AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1142
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....gain/loss on sale of residential apartment was offered in the hands of the appellant, and hence was rightly entitled to the credit of entire Tax Deducted at Source, including that of his spouse. That, the intimation passed u/s 143(1) is bad in law, patently wrong and the Assessing Officer (CPC) may be directed to give balance credit of TDS of Rs. 14,59,120/- being TDS deducted of spouse, to the appellant. 2. That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises." 2. The issue in present case relates to giving credit of TDS of Rs. 14,59,120/- claimed by assessee in the return of income but not allowed by AO in aforesaid intimation u/s 143(1). The Ld. AR explained all facts of case in the open court with reference to various documents filed in Paper-Book. The facts narrated by Ld. AR are neatly submitted by him in Written- Synopsis; hence the same is scanned and re-produced below: BEFORE THE HON'BLE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE IN THE MATTER OF SHRI DEEPAK PAREKH ITA 126/IND/2025 (Assessee's App....
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....offered by the appellant in his return of income for AY 2022-23. (Refer page 110 of Paper Book) 8. The appellant filed a rectification applications u/s 154 on 06.11.2022 and 13.12.2022, seeking credit of Rs. 14,59,120/- deducted by the purchasers in the name of the assessee's wife. The said applications u/s 154 was rejected on 02.12.2022 and 23.12.2022 as there was mismatch of TDS because only credits appearing in 26AS of the appellant were considered. 9. Then the appellant filed a revised return u/s 139(5) on 31.12.2022 changing the claim of TDS from the head "TDS deducted in own hands to TDS credit relating to self /other person [spouse as per section 5A/other person as per rule 37BA(2)]" but to no avail, as claim of TDS of Rs. 14,59,120/- relating to spouse was still denied. (copy of relevant page of ITR 2 at page 9 of the Paper Book) 10. The Assessing Officer (CPC) Bangalore passed another intimation u/s 143(1) on 02.03.2023, processing the revised return filed u/s 139(5). In the said intimation, the entire capital loss of Rs. 11,80,710/- arising on the sale of residential. apartment at Bangalore was again accepted but TDS of Rs. 14,59,120/- deduc....
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....lore. 3. It was specifically requested that the TDS be deducted only in the name of the assessee Shri Deepak Parekh but this request was not acceded by the purchasers who went on to deduct TDS of Rs. 14,59,120/- in the hands of both Shri Deepak Parekh and Smt. Naina Parekh as the apartment was registered in the names of Shri Deepak Parekh and Smt. Naina Parekh. 4. It is a general practice that when a house property is purchased, it is usually purchased in joint names particularly when it is between a husband and a wife for the purpose of smooth succession etc. Just because the wife is added as a joint owner of the property in the purchase deed, does not make the wife the beneficial owner of the property. The beneficial ownership of such jointly owned house belongs to respective joint owner in the ratio in which contribution for buying the property was made. In case a person has not contributed anything for the property he does not have any beneficial ownership in the property even if he is added as the first joint owner in the purchase deed. So, while selling the joint property, it is the beneficial owner who is entitled to receive the money in case he has fully c....
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....for the proportionate tax deducted at source shall be given to such other person and not the deductee. The proviso to sub- rule (2) provides for deductee filing a declaration with the deductor giving particulars of the other person to whom credit is to be given. On receipt of such declaration, the deductor shall issue certificate for the deduction of tax at source in the name of such other person. The crux of section 199 read with Rule 37BA(2) is that if the income, on which tax has been deducted at source, is chargeable to tax in the hands of the recipient, then credit for such tax will be allowed to such recipient. If, however, the income is fully or partly chargeable to tax in the hands of some other person because of the operation of any provision, like section 64 in the extant case, the proportionate credit for tax deducted at source should be allowed to such other person who is chargeable to tax in respect of such income, notwithstanding the fact that he is not the recipient of income. It is with a view to regularise the allowing of credit for tax deducted at source to the person other than recipient of income, that the proviso to Rule 37BA(2) has been enshrined necessitating....
