TDS on SARFAESI property sale proceeds can be refunded to the bank despite non-ownership of the secured asset.

Tax deducted at source on sale proceeds of immovable property sold under the SARFAESI framework was held refundable to the bank. Section 194IA applied to the deduction, but the bank did not become the owner of the secured asset; the borrower remained the owner and the bank acted only as a custodian of the sale proceeds. Since the income from the sale was not shown by the bank and its role was limited to recovery and accounting for surplus or deficit, the Revenue could not deny refund merely because the property sold did not belong to the bank. The bank's claim for refund was upheld.

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Issues: Whether tax deducted at source from the sale proceeds of an immovable property sold in enforcement of security interest could be refunded to the bank when the bank was not the owner of the property and the corresponding income was not shown by it.

Analysis: The amount was deducted at the time of sale of an immovable property, making Section 194IA of the Income-tax Act, 1961 the applicable provision. In a sale under the SARFAESI framework, the bank holds only possession and recovery rights over the secured asset and does not become its owner. The borrower remains the owner, while the bank acts only as a custodian of the sale proceeds and must account for surplus or deficit in accordance with law. On that basis, deduction of tax from the sale consideration did not deprive the bank of entitlement to refund merely because the asset sold did not belong to it.

Conclusion: The bank was entitled to refund of the tax deducted at source, and the challenge by the Revenue failed.

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