TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 394
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct, claiming the same as refund. 3. The learned Commissioner ought to have appreciated that the income from the rent is being assessed in the hands of partners as per the orders of the Hon'ble ITAT, whereas, the tax is being deducted in the name of firm, therefore, denying refund in the hands of firm when the income is assessed in the hands of partners, leads to unjustified enrichment of the state, as the tax is collected in the hands of firm and also the partners paid tax on the income offered from rent. 4. The appellant craves leave to add to, amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary." 2. Succinctly stated, the assessee firm had filed its return of income for the A.Y. 2022-23 on 05.11.2022, declaring a loss of Rs. 12,22,906/- and had raised a claim of refund of Rs. 20,57,372/- on account of Tax Deducted at Source (TDS). The A.O., CPC, Bangalore, while processing the return of income, however, granted credit for TDS of Rs. 49,187/- only, resulting in a refund of Rs. 50,660/-. 3. Aggrieved the assessee assailed the intimation issued by the A.O./CPC under Section 143(1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eductor 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 safe custody. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....necessary declarations requesting that TDS be issued in the name of partners (co-owners). Despite the deficiency letter dated 14/12/2022 issued and duly served upon the appellant's registered email id by the AO, CPC, no such action has been carried out by the appellant and the TDS continues to appear in his own PAN without offering the corresponding income. 6.3.3. As on the date of processing, the impugned income was appearing in Form 26AS of the appellant's PAN but was not included in the total income in the return filed by the appellant, credit for such TDS was not allowed and necessary adjustments u/s 143(1)(a) have been carried out by CPC as per the Act which is found to be tenable on facts and in law. 6.3.4. The short credit of TDS granted in respect of TDS deducted against its own PAN is dependent upon the filing of TDS statement by the deductor as mandated u/s 199 and rule 37BA(1). If there is any mismatch in the TDS claim as per the return vis a vis the TDS statement filed by the deductor, the same can be rectified by getting appropriate correction statement filed by the deductor. Appellant is at liberty of seek appropriate remedy thereafter. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee firm, in its return of income for the preceding year, declared income from property and loss from the business of maintenance. The A.O., while framing the assessment in the case of the assessee firm for the A.Y. 2001-02 declined its claim for treating the maintenance receipts, as its "Business Income" and brought the same to tax under the head "Income from Other Sources." On the other hand, the assessee firm continued with its claim that the maintenance charges were taxable in its hands under the head "Business Income." 8. On appeal before the Tribunal, the assessee, by way of an additional ground of appeal, claimed that in case it was to be held that the maintenance receipts were not to be assessed as the business income of the assessee, then no association of persons could be found in existence, and the income should be assessed in accordance with the provisions of Section 26 of the Act. 9. We find that the Tribunal in the case of the assessee firm for the A.Y. 2001-02 in ITA No.418/Hyd/2004, had held that the letting out of the building on rent and doing nothing more either during the financial year under consideration or in the subsequent financial year did not amou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....from the subject property falling to their share in the respective hands and paid taxes on the same. 12. The assessee firm, following the directions given by the Tribunal in A.Y. 2001-02 and subsequent years, had filed its return of income admitting nil income, as the corresponding income, i.e., rental receipts on which Tax Deducted at Source (TDS) was offered in the hands of the respective partners. It was, thus, based on the aforesaid facts that the assessee firm, in its return of income, had raised a claim of refund of Rs. 20,57,372/- (supra), as the same was deducted in its name, as per Form No. 26AS, while for the corresponding income, as per the directions of the Tribunal, was disclosed/offered for tax by the respective partners in their individual hands. However, the assessee's claim for credit of Tax Deducted at Source (TDS) was rejected by the A.O./CPC vide its intimation issued under Section 143(1) of the Act, dated 27.03.2023 for the reason that the corresponding income had not been accounted for by the assessee firm in its return of income. 13. Controversy involved in the present appeal boils down to the solitary aspect, i.e., the entitlement of the assessee f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. (3) 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) and also the assessment year for which such credit may be given. Also, it is relevant to cull out the provisions of Rule 37BA of Income Tax Rules, 1962, which has to be read along with the aforesaid Section 199 of the Act and provides as under : Credit for tax deducted at source for the purposes of section 199. 37BA (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. 18. On a perusal of Section 199 of the Act, it contemplates that any deduction of tax at Source (TDS) shall be treated as payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of the property or of the unit-holder or of he share holder, as the case may be. It takes us to Rule 37BA(2)(i) of the Income-tax Rules, 1962, which inter alia contemplates a situation, 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, then the credit for the whole or any part of the TDS, as the case may be, shall be given to such other person, and not to the deductee. However, Rule 37BA(2)(i) comes with rider in form of a "Proviso" which puts an obligation on the deductee to file a declaration with the deductor, who then reports the tax deduction in the name of the other person in the information in relation to the deduc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ture and sub-servient to give effect and aid the substantive provision cannot be allowed to come in the way of implementation of the aforesaid statutory provision. In other words, let us presume that an income, as in the case of the assessee before us, is assessable in the hands of a person other than the deductee, but the deductor had deducted tax at source (TDS) in the hands of the deductee, then it cannot be presumed that if the pre-condition laid down under the "Proviso" to Rule 37BA(2)(i) is not satisfied, the other person, in whose hands the income is liable to be assessed, would be disentitled of his statutory right of credit of the amount of corresponding Tax deducted at Source (TDS) on the subject income. Our aforesaid view that the income and deduction of Tax Deducted at Source (TDS) must go hand-in-hand is supported by the judgment of the Hon'ble Supreme Court in the case of ITO, Lucknow Vs. Bachulal Kapoor, (1966) 60 ITR 74 (SC). The Hon'ble Supreme Court, in its order, had observed that, in the context of the facts involved in the case before them, that if the assessment proceedings initiated under Section 34 of the Income-tax Act, 1962, in the hands of the mem....