9911796707
TMI Blog2014 (4) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... undisputed, are that the assessee, an individual, claimed credit for tax deduction of source (TDS) on interest for Rs.56.80 lacs received by her for and on behalf of an Association of Persons (AOP) by the name, M/s. Hosang Mistry & Co., of which she is the member, per her return of income for the year. The interest was on 8% RBI saving bonds issued through Union Bank of India (the issuer of securities). As the said bonds could not be subscribed to by an AOP, resolution was passed by it for investment for and on its behalf by the assessee, who happened to be the only individual member of the AOP. That is, though the funds utilized and invested were of the AOP (PB pages 36-38), the investment/s was in the name of assessee (PB pages 25-32). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him for precedence. Aggrieved, the Revenue is in appeal. 3. We have heard the parties, and pursued the material on record. Findings 3.1 Our first observation in the matter is that the Revenue has only challenged the direction of the ld. CIT(A) in-so-far as it relates to allowing credit for TDS to the assessee, on the ground that the same is violative of and inconsistent with the provision of sec. 199 of the Act. The assessee, on the other hand, contends that in view of the amended law, insistence on the allowance of the credit (for TDS) to the person in whose hands the corresponding income is assessable, is not appropriate as the same may not always hold, so that an allowance has to be made for the peculiar facts and circumstances of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson only ITO v. Ch. Atchaiah [1996] 218 ITR 239 (SC). Coming to the issue at hand, we find the assessee's case to be based more on convenience than on law, or even on equity. No doubt, the law (sec. 199) stands amended to provide for TDS as being treated as payment of tax for and on behalf of, besides the person from whose income deduction of tax stands made, the owner of the relevant security, deposit or property yielding income. The same, however, has necessarily to be read in consistence with provisos thereto, also inserted simultaneously (by Finance (No.2) Act, 1996, w.e.f 01/04/1997), which, on the contrary, seek to provide credit in the hands of the person, other than the deductee, in whose hands the income, ostensibly of the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mfg. Co. Ltd. [1970] 78 ITR 4 (SC)]; and S.M. Ziaddin v. CIT [1993] 203 ITR 136(Mad). In the case of Toyo Engg. India Ltd. (supra), the assessee-company, providing technical services as well as executing construction of projects in the areas of fertilizers, petrochemicals, gas and petroleum, etc., was following project completion method for the latter business. The issue that arose was of the year for which credit for TDS was to be allowed. It is in that context it was held by the tribunal that the nexus between the amount of income and the assessment year may not be specific and immediate in all cases, so that it may not be possible to correlate the two at all times. The decision is rendered in the facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein, adverting to sections 190, 191, 198 and 199 of the Act, it was held that 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, however, 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. Further, there was complete harmony between the erstwhile section 199 and section 199 as it stands after substituti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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