Tax Deducted at Source credit dispute concerning beneficial ownership and unregistered family arrangement, credit awarded to family members.

Dispute over entitlement to tax deducted at source credit where purchaser deducted TDS in the names of the assessee's spouse and child is decided by reference to legal versus beneficial ownership; because the familial arrangement transferring beneficial interest was unregistered and the sale agreements were executed only in the spouse's and child's names, the assessee's claim to TDS credit is refused and credit is directed to the spouse and child respectively. Revenue is directed to verify TDS credit and may allow revision of returns to give credit to the spouse and child after due approval; the assessee's refund entitlement is limited to the stated lesser amount.

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1. ISSUES PRESENTED AND CONSIDERED

1. Whether the assessee was entitled to credit of TDS of Rs. 9,82,156 and consequential refund/interest, where TDS was deducted and reflected in the names of other persons who were the legal owners and signatories to the sale agreement.

2. Whether a non-registered "family arrangement" not reflected in the registered sale documentation could justify granting TDS credit in the assessee's hands despite TDS having been deducted in the hands of the legal owners/signatories.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement of the assessee to TDS credit/refund where TDS was deducted in the names of other persons

Legal framework (as discussed in the judgment): The assessee claimed TDS credit by relying on Section 199 read with Rule 37BA; the return was processed under Section 143(1).

Interpretation and reasoning: The Court found that the purchaser deducted TDS in the hands of the assessee's wife and son, who were the legal owners and were the signatories to the agreement for sale. The assessee was neither shown as the recipient in the TDS deduction nor established as a party with authority in the sale agreement. Since the TDS stood in the names of the wife and son, the assessee's claim for credit in his own account was held not maintainable on the facts as recorded.

Conclusions: The assessee was held not entitled to the TDS credit of Rs. 9,82,156 or the corresponding refund/interest; his refund remained limited to the amount already determined on processing (Rs. 11,960).

Issue 2: Effect of the unregistered family arrangement on TDS credit claim

Legal framework (as discussed in the judgment): The assessee relied on the family arrangement to contend exclusive rights in specified floors/units and sought TDS credit accordingly; the Court evaluated this claim against the documentary record of ownership and sale.

Interpretation and reasoning: The Court held that the family arrangement dated 12 September 2014 was not registered and, as recorded, it stated that the assessee would not have right, title, or interest in the land except as permitted by the wife and son. Crucially, the arrangement did not reflect in the final agreement for sale, and the assessee was not shown as having authority or status as a confirming party for the sale. On these facts, the Court concluded that the family arrangement could not displace the position arising from the sale documentation and TDS deduction particulars.

Conclusions: The unregistered family arrangement, not carried into the sale agreement and not conferring sale-related authority in the executed documents, did not support the assessee's claim for TDS credit. The Court directed that TDS credit be considered in the hands of the wife and son after verification, and indicated they may seek relief by revising their returns after obtaining due approval under Section 119(2)(b).

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