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TMI Blog2023 (1) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... s.2,80,456/-. 3. Succinctly, the facts of the case are that the assessee filed return declaring total income of Rs.8,42,68,650/-. An Intimation was issued u/s.143(1) of the Act disallowing, inter alia, credit for tax deducted at source amounting to Rs.2,80,456/- on interest income. According to the CPC, Form No.26AS did not contain/contained partial amount of TDS with respect to TAN mentioned in schedule TDS 1/TDS 2/TCS. The assessee appealed against the Intimation issued u/s 143(1) submitting before the ld. CIT(A) that he gifted certain amount to his wife, out of which she made deposits with State Bank of India. As per Form no. 26AS, she earned total interest income of Rs.39,26,260/- with deduction of tax at source amounting to Rs.2,94,47 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) ....'. Thus it is overt that sub-section (3) recognises that where the income on which tax was deducted at source in the hands of 'A', is actually chargeable to tax in the hands of 'B', credit for tax deducted at source on such income shall be allowed to 'B'. The relevant rule is 37BA with a caption "Credit for tax deducted at source for the purposes of section 199". Sub-rule (1) provides that credit for tax deducted at source shall be given to the person to whom payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The proviso to sub-rule (2) provides for deductee filing a declaration with the deductor giving particulars of the other person to whom credit is to be given. On receipt of such declaration, the deductor shall issue certificate for the deduction of tax at source in the name of such other person. The crux of section 199 read with Rule 37BA(2) is that if the income, on which tax has been deducted at source, is chargeable to tax in the hands of the recipient, then credit for such tax will be allowed to such recipient. If, however, the income is fully or partly chargeable to tax in the hands of some other person because of the operation of any provision, like section 64 in the extant case, the proportionate credit for tax deducted at source s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompliance of a procedural provision, which is otherwise directory in nature, cannot disturb the writ of a substantive provision. 7. Adverting to the facts of the extant case, it is seen that out of total interest income credited to assessee's wife as per Form No.26AS amounting to Rs.39.26 lakh, she included interest from SBI in her total income to the extent of Rs.1,84,212/-. The assessee included the remaining interest of Rs.37.42 lakh in his income because of the applicability of section 64 of the Act. The assesse and his wife claimed proportionate tax credit, which totals up to Rs.2,94,474/-. This deciphers that the total interest income received by the assessee's wife got taxed partly in her own assessment and partly in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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