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TMI Blog2007 (8) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... see, the Income Tax Appellate Tribunal, Mumbai has forwarded the following questions of law for the opinion of this Court under Section 256(1) of the Income Tax Act, 1961. "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that credit for the tax deducted at source from the dividends was to be given to the firm and not to the partners ? 2. Whether, on the facts and in the circumstances of the case, if the credit for the entire tax was not to be given to the partners, if there was any tax deducted at source remaining unabsorbed after meeting the tax liability of the firm, whether such tax should be apportioned among the partners and credit for such tax should be given to them in their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng its decision in the case of the assessee for A.Y. 1974-75 upheld the order of CIT (A). On a reference application filed by the assessee, the Tribunal has forwarded the aforesaid questions of law for the opinion of this Court. 8. During the period relevant to A.Y. 1972-73, the provisions relating to the availability of credit of the TDS to the firm / partners were contained in Section 199 of the Act and Rule 30A of the Income Tax Rules, 1961. The said provisions, to the extent relevant for the purpose herein, read thus : "199. Credit for tax deducted. Any deduction made in accordance with the provisions of sections 192 to 194, section 194A, Section 194B, Section 194BB, section 194C, section 194D and section 195 and paid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be deemed to be a payment of tax on behalf of, and the credit in respect thereof shall be given to, such other person in the circumstances specified below, namely :- . (vii) where the shares owned by a firm are held in the name of any of its partners; .. (2) The credit referred to in sub-rule (1) shall not be given unless the person entitled to such credit furnishes to the Income-tax Officer a declaration in Form No.15B made by him and the shareholder concerned, together with a certificate of deduction of tax at source in Form No.19." 9. Mr.Mistry, learned counsel appearing on behalf of the assessee submitted that in the present case, admittedly the shares from which dividend income was earned stood in the name of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the firm. Mr.Rao further submitted that on a plain reading of Section 199 of the Act read with Rule 30A (vii) of the Income Tax Rules, it is clear that where the shares belong to a firm but are held in the name of any of its partner, then credit of TDS shall be given to the firm and not to the partner in whose name the share stands. Accordingly, Mr.Rao submitted that there is no infirmity in the orders passed by the authorities below and the questions referred by the Tribunal be answered in favour of the Revenue. 11. We have carefully considered the rival submissions. Under Section 199 of the Act, credit of Tax deducted at source from the dividend income and paid to the Central Government is given to the share-holder. However, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst proviso to Section 199 of the Act read with Rule 30A of the I.T. Rules apply inter alia, where the dividend income is to be taxed in the hands of a person other than the shareholder. As the case of the assessee falls in the first part of Section 199 of the Act, the assessee could not be denied credit of TDS by invoking the first proviso to Section 199 of the Act read with Rule 30A of the Income Tax Rules. 13. The fact that the Tribunal in the A.Y. 1974-75 has denied credit of TDS to the assessee / shareholder and the assessee has not challenged the same would not make any difference. Moreover, it is not known as to whether, in A.Y. 1974-75 the dividend income was taxed in the hands of the firm or the partners. Nothing is brought ..... X X X X Extracts X X X X X X X X Extracts X X X X
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