TMI Blog2023 (1) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Hari Shankar Singhania on 27.09.2013 for AY 2013-14, the said commission income has not been declared. Thus we are of the opinion that in the interest of justice, it would be fair and just if we direct the Ld. AO to re-open the assessment of Late Shri Hari Shankar Singhania (Individual) for AY 2013-14 to bring to tax the impugned commission income and allow the credit of TDS. In so far as the assessee, Hari Shankar Singhania Estate is concerned, it shall abide by the procedure laid down under section 199 of the Act r.w. Rule 37BA(2)(i) of the Income Tax Rules, 1962 as amended by the Income Tax (Eight amendment) Rules, 2011 to enable the Ld. AO to give credit of TDS in the hands of Late Shri Hari Shankar Singhania (Individual) in AY 2013-14. - ITA No.4176/Del/2019 - - - Dated:- 9-1-2023 - Shri N.K. Billaiya, Accountant Member And Ms. Astha Chandra, Judicial Member For the Assessee : Shri V.P. Gupta, Advocate For the Department : Shri M. Baranwal, CIT(DR) ORDER PER ASTHA CHANDRA, JM 1. The appeal by the assessee is directed against the order dated 13.03.2019 of the Ld. Commissioner of Income Tax Appeals-18, New Delhi ( CIT(A) ) pertaining to ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return. Vide order sheet entry dated 13.12.2016, the Ld. AO required the assessee to show cause why claim of TDS credit of Rs. 15,00,000/- be not disallowed as commission income has not been offered for taxation in the previous year 2013-14 relevant to AY 2014-15. 5. Vide letter dated 16.12.2016, the assessee furnished reply which has been reproduced by the Ld. AO in para 4.5 of the assessment order. The gist of the reply was that the payer companies were liable under section 194J to deduct TDS @10% on commission paid to Shri Hari Shankar Singhania. Since at the time of credit/payment of the commission Shri Hari Shankar Singhania was not alive, his PAN could not be used for the purpose of TDS. Therefore, the PAN of the assessee Estate was used for TDS resulting in the credit being reflected in Form 26AS of the assessee Estate which has been claimed in AY 2014-15. 6. The explanation of the assessee was not acceptable to the Ld. AO. According to him, the income by way of commission arose/accrued to the deceased Hari Shankar Singhania which is taxable in the hands of his legal heir/representative as per provisions of section 159 of the Act. Therefore, the legal heir/represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shankar Singhania In the written - submission, the AR has claimed the credit for TDS by stating that after the death of Shn Hari Shankar Singhania, payment could be made to the Estate only and therefore, the deductor companies used the PAN of the Estate for deducting TDS. 4.3.1 In this regard, reference is made to Rule 37BA of the Income Tax Rule 1962 which contains the conditions for granting credit for TDS for the purposes of section 199 of the Act. The Rule reads as under: Credit for tax deducted at source for the purposes of section 199. 37BA. (1) Credit for tax deduced at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority. (2) (i) If the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for tax deducted at source shall be given to the other person and not the deductee: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jaipur has in ITA No. 676/JP/15 held as under: Rule 37BA(2)(i) of Income tax Rules as amended by the Income Tax (Bight 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 other person in the information relating to deduction referred to in sub-rule (1). 2.7 The essence of the above stated provisions and corresponding rules is that the tax deducted at source (TDS) is nothing but tax, and credit for TDS should go to the person in whose hands the income is rightfully and finally assessed to tax in accordance with law irrespective of the person in whose hands the TDS has been deducted and TDS certificate has been issued at first place. If we look at the provisions of section 206C read with section 190 of the Act, the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which it has been held that- 7 2 So far as the decision of higher Judicial Authority is concerned, we find that Hon'bte Kerala High Court in CIT Vs. Smt. Pushpa Vijoy [19 Taxmann.com 157] has clinched the issue in the following manner:- 11. The question to be considered is whether the assessing officer was justified in refusing to give credit for tax payments based on TDS certificates issued by the Bank for the reason that income is not returned for assessment by the assesses m the assessment year following the year in which tax is recovered and paid by the Banks. We do not think there is any justification for assessees' claim because Section 199 of the Income Tax Act makes it clear that the assessee is entitled to credit based on TDS certificate only in the assessment year in which income from which tax is deducted is assessed Therefore, when the statute makes it mandatory that credit of tax based on TDS certificate is available only in the assessment year in which the income from which tax deducted at source is assessed, we do not know how the Tribunal can over-rule the statutory provisions and allow the claim. In our view, going by the practical diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year concerned and the tax amount should be assessed as income by simultaneously giving credit for the full amount of tax remitted by the payer. In these cases, the entire interest credited should be assessed on maturity of the deposit and on payment by the bank, as the assessees are admittedly following cash system of accounting. However, in our view, if Section 145(1) is amended for assessment of income on which TDS is made in the assessment year following the year in which deduction is made irrespective of the system of accounting followed by the assessee, the same will avoid problems for the assessees and the Department. Based on the findings above, we allow the Departmental appeals by reversing the orders of the Tribunal and that of the first appellate authority and by .restoring the assessments denying credit of tax in the assessments for which corresponding income is not assessed. However, since we are allowing the Departmental Appeals, we leave it open to the respondents-assessees to claim credit based on the very same TDS certificates against the interest income assessed in the year in which such income is assessed. Upon perusal of Tribunal's order f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asia Holdings (India) Pvt. Ltd. (TS-775-SC- 2019 (TP) ). The Ld. CIT (DR) also referred to the order dated 20.8.2020 of the Mumbai Bench of the Tribunal in ITA No. 6748/Mum/2017, 7257/Mum/2018 and 7246/Mum/2019 in the case of CLSA India Pvt. Ltd. 11. We have carefully considered the submissions of the parties and perused the material available in the records. The undisputed fact is that during the previous year (on 22.02.2013) relevant to the AY 2013-14 Shri Hari Shankar Singhania died. Sub-section (3) of Section 159 of the Act ordains that the legal representative of the deceased shall, for the purposes of the Act, be deemed to be an assessee. Sub-section (1) of Section 159 provides that legal representative shall be liable to pay any sum which the deceased would have been liable to pay, if he had not died in the like manner and to the same extent as the deceased. Sub-section (2) of Section 159 further provides that for making an assessment etc. of the income of the deceased, all the provisions of the Act, inter alia shall apply. In pursuance to the above provisions of the Act, the legal representative of Late Shri Hari Shankar Singhania filed a return of income for AY 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, and credit for TDS should go the person in whose hands the income is rightfully and finally assessed to tax in accordance with law irrespective of the person in whose hands the TDS has been deducted and TDS Certificate has been issued at first place. We are in agreement with above observation of Jaipur Bench of the Tribunal. 15. In the case at hand, the assessee Hari Shankar Singhania Estate has claimed TDS of Rs. 15,00,000/- in respect of the impugned commission income of Rs. 1,50,00,000/- which is not its income and not declared in its return for AY 2014-15. The Ld. AO/CIT(A) both held that the impugned commission income of Rs. 1,50,00,000/- on which tax of Rs. 15,00,000/-has been deducted at source is taxable in the hands of Late Shri Hari Shankar Singhania as represented by his legal heirs and that the legal heirs of Late Shri Hari Shankar Singhania are liable to furnish the return of income and are also liable to pay taxes in respect of the income of Late Shri Hari Shankar Singhania. We agree. However, as stated earlier, the impugned commission income of Rs. 1,50,00,000/- has escaped assessment as in the return of income filed by the legal representative of Late Shri H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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