TDS credit allowed to appellant under Rule 37BA(2) and (3)(i) after correcting records in her PAN name

The ITAT Kolkata held that TDS credit initially recorded in the name of the deceased husband must be allowed to the appellant, who declared the income in her return, in accordance with Rule 37BA(2) and (3)(i). The AO was directed to grant TDS credit to the appellant for the relevant assessment year, provided she obtains corrected records from the deductor reflecting the TDS under her PAN and submits proof that no other person has claimed the credit. The appeal was allowed for statistical purposes.

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ISSUES:

Whether tax credit for TDS deducted in the name of a deceased person can be allowed to the legal heir who has offered the corresponding income in her return of income.Whether mismatch in the name of the deductee in TDS records precludes allowance of tax credit when the income is declared by the assessee.Whether interest under Sections 234A, 234B, and 234C of the Income Tax Act, 1961, has been correctly computed when tax credit is denied.Whether the legal heir must file a separate return as a legal representative to claim TDS credit deducted in the name of the deceased.

RULINGS / HOLDINGS:

The Court held that credit for TDS deducted in the name of the deceased husband shall be allowed to the assessee as she has offered the corresponding income in her return, relying on Rule 37BA(3)(i) of the Income Tax Rules, 1962 and relevant judicial precedents. The Court emphasized that "Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable."The Court rejected the Assessing Officer's denial of tax credit on the ground of mismatch in the name of the deductee, stating that "if the income is assessable in the hands of any other person, the credit of TDS shall be given to him for the year in which the income is shown."The Court found the computation of interest under Sections 234A, 234B, and 234C to be incorrect where it was based on denial of genuine tax credit and directed recalculation consistent with the allowed TDS credit.The Court clarified that the legal heir need not necessarily file a separate return as a legal representative to claim TDS credit if the income is offered in the assessee's return and the credit is claimed accordingly.

RATIONALE:

The Court applied Rule 37BA of the Income Tax Rules, 1962, which governs the allowance of TDS credit when income is assessable in the hands of a person other than the deductee, emphasizing the requirement of filing a declaration with the deductor to reflect the correct person's name in TDS records.The Court relied on judicial precedents from various High Courts and ITAT benches holding that TDS credit cannot be denied merely because the TDS certificate or Form 26AS reflects the name of the deceased if the income is offered by the legal heir.The Court recognized that the assessee, as the legal heir and successor of the proprietorship concern of the deceased, has offered the income of the deceased in her return, thereby entitling her to the corresponding TDS credit.The Court noted the procedural requirement that the assessee may approach the deductor to update records to reflect the correct PAN for TDS credit but held that denial of credit on the ground of non-updation is not sustainable if income is declared and accepted.No dissent or doctrinal shift was recorded; the Court followed established statutory provisions and judicial pronouncements to allow the appeals.

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