TDS credit and PF/ESI deduction allowed where tax was linked to representative receipts and payments were made before return filing due date.

TDS credit on interest from FDRs could not be denied merely because the corresponding income was not assessed in the assessee's hands, where the assessee received the funds in a representative capacity as nodal agency for State funds; the Tribunal upheld the credit in favour of the assessee. Employees' contributions to PF and ESI were allowable because they were deposited before the due date for filing the return, and the disallowance was deleted notwithstanding delay under the welfare enactments. The Revenue's appeal failed in full, and the relief granted by the first appellate authority was sustained on both issues.

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Issues: (i) Whether TDS credit deducted on interest earned on FDRs could be denied merely because the corresponding interest income was not assessed in the assessee's hands. (ii) Whether employees' contribution to PF and ESI, paid before the due date for filing the return, was allowable notwithstanding delay under the respective welfare enactments.

Issue (i): Whether TDS credit deducted on interest earned on FDRs could be denied merely because the corresponding interest income was not assessed in the assessee's hands.

Analysis: The credit of tax deducted at source is to be granted where the tax has been deducted on income routed through the assessee in a representative or fiduciary capacity and the corresponding receipt has not escaped tax merely because of technical objections as to the person in whose hands the income is reflected. The Tribunal followed its own earlier decisions in the assessee's case and held that the assessee, acting as nodal agency for the State's funds, was entitled to the TDS credit.

Conclusion: The issue was decided in favour of the assessee and the TDS credit was upheld.

Issue (ii): Whether employees' contribution to PF and ESI, paid before the due date for filing the return, was allowable notwithstanding delay under the respective welfare enactments.

Analysis: Where employees' contributions to PF and ESI are deposited before the due date for filing the return of income, the disallowance is not sustainable in view of the binding jurisdictional precedent and the principle applied by the higher courts that such payment satisfies the statutory requirement for deduction under the income-tax law.

Conclusion: The issue was decided in favour of the assessee and the disallowance was deleted.

Final Conclusion: The Revenue's appeal failed in full, and the relief granted by the first appellate authority was sustained on both contested issues.

Ratio Decidendi: TDS credit cannot be denied on a hyper-technical ownership objection where the deducted tax relates to income received through the assessee in a representative capacity, and employees' PF/ESI contributions paid before the return-filing due date are allowable notwithstanding delayed deposit under the respective welfare laws.

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