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2014 (4) TMI 820 - AT - Income TaxAllowability of Credit for TDS – assessee, an individual, claimed credit for tax deduction of source (TDS) on interest for ₹ 56.80 lacs received by her for and on behalf of an Association of Persons (AOP) - Held that:- The AOP returned the interest income on the bonds, with the assessee excluding the same from her return. Why, we wonder, then, the TDS could not be claimed in the hands of AOP? Tax deduction at source, it is to be appreciated, is only toward the charge of tax u/s. 4 of the Act and, therefore, credit for same would normally be to the person in whose hands the said income is assessable (u/s. 199(1)), and for the relevant year/s (ss. 199(2) & (3) r/w s. 190), being consistent and in accord with the scheme of the Act. That the said person has paid the tax in full on his own, or has not preferred to claim credit in respect of the TDS, is no ground for allowing credit to another. The amendment to sec. 199, as already clarified, is toward mitigating and resolving difficulties that may arise on account of the difference in the ostensible and the real owner of the underlying security (property) and the income thereon, so that on a declaration being made by the deductee, credit for TDS could be claimed by and allowed to the real (de facto) owner, even as the TDS certificate/s is in the name of the ostensible owner (deductee). Recourse to the rule 37BA, introduced subsequently (w.e.f. 01/04/2009), would arise only where the rule denies, as it did in some of the cases cited, credit to the AOP on the ground the TDS certificate being in the name of the assessee (deductee). Relying upon ITO v. Shri Anupallavi Finance & Investments [2010 (12) TMI 334 - ITAT, CHENNAI] the deduction of tax at source does not necessarily, or is required to, march alongside the corresponding income, recognition of which by the recipient could be either on accrual or on receipt basis - The tax liability would arise only on it becoming assessable - It is in view of and to address this mismatch in time between the TDS and the accrual and/or receipt of the corresponding income that section 199 r/w ss. 190 and 191 clarifies that the credit for TDS shall be available for the year/s in which the corresponding income is assessable - there was complete harmony between the erstwhile section 199 and section 199 as it stands after substitution by Finance Act, 2008 w.e.f. 01.04.2008 read with r. 37BA – Decided in favour of Revenue.
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