TaxTMI 
TaxTMI 
2023 (1) TMI 427
X X X X Extracts X X X X
X X X X Extracts X X X X
....eirs and directing the AO to take appropriate remedial action without appreciating that it was not within his jurisdiction to make any such observation and in any case as per the provisions of Section 159 of the Act only the income earned / received up to the date of death i.e. 22.02.3013 could be assessed in the case of late Late Shri Hari Shankar Singhania through the legal heirs. 3. That the order passed by CIT(A) is unjustified, unreasonable and without considering correctly the factual and the legal position." 3. The facts, briefly stated are that Shri Hari Shankar Singhania died on 22.02.2013. He was a Non-Executive Director of two companies, namely JK Lakshmi Cement Ltd. ("JKLC") and JK Tyre & Industries Ltd. ("JK Tyre"). After his death, all assets and liabilities devolved to his Estate known as "Hari Shankar Singhania Estate". The Executor of the Estate filed return of income of the Estate for the period from 23.02.2013 to 31.03.2013 in accordance with section 168 of the Income Tax Act, 1961 (the "Act") for AY 2013-14. Return of income for the period 01.04.2012 to 22.02.2013 was also filed for AY 2013-14 in the individual capacity of Shri Hari Shankar Singhania which wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....50,00,000/- on which TDS has been deducted by the two companies. For the sake of clarity, the findings of the Ld. CIT(A) are reproduced herein below:- "4.3 I have considered the facts of the case and the submission2013 ft is observed that Late Shn Hari Shankar Smghania who expired on 22.02.2013 was due to get commission for the services rendered by h.im during the period from 01.04.2012 to 22.02.2013_to the two companies JK Lakshmi Cement Ltd. and JK Tyre & .Industries Ltd.. These two companies declared payment of commission of Rs. 90 lakhs and Rs. 60 lakhs respectively to Late Shn Han Shankar Singhania in the month of May 2013. Late Shri Han Shankar Sighania was Non Executive Chairman of the Board of Directors of both these companies At the time of payment of this commission of Rs. 1.50 crores, these companies deducted TDS of Rs. 15 lakhs by using the PAN of the Estate of Late Shn Hari Shankar Singhania i.e. the appellant. The appellant did not show this commission income of Rs. 1.50 crores in its Return of Income, in respect of which it has been stated by the AR that this income does not belong to the Estate. From the assessment order, it is observed that the AO has held this i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tax referred to in sub-rule (1) and shall keep the declaration in his safe custody. (3) (i) 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. (ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax. (4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of - i. the information relating to deduction of tax furnished by the deductor to the income- tax authority or the person authorized by such authority: and ii. the information in the return of income in respect of the claim for the credit, subject to verification in accordance with the risk management strategy formulated by the Board from time to time." As per Rule 37BA(2)(i), where income is assessable in the hands of a person other than the deductee, credit for tax deducted at source shall be given to the other person and not the deductee. In this case, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the nature of TCS is nothing but tax which has been statutorily recognised in the Income tax Act and the Rules are enabling and procedural in nature and absence thereof cannot result in denial of credit of TCS. This issue also find supports from the decision of the Co-ordinate Bench in case of ACIT. Circle-2, Udaipur vs. Shri Krtshnalal Meel & party (supra). 2 8 In the instant case, the Id. AR has submitted that the income has been brought to toxin the hands of the assessee firm and accordingly the credit for TCS should be granted to the assessee firm. In this regard, we find that there is no findings of fact by the AO in this regard and in A.Y. 2012-13 the Id. CIT(A) has stated that ''the claim of the appellant that all the income of partners of the firm, has been include in the income of the appellant is also not fully verifiable from the documents filed by the appellant." 2 9 In light of above discussions, we set-aside the matter in both the years to the file of the AO with the directions to verify whether the corresponding income in respect of which TCS has been claimed by the assessee firm has been brought to tax in the hands of the assessee firm or not Where aft....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me Tax Rules specifically authorise the assessee to retain TDS certificates and to produce it and claim credit in the year in which income on which recovery of tax made is returned for assessment. As of now, the Act does not provide that assessees should return the income for assessment, in the assessment year following the previous year in which tax is recovered at source and TDS certificate is issued by the payer and if so provided assessment and credit of tax will go together which will avoid botheration for the assessees as well as for the Departmental Officers. In our view, the provisions contained in sub-sections (1) and (3) of Section 199 read with Rule 37BA of the Income Tax Rules serve a purpose because if income is not assessable in the assessment year and at the same time assessees are entitled to credit of tax recovered and remitted in respect of such income, the Department will be compelled to refund the entire tax amount every year and along with it if refund is not made within three months from fling of return, mandatory interest will also payable, as provided under Section 243(1) of the Income Tax Act which Will defeat the purpose of TDS provisions in the Act. There....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9 of the Act read with Rule 37BA of the Income Tax Rules, 1962. Accordingly, the decision of the AO is upheld and the ground of appeal is dismissed." 8. Being aggrieved, the assessee is before the Tribunal and all the grounds of appeal relate thereto. 9. The Ld. AR reiterated the same arguments which were advanced before the Ld. AO/CIT(A). He further submitted that the Ld. CIT(A) was not legally correct in directing the Ld. AO to take appropriate remedial action. It was not within his jurisdiction to make any such observation. His order is without considering correctly the factual and legal position of the case. 10. The Ld. CIT (DR) filed a written submission wherein after narrating the facts of the case, he emphasised that the impugned receipt of commission of Rs. 1.5 crores has neither been declared in the ITRs of Hari Shankar Singhania Estate, the assessee for AY 2013-14 or 2014-15 nor in the return filed by the legal heir of Shri Hari Shankar Singhania (individual) for AY 2013-14. However, the credit of corresponding TDS of Rs. 15,00,000/- has been claimed in the ITR for AY 2014-15 of the assessee, namely Hari Shankar Singhania Estate. In view of non disclosure of the impugn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....edly has not been done and thus escaped assessment. 12. The impugned commission receipt of Rs. 1,50,00,000/- has not even been declared in the return filed by the assessee at hand, namely Hari Shankar Singhania Estate for AY 2014-15 in accordance with the provisions of section 168 of the Act. But TDS of Rs. 15 lakhs as reflected in Form 26AS has been claimed. This has been denied by the Revenue Authorities. 13. Section 199 of the Act deals with credit for tax deducted at source. It says that any tax deducted and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made and that the CBDT may frame rules for the purpose of giving credit including giving credit to a person other than the person from whose income the deduction was made and also the assessment year for which such credit may be given. 14. CBDT has framed Rule 37BA of the Income Tax Rules, 1962 which contains the conditions for granting credit for TDS for the purposes of section 199 of the Act. The Ld. CIT(A) has extracted Rule 37BA in para 4.3.1 of his appellate order which we have reproduced earlier. The Ld. CIT(A) took notice of the decision ....