 (‘Act’ for short) on 11.12.2023 accepting the returned income but denied the Tax Deducted at Source credit of Rs. 17,87,367/- as claimed by the petitioner. The appellant filed rectification applications under section 154 read with section 143(1) of the Act. However, the same were rejected. Against this order the appellant filed the present appeal before the Income Tax Appellate Tribunal (‘ITAT’ for short).
The appellant raised the following grounds in the appeal-
- The Commissioner of Income Tax, Centralised Processing Centre (‘CPC’ for short) Bengaluru has erred in upholding rectification order passed under section 154 of the Act, by Deputy Director of Income Tax, CPC, Bengaluru by allowing only proportionate TDS credit of Rs. 33,55,983/- based on Rule 37BA of Income Tax Rules, 1962; as against Rs. 45,28,441/- claimed by the appellant.
- The Commissioner, Bengaluru has erred in not providing full TDS credit of Rs. 10,36,269/- to the appellant ignoring the provisions of Section 199 of the Income Tax Act, 1961 and non-applicability of Rule 37BA (2) of Income Tax Rules, 1962.
The appellant submitted the following before the ITAT-
- The appellant is Governed by Portuguese Civil Code 1860.
- As per section 5A of the Act, being a resident of Goa the appellant is governed by the system of Community Property and the income of husband and wife under any heads of income (other than under the head salary) shall be apportioned equally and such apportioned income is to be added in the total income of husband and wife respectively.
- The appellant has claimed TDS of Rs. 45,28,441/-, comprising of tax deducted at source of salary at Rs. 35,22,412/- and the Rs. 10,36,269/- deducted on Income from ‘Other Sources’ which is required to be apportioned equally between the appellant and his wife.
- Rule 37BA of the Income Tax Rules 1962 are not applicable in the given case because there is no reference of application of Section 5A of the Act.
- Therefore, the remaining amount of Rs.10,36,269 should be refunded to him.
The Revenue supported the order of the Commissioner of Income Tax.
The ITAT considered the submissions of the appellant and the Department. The ITAT observed that there was no dispute that the appellant is a resident of Goa and covered under Portuguese Civil Code, 1860. The ITAT analysed the provisions of Section 5A of the Act which deals with the apportionment of income between spouses governed by Portuguese Civil Code.
The ITAT further observed that the appellant Rs. 1,01,100/- and Tax collected at source of Rs. 30,340. The CPC has duly given the credit of advance tax as well as tax collected at source. However, for the TDS of Rs. 45,28,441/- the claim has been allowed only at Rs. 33,55,983/-. The remaining credit of Rs.11,72,458/- was not allowed by the Commissioner of Income Tax.
The ITAT further observed that the provisions of Section 5A of the Act allows the income of husband and wife, other than income from salary shall be equally apportioned between the both. The apportionment of her income within the Appellant's total income comes to Rs. 3,49,596/-. Accordingly, the proportionate TDS on other income, amounting to 33,555/- (50% of 67,111/-), should have been claimed by the appellant in his return of income. However, this apportioned TDS credit has not been claimed by the appellant and the same cannot be allowed to be claimed in the appeal.
The ITAT directed the Assessing Officer to verify the Appellant's return of income along with that of his wife for AY 2023-24 and ascertain the total income offered and the TDS claimed against the same. The appellant’s wife has not offered the proportionate income of the appellant to tax in her return for the year under consideration then no proportionate TDS allowance is required to be made in her hands. However, the appellant has offered the entire income to tax in his return for the relevant year then the Assessing Officer is directed to allow full TDS credit offered by the appellant. The Assessing Officer shall give an opportunity of being heard to the appellant and call for requisite details. The ITAT allowed the appeal partly on the first ground.
The ITAT observed that out of TDS of Rs. 45,28,441/- sum of Rs. 35,22,412/- has been deducted on the salary income received by the appellant. Section 5A of the Act has no application on the salary income earned by individual, the appellant deserves to get the benefit of TDS of Rs.35,22,412/- deducted on salary income. On the remaining amount of TDS at Rs.10,36,269/-, the appellant has claimed that the wife has not claimed 50% of TDS on Rs.10,36,269/- in her return and she has paid the due taxes calculated on the income offered.
The ITAT then analysed the provisions of Rule 37A. The ITAT found that there is no reference about the tax credit to be given to the persons who are governed by the Portuguese Civil Code, 1860 and fall under section 5A of the Act. Therefore, the application of Rule 37BA by the CPC is not in accordance with law in the instant case.
The ITAT held that since the TDS deducted at Rs.10,36,269/- on the income other than the income under the head salary is reflecting under the name and PAN of the appellant and Rule 37BA is not applicable on the appellant who is governed by Section 5A of the Act, the credit of TDS of Rs.10,36,269/- should be given to the appellant.
The ITAT directed the Assessing Officer to give the total tax credit for TDS claimed by the appellant at Rs. 45,28,441 which is shown in the income tax return. The ITAT allowed the appeal filed by the appellant.