2022 (5) TMI 278 - AT - Income Tax

Tribunal grants TDS credit to legal heir, allows filing return under Section 159, corrects interest calculation.

The Tribunal allowed the appeal, directing the CPC to provide the TDS credit of Rs.1,34,220/- deducted under the deceased father's PAN to the assessee. It ... TDS credit on income deducted in the PAN of his late father - TDS on fixed deposit income made in assessee's father’s name - income is offered by the assessee in his individual capacity as sole legal heir - assessee is the only legal heir of his deceased father and his mother is also pre-deceased her husband - HELD THAT:- As relying on case of Naresh Bhavani Shah (HUF) [2017 (7) TMI 819 - GUJARAT HIGH COURT] it is crystal clear that there are provisions of under the IT Act; namely, section 199 of the IT Act, 1961 and Rule 37BA of the IT Rules, 1962 and proper mechanism is also provided under the Act and Rules. Thus,the assessee is entitled to get credit on TDS which was deducted in the PAN of his late father. However, the entire income is offered by the assessee in his individual capacity as sole legal heir. Apart from that, the assessee also paid self assessment tax on the above income. Thus, the grounds of appeal raised by the assessee allowed. Issues Involved:1. Denial of TDS Credit for Deceased Father's Income.2. Requirement to File Separate Return for Deceased Father's Estate.3. Calculation of Interest under Sections 234B and 234C of the Income Tax Act.Detailed Analysis:1. Denial of TDS Credit for Deceased Father's Income:The assessee, a non-resident individual, inherited movable and immovable properties from his late father. For AY 2018-19, the assessee declared the income derived from these properties, including interest income from Bank of Baroda, in his return. The Centralized Processing Center (CPC), Bengaluru, processed the return and denied the TDS credit of Rs.1,34,220/- deducted under the PAN of the deceased father. The CIT(A) upheld this denial, stating that the TDS credit could not be treated as prepaid tax for the assessee since it was under the deceased father's PAN. However, the Tribunal found that since the income was declared by the assessee and accepted by the Revenue, the corresponding TDS credit should also be allowed to the assessee. The Tribunal directed the CPC to provide the TDS credit to the assessee, referencing Section 159 of the Act and Rule 37BA of the Income Tax Rules, 1962, which allow credit for TDS in cases where income is assessable in the hands of a person other than the deductee.2. Requirement to File Separate Return for Deceased Father's Estate:The CIT(A) questioned why the return for the deceased father was not filed separately as the estate/legal heir of the deceased. The CIT(A) noted that there is no provision under the Act allowing the income of the deceased to be clubbed with the income of the legal heir. The Tribunal, however, noted that the assessee, being the sole legal heir and a non-resident, declared the entire income in his return and paid self-assessment tax. The Tribunal found that the CIT(A)'s observation was legally incorrect and emphasized that Section 159 allows the legal heir to file the return of income for the deceased. The Tribunal concluded that the assessee should not be denied the benefit of TDS on the fixed deposit income made in the deceased father's name.3. Calculation of Interest under Sections 234B and 234C of the Income Tax Act:The assessee contested the interest charged under Sections 234B and 234C of the Act. The AO charged interest of Rs.23,641/- under Section 234B and Rs.19,257/- under Section 234C, which the assessee claimed were incorrectly calculated. The Tribunal noted that these charges are consequential and did not require separate adjudication. Consequently, the grounds related to the interest charges were allowed in favor of the assessee.Conclusion:The Tribunal allowed the appeal of the assessee, directing the CPC to provide the TDS credit of Rs.1,34,220/- deducted under the deceased father's PAN to the assessee. The Tribunal also addressed the incorrect calculation of interest under Sections 234B and 234C, allowing the related grounds of appeal. The judgment emphasized the application of Section 159 and Rule 37BA, ensuring that the legal heir receives the appropriate tax credits for the income declared.