How to Handle Wrong TDS Credit and PAN Mismatch in Doctor-to-Doctor Hospital Rent Agreements (Section 194J

[Sundaraiah kollipara]

SIR,

 A doctor (landlord) has rented out their hospital premises to another doctor (tenant), who provides healthcare services there. The tenant doctor earned Rs. 40 lakhs from a healthcare trust for medical services rendered, but the payment was mistakenly credited to the landlord  doctor’s bank account. TDS under Section 194J was deducted, and this amount is now showing in the landlord doctor’s AIS (Annual Information Statement), linked to their PAN.

The healthcare trust has stated that it cannot change the PAN or reissue the TDS certificate.

For income tax compliance, how should the Rs. 40 lakhs be correctly transferred from the landlord to the tenant doctor? Can this transfer be done without triggering further TDS or tax implications? What is the correct procedure to document this transfer and clarify ownership of income for tax purposes?”

This situation involves misreporting of income in the wrong PAN due to a payment error. Here’s how the landlord (recipient doctor) and tenant (actual service provider) should address it without triggering double taxation or further TDS:

[Ramanathan Seshan]

Dear Sundar,

Landlord = A

Other doctor =B

It is possible to transfer this TDS credit.

1. Take declaration from A on transfer of credit 

2. Make a submission of the declaration copy to AO"S

3. Get their NOC

4. When A files ITR, he can credit to B"s PAN

5. B can claim it in his ITR

please contact me in case u have any doubts

AI Summary

TDS credit transfer procedures enable correction of PAN-linked miscredited payments and reallocation to the actual service provider. Where payment and TDS under professional services were miscredited to the wrong PAN and the payer cannot amend records, the registered recipient should execute a written declaration transferring the TDS credit, submit it to the assessing officer and obtain acceptance/NOC; the donor should record the transfer when filing its ITR and the true service provider should claim the credit in its ITR, retaining the declaration, AO communications and payment records to document income ownership and prevent duplicate taxation.