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2012 (5) TMI 138 - AT - Income TaxDisallowance of credit of TDS – no chargeable income in the hands of assessee - The franchisee pays rent to the assessee after deducting applicable TDS." The assessee explained the transaction with the help of accounting entries passed in its books of account. It was, therefore, urged that the assessee and M/s Arvind Brands Limited were only the link between Landlords of the property and the franchisee. That was stated to be the reason for which the assessee had not shown any rental income. The Assessing Officer, on going through the assessee's explanation, agreed that the assessee did not receive any rental income. He, therefore, did not make any addition on this account. However he held that the amount of TDS could not be refunded to the assessee as the assessee had not shown any income from rent. – Held that:- As per section 199 any deduction made in accordance with the foregoing provisions of 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 and credit shall be given to him for the amount so deducted for the assessment year for which such income is assessable - The Revenue will never allow credit as the amount is not chargeable to tax and it cannot retain such amount in contravention of Article 265 of the Constitution so to circumvent the situation credit for the tax deducted at source to the payee of the amount in the year for which such tax was deducted and the amount was paid after deduction of tax at source is allowed – in favour of assessee.
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