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TMI Blog2017 (5) TMI 1817X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee are as under:- ITA No. 391/JP/2016 "1. The Ld. AO has erred in withholding TDS of Rs. 38,440/- deducted by Bank on Interest income held by the assessee in fiduciary capacity which was not income of the assessee. Since, the funds received from HUDCO were held by the assessee in Trust/in fiduciary capacity on behalf of State Government for disbursement, hence the Ld. AO erred in treating the income of interest on such funds temporarily deposited in bank as taxable income and further erred in withholding the TDS of Rs. 38,440/-. The interest income being not taxable and TDS therefore is allowable to assessee. The assessee was acting as nodal agency for and on behalf of State Government in receiving and repaying loan from HUDCO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gency by the Government of Rajasthan for Police Housing Scheme and funds were received by the assessee from HUDCO on behalf of State Government for disbursement to various agencies for construction of houses for the Police department. The funds so received from HUDCO till the time the same was disbursed to the various agencies were placed in FDRs with the bank and TDS was deducted by the bank on interest earned on such FDRs. The funds so received belonged to the Government of Rajasthan and any interest on such funds placed in the form FDR also belongs to Government of Rajasthan. As a result, the assessee did not offer the interest income for tax while filing its return of income. At the same time, it claimed credit of TDS deducted on such i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Year 2009-10): "In the facts and circumstances of the case the learned Commissioner (Appeals) has erred in not allowing credit of TDS of Rs. 4502798, deducted by our Bank on interest and deposited to the Income Tax Department and holding that the interest belongs to Police Department and the provisions of section 199 are applicable.' ITA No. 248/JP/2014 (Assessment Year 2010-11) "In the facts and circumstances of the case the learned Commissioner (Appeals) has erred in not allowing credit of TDS of Rs. 1741463, deducted by our Bank on interest and deposited to the Income Tax Department and holding that the interest belongs to Polce department and the provisions of section 199 are applicable." The facts under consideration before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entity, therefore, refund of TDS cannot be given to the State of Rajasthan. It is not disputed that the assessee after realizing the interest income from the bank has given back the amount to the State of Rajasthan. Similarly it is also undisputed that the refund of TDS has not been claimed by the State of Rajasthan and is only claimed by the assessee being the nodal agency of the State of Rajasthan for this project. In our view, no prejudice will be caused to any person if the TDS is refunded to the assessee being the nodal agency with the undertaking to return the amount to the State of Rajasthan. In view of thereof and also in view of the judgment referred hereinabove, the TDS deducted by the Income Tax Department is directed to be pai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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