2016 (9) TMI 997 - AT - Income Tax

TDS credit - relevant assessment year - to whom the credit belongs to - whether the TDS certificate filed along with the return of income was not for the relevant A.Y. 2006-07 and also not in the name of the assessee? - Held that - There is no merit in this appeal by the revenue. The facts with regard to the ownership of the bonds on which the interest accrued as that of the assessee is not in disputed. It is also not in dispute that the assessee was entitled to the interest on the bonds that were acquired by the assessee form M/s. C.K.P. Corporation Bank Ltd. It is only because of the fact that the assessee s name was not found in the registered bond holders that the TDS was issued in the name of the previous owner of the bond. All the above facts were not only confirmed by M/s. CKP Corporation Bank but also the company which issued the bonds namely M/s. MPVCL. In these circumstances there cannot be any doubt or dispute as to the person who is entitled to the interest income and the refund of TDS thereon in the event of non taxability of interest income in question. The fact remains that the assessee has offered the interest income to tax in the A.Y.2006-07 and in terms of section 199 of the Act the assessee was entitled to credit for tax deducted at source. The fact that the TDS certificate refers to assessment year 2005-06 is of no consequence. The fact remains that the assessee has not claimed credit for TDS in any other assessment year. The tax deducted at source and paid to the Government is tax actually paid. In the present case the assessee satisfies all the conditions for grant of credit of TDS - Decided in favour of assessee.

Summary

Issues:
1. Allowance of TDS credit for an exempted entity.
2. Denial of refund based on technicalities and TDS certificate details.

Analysis:
1. The case involved an appeal by the Revenue against the order of CIT(A)-XIX Kolkata regarding the allowance of TDS credit amounting to ?11,42,889 for the assessment year 2006-07. The Assessee, an exempt entity under section 10(25)(ii) of the Income Tax Act, filed a belated return to claim a refund of TDS erroneously deducted by financial institutions. The Assessee's income was fully exempted, thus not requiring a return of income. However, the Gauhati High Court ruled that belated filing by a recognized provident fund does not justify denying a refund. The Assessee purchased bonds and claimed a refund of TDS deducted by the bond issuer, despite the TDS certificate being in another entity's name for the relevant assessment year.

2. The Assessee's claim for a refund was rejected by the AO based on technical grounds, citing discrepancies in the TDS certificate details. On appeal, the CIT(A) allowed the claim, emphasizing procedural fairness and the substance of the case. The CIT(A) highlighted that the TDS certificate mentioning a different assessment year did not alter the fact that the income was accounted for in the correct assessment year. Referring to relevant legal provisions and court judgments, the CIT(A) directed the AO to issue the rightful refund to the Assessee. The Tribunal upheld the CIT(A)'s decision, emphasizing that the Assessee was entitled to the interest income and TDS refund, despite the TDS certificate discrepancies, as the Assessee met all conditions for TDS credit. The Tribunal dismissed the Revenue's appeal, affirming the Assessee's legitimate claim for the refund.

In conclusion, the judgment dealt with the allowance of TDS credit for an exempt entity and the denial of a refund based on technicalities regarding TDS certificate details. The courts emphasized the substance of the case, procedural fairness, and adherence to legal provisions to uphold the Assessee's legitimate claim for the refund, despite discrepancies in the TDS certificate information.