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TMI Blog2014 (4) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... real owner of the underlying security (property) and the income thereon, so that on a declaration being made by the deductee, credit for TDS could be claimed by and allowed to the real (de facto) owner, even as the TDS certificate/s is in the name of the ostensible owner (deductee). Recourse to the rule 37BA, introduced subsequently (w.e.f. 01/04/2009), would arise only where the rule denies, as it did in some of the cases cited, credit to the AOP on the ground the TDS certificate being in the name of the assessee (deductee). Relying upon ITO v. Shri Anupallavi Finance & Investments [2010 (12) TMI 334 - ITAT, CHENNAI] the deduction of tax at source does not necessarily, or is required to, march alongside the corresponding income, recognition of which by the recipient could be either on accrual or on receipt basis - The tax liability would arise only on it becoming assessable - It is in view of and to address this mismatch in time between the TDS and the accrual and/or receipt of the corresponding income that section 199 r/w ss. 190 and 191 clarifies that the credit for TDS shall be available for the year/s in which the corresponding income is assessable - there was complete harm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant provision (section 199) has since been amended (by Finance (No.2) Act 1996, w.e.f 1/4/1997) to provide for deduction of tax, besides the person in whose hands the corresponding income (i.e., on which credit for TDS is being claimed) is assessable, also qua the owner of the security, deposit or property yielding the said income. Accordingly, it is permissible to allow credit for TDS to the person other than in whose hands the corresponding income is assessable. Decisions in the case of CIT v. Sonal Bansal (in I.T.A. No. 412 of 2007) (P H) and ITO vs. T.G. Veeraraghavan [2007] 108 ITD 288 (Coch) were relied upon by him for precedence. Aggrieved, the Revenue is in appeal. 3. We have heard the parties, and pursued the material on record. Findings 3.1 Our first observation in the matter is that the Revenue has only challenged the direction of the ld. CIT(A) in-so-far as it relates to allowing credit for TDS to the assessee, on the ground that the same is violative of and inconsistent with the provision of sec. 199 of the Act. The assessee, on the other hand, contends that in view of the amended law, insistence on the allowance of the credit (for TDS) to the person in whose ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome, ostensibly of the deductee, is assessable in law, so that in case of joint ownership, credit is to be allowed in proportion to the income. That is, to the same purport and effect as rule 37BA, brought on the statute-book subsequent to the substitution of the sec. 199 by Finance Act, 2008 w.e.f. 01/4/2008. The rule only seeks to; firstly, specify such instances and, two, provide for the mechanism therefor. In fact, the owner of the security (bonds) in the instant case is only the AOP; the assessee being only a de jure owner, with the property in the bonds being admittedly of the AOP. 3.3 As regards the argument qua ambiguity, the same is completely misplaced. The law, per sections 190 191, provides for TDS being only a manner of collection of tax chargeable on the relevant income. Section 199(1) itself lays down that TDS is to be treated as tax paid for and on behalf of the person from whose income tax is deducted. Other categories of persons, being the owner of the relevant property, are also provided. The law thus contemplates of the deductee being the person other than from whose income tax deduction stands made. It, therefore, rather than being a source of ambiguity, se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mfg. (P.) Ltd. v. CIT [1967] 65 ITR 237 (All.); Mysore Spg. Mfg. Co. Ltd. v. CIT [1966] 61 ITR 572 (Bom.) [affirmed by hon'ble apex court in CIT v. Mysore Spg. Mfg. Co. Ltd. [1970] 78 ITR 4 (SC)]; and S.M. Ziaddin v. CIT [1993] 203 ITR 136(Mad). In the case of Toyo Engg. India Ltd. (supra), the assessee-company, providing technical services as well as executing construction of projects in the areas of fertilizers, petrochemicals, gas and petroleum, etc., was following project completion method for the latter business. The issue that arose was of the year for which credit for TDS was to be allowed. It is in that context it was held by the tribunal that the nexus between the amount of income and the assessment year may not be specific and immediate in all cases, so that it may not be possible to correlate the two at all times. The decision is rendered in the facts of the case and in view of the failure to establish a correlation between the quantum of income and the year of its assessability, the very basis of section 199. The same, thus, has no application in the facts and circumstances of the case. The decision in the case of Escorts Ltd. (supra), again, represents one s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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