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....is also drawn from the decision of the Hon'ble ITAT Delhi SMC-I Bench in the case of Ankit Mittal VS. ITO reported in 47 CCH 0876 (copy attached at pages 123 to 134 of Paper Book)) Though the facts of that case is on a different footing than the case before your Honour but the concept of beneficial ownership taking into consideration the funding pattern has been clearly outlined by the Hon'ble Tribunal and the case was accordingly decided in favour of the assessee. 11. We draw your Honour's kind attention to the income tax return of the assessee appellant and his wife Smt. Naina Parekh for AY 2022-23. In both cases there is refund of tax. Now just for the sake of argument but not accepting what would have been the position if the capital gain / loss in this case arising on the sale of apartment no. B-1203, Wing-B, 12th Floor, Cedar Block, Greenage, Bangalore would have been split into two or shown by both the assessee appellant and his wife Smt. Naina Parekh? The capital loss of Rs. 11,80,710/- would have been split into two viz Rs. 5,90,355/- each. In that case Smt. Naina Parekh would have claimed the TDS deducted of Rs. 14,59,120/- in her ITR and the Assessin....
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....also declared 100% rental income of Rs. 2,31,000/- earned from impugned property (before the date of sale) in his return. The assessee also claimed credit of 100% TDS of Rs. 29,18,240/-. The assessee's wife neither declared capital gain nor rental income from impugned property nor claimed credit of TDS also. While processing assessee's return u/s 143(1), the AO though assessed 100% of capital gain and rental income in assessee's hands as declared in assessee's return yet he did not allow credit of 100% TDS of Rs. 29,18,240/- to assessee. The AO allowed credit of Rs. 14,59,120/- only as reflected in Form No. 26AS of assessee and denied the credit of TDS of Rs. 14,59,120/- appearing in Form No. 26AS of assessee' wife. During first-appeal, the CIT(A) has also upheld AO's order. Therefore, the assessee is contending for giving credit of TDS of Rs. 14,59,120/- appearing in Form No. 26AS of assessee's wife. 4. We have heard learned Representatives of both sides and carefully perused the case-record. 5. At first, Ld. AR for assessee carried us to various documents filed in Paper-Book to show that the sold property was fully owned by assessee individually;....
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....nished by the deductor to the income-tax authority or the person authorised by such authority. (2) (i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee: Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1). (ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. (iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his sa....
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....dering the provisions of section 64, the assessee suo motu included such interest income of Rs. 37.42 lakh in his total income and claimed credit for the proportionate tax deducted at source at Rs. 2,80,656/-, which got denied by the authorities on the ground that the mandate of Rule 37BA was not fulfilled. 5. Section 199(1) of the Act, with the marginal note 'Credit for tax deducted', provides through sub-section (1) that the amount of tax deducted at source on the amount of income shall be treated as payment of tax on behalf of deductee. Sub-section (3) of section 199 is relevant for our purpose, whose material part states that: `The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub- section (2) .... '. Thus it is overt that sub-section (3) recognises that where the income on which tax was deducted at source in the hands of 'A', is actually chargeable to tax in the hands of 'B', credit for tax deducted at sourc....
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.... some other person because of the operation of any provision, like section 64 in the extant case, the proportionate credit for tax deducted at source should be allowed to such other person who is chargeable to tax in respect of such income, notwithstanding the fact that he is not the recipient of income. It is with a view to regularise the allowing of credit for tax deducted at source to the person other than recipient of income, that the proviso to Rule 37BA(2) has been enshrined necessitating the furnishing of particulars of such other person by the recipient for enabling the deductor to issue TDS certificate in the name of the other person. The proviso to Rule 37BA(2) is just a procedural aspect of giving effect to the mandate of section 199 for allowing credit to the other person in whose hands the income is chargeable to tax. The entire purpose of this exercise of allowing credit to the other person is to ensure that the benefit of tax deducted at source is availed once and that too, by the right person, who is chargeable to tax in respect of such income. It is just to streamline the procedure for giving effect to this intent and rule out the possibility of taking any inapprop....