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TMI Blog2007 (12) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (Appeals), directing the Assessing Officer to allow full credit of T.D.S to the assessee, in contravention of the provisions of section 199 of the Income Tax Act ? Whether on the facts and in the circumstances of the case the findings recorded by ld. ITAT in allowing full credit of TDS to assessee are perverse and sustainable in view of statutory provisions of Section 199 of Income Tax Act, 1961 ? For the sake of convenience, facts are being referred from I.T.A No. 412 of 2007. There is one Vivek Bansal, Liberty House, Karnal who had originally purchased deep discount bonds 1997 of Industrial Development Bank of India (I.D.B.I) @ of ₹ 5500/- each (to be referred as the original purchaser). From him the assessee-respondent purchased those bonds @ ₹ 9700/- each on 01.01.2001 for total value of ₹ 19,40,000/- (to be referred as the assessee secondary purchaser). The original purchaser filed his return for the assessment year 2001-02 and reflected the difference in amount of purchase viz.a.viz the sale. Thus, a sum of ₹ 9,40,000/- became long term capital gain in respect of the original assessee. It is undisputed that the bonds were subject to accruing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance on circular No. 2 of 2002 issued by the Central Board of Direct Tax (to be referred as, C.B.D.T). The CIT(A) concluded that the effect of circular No. 2 of 2002 issued by C.B.D.T was that the entire T.D.S benefit was to be given to the holder of the bond at the time of maturity and the assessee-secondary purchaser was entitled to the same. The CIT(A) disagreed with the approach adopted by the Assessing Officer that the T.D.S benefit was to be given whenever the income is declared because it was not a workable proposition as there can be a number of persons to whom the said credit may belong and that there can be different Assessing Officer of such persons. The CIT (A) held that the credit was not to be available to other persons because the T.D.S certificate could not be issued in anyone else's name and that this was the intention and the meaning of the circular. It was further found that the assessee-secondary purchaser was required to declare interest income in respect of the period for which she had held the bond which has been correctly offered and there was no dispute on that question. The T.D.S certificate has also been correctly issued in the name of assessee-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be given to the holder of the bond at the time of maturity. Further view of the Tribunal is discernible from para 9 of the impugned order, which reads as under : I have considered the rival submissions and the material available on record. Section 199 (1) provides, Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government, shall be treated as payment of tax on behalf of the person from whose income the deduction was made or of the owner of the security or the depositor or owner of the property or of the unit holder or of the shareholder as the case may be and credit shall be given to him if the amount so deducted on the production of the certificate furnished under Section 203 in the assessment made under this act for assessment year for which such income is assessable. I find that by Finance Act, 1996 with effect from 01.04.1997 the words or depositor or owner of the property or of the unit holder have been inserted in the existing provision of Section 199 of the I.T.Act. In this case the Deep Discount Bonds were held by investor original purchaser, which were transferred during the intermediary period before the matu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of C.I.T V. Birla Janahit Trust , (1994) 208 We have carefully considered the submissions made by learned counsel and are of the view that the instant appeal lacks merit. In our view the Tribunal has correctly interpreted the provisions of Section 199 of the Act and circular No. 2 of 2002. The provisions of Section 199 as amended on 01.04.1997 reads as under : 199. Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or depositor or owner of property or of unit-holder, or of the shareholder, as the case may be, and credit shall be given to him for the amount so deducted on the production of the certificate furnished under Section 203 in the assessment made under this Act for the assessment year for which such income is assessable. A perusal of the aforementioned provision shows that any deduction made of tax at source and paid to the Central Government is required to be treated as payment of tax on behalf of the person from whose income the deduction was made. However, with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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