2023 (7) TMI 231 - AT - Income Tax

Non granting of TDS credit - assessment in hands of HUF v/s Karta individual - CIT(A) directing the assessee to follow the procedure prescribed u/s. 37BA(2) for the purpose of getting TDS credit - sale of property belonging to HUF but TDS deduction reflected in 26AS of the KARTA of HUF as the buyer deducted tax in his name for the reason that he was the registered owner of the properties - assessee contended that the A.O. has accepted the return of income filed by the assessee but had denied TDS credit in the computation sheet where the TDS is reflected in the individual name - HELD THAT - As decided in Bhavani Shah (HUF) 2017 (7) TMI 819 - GUJARAT HIGH COURT that under special circumstances TDS credit can be given to the assessee HUF upon filing affidavit by the individual that the income does not belong to him and that he has not claimed credit of TDS In the present case the KARTA of HUF has not claimed the TDS in the individual s returns. The A.O. cannot deny the credit of TDS in the assessee s name when the corresponding capital gain on the said transaction was taxed in the assessee HUF s name and cannot take benefit of the mistake crept in, in the sale deed. It is also pertinent to point out that the provision of section 199(3) mandates that credit may be given to person other than those mentioned in sub-section (1) (2), which allows deviation in giving credit in suitable cases. A.O. is directed to allow the TDS credit in the hands of the assessee HUF after verifying that the same was not claimed in the hands of the individual. Assessee appeal allowed.

Summary

Issues involved:
The appeal challenging the order of the Commissioner of Income Tax (Appeals) regarding the non-granting of TDS credit amounting to Rs. 15 lacs by the Assessing Officer.

Details of the Judgment:

Issue 1: Denial of TDS credit by Assessing Officer and Commissioner of Income Tax (Appeals)

The assessee, an HUF, filed a return of income for the Assessment Year 2018-19 under limited scrutiny for capital gains deduction. The Assessing Officer accepted the return but denied TDS credit of Rs. 15 lacs under section 194IA of the Income Tax Act on the sale of a house property. The Commissioner of Income Tax (Appeals) allowed the credit but directed the assessee to follow the procedure under Rule 37BA(2) of the Income Tax Rules. The assessee challenged this order.

Issue 2: Arguments of the Parties

The Authorized Representative for the assessee argued that the TDS was reflected in the name of an individual, Shri Anand Singhania, but the income belonged to the HUF. The Revenue Departmental Representative contended otherwise, supporting the decision of the lower authorities.

Issue 3: Tribunal's Observations and Decision

The Tribunal noted that the LTCG from the property sale was shown in the HUF's name, with TDS deducted in the individual's name due to an error in the sale deed. Relying on a Gujarat High Court decision, the Tribunal held that the HUF could claim TDS credit upon filing an affidavit by the individual confirming non-claim of TDS. As Shri Anand Singhania did not claim the TDS in his returns, the Tribunal directed the Assessing Officer to allow the TDS credit to the HUF.

Conclusion

The Tribunal allowed the appeal, stating that the assessee HUF was entitled to claim TDS for the transaction, and directed the Assessing Officer to verify and grant the credit in the HUF's name. The decision was pronounced on 07.06.2023.