Concept - real beneficiary for deducting TDS

[RUPESH SRIVASTAVA]

Client of mine received compensation and he apporached the court for higher compensation and mean time the compensation received was kept with a bank in fixed deposit account in the name of the court were my client was beneficiary. later case was decied my client favour and Fixed deposit was transferred in my clients name along with interest and interest was claimed as exempt income. in the due course banks have deducted TDS on interest that too after six months from the due date for deducting TDS. now my querry is 1. is there any concept called real beneficiary for deducting TDS from interest income. 2.whether the TDS deducted by bank was late whether the same is allowed. 3. as per section 194A read with section 196 governments are exempted from deducting TDS, whether courts are also come under this provisions.

It appears that your answer to your query gets a reference from new rule 37BA of the income tax rules 1962. If the certificate is issued in the name of your client in that there should not be an issue. In case, the certificate is issued in different name, you may approach the bank for necessary collected necessary evidence and the order of the court may also help you to claim the benefit of TDS in favour of your client. Further, since the bank had deducted and deposited TDS, the second and third issue may not pursued.

AI Summary

Real beneficiary for TDS: beneficiary-named certificate supports TDS credit where deposit was held in an intermediary name.
If documentary evidence and a certificate name the recipient as the payee, that person may be treated as the real beneficiary for claiming TDS credit on interest held in an intermediary name; rule 37BA supports recognition of the person named in the certificate. Where the bank has deducted and deposited tax, practical remedy lies in claiming credit or adjustment in favour of the named beneficiary using the certificate and related court order rather than contesting the timing of deduction; exemption questions turn on the applicable statutory exemption status of the intermediary.