TaxTMI 
TaxTMI 
2026 (9) TMI 510
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....s well as ld. CIT(A) also erred in law as well as facts of the case in confirming in allowing the credit of Prepaid Taxes/TDS of Rs. 9,93,220/only instead of Rs. 12,41,130/-. The short credit SO given by the ld. AO (CPC Bangalore) and confirming by CIT(A) is totally contrary to the provisions of law and fact on the record and hence the same kindly be allowed in full. 3. Under these circumstances and facts of the case, the ld. AO (CPC Bangalore) seriously erred in law as well as on the fact of the case in denying the TDS claimed under ITR, even though admittedly, the appellant Trust was entitled; merely on surmises and conjecture and without appreciating the facts correctly. 4. The appellant prays your honour to add, amend or alter any of the grounds of the appeal on or before the date of hearing. 3. The solitary grievance of the assessee is the denial of grant of TDS credit to the tune of Rs. 2,47,910/- made by the CPC while processing the return of income u/s 143(1) of the Act. The same was denied by the CPC noting a "mismatch between the tax credits claimed and allowed" as reflected in the Form No. 26AS containing the entire detail of TDS deducted on the inco....
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....e contended that the Ld. CIT(A) has not controverted the fact that the interest income to which the TDS pertained was returned to tax by the assessee; that the interest income pertained to investment made by the assessee trust though in the name of the trustee since it could not have opened a demat account in its own name. But he contended that the Ld. CIT(A) denied the credit of TDS solely for the reason that no declaration was filed by the deductee trustee that the interest income did not pertain to it, but to the assessee trust as required by Rule 37BA(2) of the Income Tax Rules, 1962. Ld. Counsel for the assessee pointed out that the ITAT in several decisions has held the requirement of filing the said declaration to be procedural. He drew our attention to the decision of the ITAT Pune Benches in the case of Anil Ratanlal Bohora Vs. ACIT (2023) 148 taxmann.com 15 (Pune) wherein he pointed out that at para 6 and 7 of the order, the ITAT had categorically held the requirement of filing declaration as per Rule 37BA(2) of the Income Tax Rules to be purely procedural when the fact that the income on which TDS was deducted was established to not be of the deductee but of the other pe....
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....or the amount of tax deducted at source, firstly, by the recipient who is not chargeable to tax and secondly, by the person who is rightly chargeable to tax in respect of such income, that the procedural provision has been put in place in rule 37BA(2) One needs to draw a line of distinction between substantive provision [section 199 read with rule 37BA(2) without proviso) and the procedural provision [proviso to rule 37BA(2)]. Non-compliance of a procedural provision, which is otherwise directory in nature, cannot disturb the writ of a substantive provision 7. Adverting to the facts of the extant case, it is seen that out of total interest income credited to assessee's wife as per Form No. 26AS amounting to Rs. 39.26 lakh, she included interest from SBI in her total income to the extent of Rs. 1,84,212. The assessee included the remaining interest of Rs. 37.42 lakh in his income because of the applicability of section 64 of the Act. The assessee and his wife claimed proportionate tax credit, which totals up to Rs 2,94,474. This deciphers that the total interest income received by the assessee's wife got taxed partly in her own assessment and partly in the assessmen....
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....made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be. (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 (ax 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 subsection (1) and sub-section (2) and also the assessment year for which such credit may begiven" 8. Rule 37BA of I.T. Rules 1962 is reproduced below for ready reference: - "[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 begiven to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of informa....
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....visions of under the IT Act: namely, section 199 of the IT Act, 1961 and Rule 37BA of the IT Rules, 1962 and proper mechanism is also provided under the Act and Rules. Thus, applying the ratio of the above judgement also, the assessee is entitled to get credit on TDS of Rs. 1,34,220/- which was deducted in the PAN of his late father. However, the entire income is offered by the assessee in his individual capacity as sole legal heir. Apart from that, the assessee also paid self-assessment tax of Rs. 2,70,000/- on the above income. Thus, the grounds of appeal raised by the assessee; namely, Ground Nos.2 & 3 are allowed. 8. -As far as ground Nos.4 & 4.1. of appeal are concerned, the same are charging of interest u/s. 234B & 234C of the Act, which are consequential in nature and, hence, no separate adjudication is required. Thus, these grounds of appeal raised by the assessee are allowed. In the-present ca&eyyuur-Appettarrt's wife passed away and due to the same your appeflafrt enjoyed the interest received from the deceased wife's deposit and dutifully declared the same to tax. And hence, yow-appeWa-ntis eligible to get the/credit of his deceased wife's TDS as he ....
