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2023 (6) TMI 80 - AT - Income TaxShort grant of TDS credit - CPC has denied the TDS credit on the ground that amount is not reflected in 26AS - whether credit of TDS can be allowed to the assessee, i.e., Late Russi Dinshaw Bahadurji having offered the income and have been taxed on the same for the TDS amount - conditions provided in Rule 37BA - in the case of the Trust, nil return was filed and no TDS credit has been filed - HELD THAT:- Deduction is allowed for the amount paid to the Treasury of Central Government which shall be treated as payment of tax on behalf of the person from whose income, the deduction was made where the TDS was deducted on income which has been shown and offered to tax by the assessee, Late Russi Dinshaw Bahadurji even though TDS has been deducted in the case of Deed of Settlement / Trust. There is no provision of Section 199(1) that deduction cannot be allowed on the payment of tax who has offered the income. Rule 37BA which has been framed by the CBDT in terms of section 199(3) provides credit for tax deducted at source for the purpose of Section 199. Here it is a case, the present assessee which is in appeal before us has offered income on which TDS has been deducted and it is not able to receive the credit despite the PAN on which TDS has been deducted has not shown in the return of income and is clearly stated that no credit for TDS is being taken as the income belongs to the assessee and credit should be given there. Thus, in these circumstances, the strict conditions provided in Rule 37BA especially the forms prescribed under the Rules has to be read in the spirit of provision of Section 199(1) which in our opinion should prevail upon the forms and the conditions provided in the Rules. Rules and forms issued should not frustrate the main provisions of the Act, but we are not laying any proposition that the conditions of Rules are not to be adhered to, but when there such pressing circumstances and Revenue is aware that TDS credit is being claimed under right hands and original deductee is not claiming any TDS and has given declaration that it has neither shown the income nor it will claim in future, then there should be a mechanism to resolve the issues or Revenue should direct the deductor to comply with it. Accordingly assessee should be given credit of TDS amount u/s.199(1) and accordingly, the ground raised by the assessee is allowed.
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