TMI Blog2023 (6) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... cted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng before Hon ble Bombay High Court. 5. The background of the whole matter leading to denial of credit of TDS and the fact of the case has been stated to be: - i) Deed of Settlement (trust) was settled on 25/01/1995 by the assessee, Late Mr. Russi D. Bahadurji for the benefit of his brother Mr. Khurshed D. Bahadurji, and succeeding him, his brother's wife Mrs. Bhikhoo Bahadurji. The brother and failing him, his widow was a life tenant, entitled to the entire annual income. ii) On the demise of his brother, Khurshed D. Bahadurji, the original life tenant on 25/07/1997, his wife, Mrs. Bhikhoo Bahadurji became the life tenant, entitled to the annual income. While the life tenant Mrs. Bhikhoo Bahadurji was alive, the income of the Deed of Settlement was being assessed separately u/s 161(1) of the Income Tax Act. Therefore, the return of Income of the Deed of Settlement for K D Bahadurji, Trustee R D Bahadurji was filed separately under PAN AABTD3941Q, and the income was included therein. iii) Mrs. Bhikhoo Bahadurji passed away on 12/06/2018 Mr. Russi D. Bahadurji was yet alive, and the trust reverted back to the settlor in accordance with para 15 of the Deed of Settleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Franklin Templeton Mutual Fund Dividend Income 6,60,086 49,506 HSBC Bank Savings Interest 1,32,266 Nil Total (A) 16,43,425 1,15,109 Other Income of the assessee (B) 1,00,31,522 6,38,208 Gross Total Income (A) + (B) 1,06,74,947 7,53,317 The income from the Deed of Settlement is disclosed separately in the Statement of Total Income of Late R.D. Bahadurji as 'Savings Bank Interest [from Deed of Settlement Account] and Dividend on Mutual Funds [from Deed of Settlement] 7. Simultaneously, a NIL return has been filed for the Deed of Settlement of K.D. Bahadurji (PAN: AABTD39410) and no TDS credit has been claimed in the said and NIL Return has been filed for the Deed of Settlement for K.D. Bahadurji. The Deed of Settlement has also been processed u/s. 143(1) vide Intimation date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim for TDS has been made as per rule 37BA. As per Rule 37BA(2)(i) a declaration has to be filed with the deductor by the deductee, if the income is assessable in the hands of any other person. The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person. The deductor has to thereon report the tax deduction in the hands of this other person as per provisions of Chapter XVII of the Income Tax Act, 1961. As per the rule37BA(2)(ii), the deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody. 6.2 In the given case while the income has been offered to tax in the hands of the appellant and tax credit claimed thereon in the return, there is no material available on record to show that a declaration as required under clause (1) and (ii) of rule 37BA(2) has been furnished to the deductor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome has been received in the bank account of Deed of Settlement and the deductor has reflected the PAN and Form 26AS of the Trust. However, the fact of the matter is that tax has been paid by way of TDS and Rs.1,15,109/- is in respect of income of Deed of settlement of Shri KD Bahadurji, therefore, there is no dispute and the tax has been paid. It is also undisputed fact that income belonging to Deed of Settlement / Trust was duly offered to tax in the return of income of Late Russi Dinshaw Bahadurji on PAN AACPB4740N under the head income from other sources . The said income offered to tax by the assessee had duly been assessed and intimation u/s. 143(1) dated 11/01/2022 has been passed. It is also a matter of a fact that statement of total income of the Deed of Settlement as reflected in the return of income for the relevant year reflects that no TDS credit has been claimed by the Trust. This also gets clarified by the intimation passed u/s.143(1) on the return of income filed by the CPC on 05/05/2022 for the relevant year. 13. Now the issue is, whether credit of TDS amount of Rs.1,15,109/- can be allowed to the assessee, i.e., Late Russi Dinshaw Bahadurji having offered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the information relating to deduction of tax referred to in sub-rule (1).] (ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person (iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody. 3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. (ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax. 16. Thus, Sub-Rule (2) provides that, if whole or any part of the income on which tax has been deducted at source is assessable in the hands of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 20/06/2019 which is still awaited from the Hon ble Bombay High Court. In the Deed of settlement Late Mr. Russi D. Bahadurji was the sole trustee and all the investments of the Deed of Settlement stood in a single name on that account. The executors of the estate have no right in the assets of the estate, till such time the will is probated. No company or mutual fund will entertain an executor till such time that the will is probated and therefore, for this reason the name of the deceased will continue on the Registry of the company or the mutual fund. Thus, in these peculiar facts and circumstances, it was an impossibility to comply with the condition provided in Rule 37BA (2). 19. There is another angle which needs to be seen is that the procedure prescribed by the Rule 37BA in certain circumstances becomes extremely cumbersome, because of each declaration by the mutual fund or the company, one has to lodge a particular form. It is impossible in the case of holding of several investments. 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation under section ii(2)(a) where the language does not permit delegation of power to prescribe limitation to give notice. The conclusion is thus inevitable that the Income-tax Rules could not fix a time-limit for submitting the application in Form No. 10 under rule 17 and, therefore, the Tribunal was correct in its conclusion. Sales Tax Officer vs. KI Abraham (1967 AIR SC 1823) The decision of the question at issue therefore depends on the construction of the phrase in the prescribed manner in s. 8(4) read with s. 13 of the Act. In our opinion, the phrase in the prescribed manner occurring in s. 8(4) of the Act only confers power on the rule-making authority to prescribe a rule stating what particulars are to be mentioned in the prescribed form, the nature and value of the goods sold, the parties to whom they are sold, and to which authority the form is to be furnished. But the phrase in the prescribed manner in s. 8(4) does not take in the time-element. In other words, the section does not authorities the rule-making authority to prescribe a time-limit within which the declaration is to be filed by the registered dear...In Stroud's Judicial Dictionary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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