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.... Officer erred in denying the benefit of the TDS mentioned in the TDS certificates filed by the assessee's on the ground that the TDS certificate is issued in the name of the joint venture or a Director and not the assessee." 11. The Hon'ble High Court of Delhi, Court on Its Own Motion v. Commissioner of Income-tax W.P.(C) No. 2659 OF 2012 AUGUST 31, 2012 held as follows: - "The second aspect relates to credit of TDS by the taxpayers even when tax is not been credited or paid to the government We do not think that it will be appropriate to address this question in a PIL. We have entertained this PIL not to decide individual claims but in view of the general problems faced by the tax payers specially small tax payers/individuals regarding issue of refunds, which are denied on the basis of wrong or bogus demands or incorrect record maintenance and the problem faced by them in getting full credit of the tax. which is deducted from their income and paid to the Revenue. The problem is apparent, real and enormous It has escalated because of Centralized Computerization and problems associated with the incorrect and wrong data which is uploaded by both the deducto....
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....n order to appreciate the arguments, it would be relevant to refer to the provisions of Section 190, Section 199, Section 206C and the Rule 37BA(2)(i) of Income tax Rules. Section 190 reads as under: "(1) Notwithstanding that the regular assessment in respect of any income is to be made in a later assessment year, the tax on such income shall be payable by deduction or collection at source or by advance payment or by payment under sub-section (LA) of section 192, as the case may be, in accordance with the provisions of this Chapter. (2) Nothing in this section shall prejudice the charge of tax on such income under the provisions of sub-section (1) of section 4." Section 199 reads as under: "(1) Any deduction made in accordance with the foregoing provisions of this Chapter 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, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be Any sum referred to in sub-section (1A) of section 192 and paid to the Central ....
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.... for the purposes of generation of power and not for trading purposes. The person responsible for collecting tax under this section shall deliver or cause to be delivered to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner one copy of the declaration referred to in sub-section (1A) on or before the seventh day of the month next following the month in which the declaration is furnished to him. (2) The power to recover tax by collection under sub-section (1) or sub-section (IC) or subsection (ID)] shall be without prejudice to any other mode of recovery." Rule 37BA(2)(i) of Income tax Rules as amended, by the Income Tax (Eight amendment) Rules 2011 reads as under: "Where under any provisions of the Act, the whole or any part of 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 tax deducted at source, as the case may, shall be given to the other person and not to the deductee Provided that the deductee files a declaration with the deductor and deductor reports the tax deduction in the name of the ....
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.... TCS has been claimed by the assessee firm has been brought to tax in the hands of the assessee firm or not. Where after due examination and verification, the AO find that the corresponding income has been brought to tax in the hands of the assessee firm, the AO is directed to allow credit for TCS in the hands of the assessee firm." 8. Learned DR, however, placed reliance on the decision of SMC Bench, Bengaluru, rendered in the case of Shri. Jayaprakasha Rai Vs. DCIT ITA No.681/Bang/2021, order dated 13.06.2022. I have perused the aforesaid decision and I find that the said decision was a case of transfer of licence from one person to another where pending the formality of transfer of licence, the credit was claimed by transferee of the licence in respect of TCS made in the hands of the predecessor in interest of transferor of the licence. In the aforesaid decision, the Tribunal made a reference to the provision of section 206C(4) and Rule 37-1 of the Rules and came to the conclusion that credit should be given to TCS on the basis of the ultimate outcome before the Central Excise authorities regarding transfer of excise licence. The Tribunal also held in the aforesaid case....
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....se the assessee's wife passed away and due to the same, assessee enjoyed the interest received from the deceased wife's deposit. The assessee dutifully declared the same to tax in his return of income. Hence, the assessee is eligible to get the credit of his deceased wife's TDS as he has declared the income pertaining to the said TDS. In taking the above view, we place reliance on the judicial pronouncement cited supra. 8. Ld. DR though heavily supported the order of the Ld. CIT(A), was unable to controvert and distinguish the decisions of the ITAT as relied upon by the ld. Counsel for the assessee and noted above, to the effect that the requirement of filing declaration under Rule 37BA(2) was only procedural and the credit of TDS could not be denied for mere failure to comply with the procedural requirement, if the substantive condition of the beneficial owner of the income was clearly established and it was shown that the income was returned to tax by the said beneficial owner. That the beneficial owner in such circumstances was entitled to credit of TDS even if the declaration under Rule 37BA(2) was not filed. 9. In view of the above, we find that in the facts ....