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TMI Blog2023 (6) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed TDS credit of Rs.68 Crores in the revised return of income filed on 27.05.2021. The return was processed u/s 143(1) vide Intimation dated 08.06.2022 wherein credit for TDS of Rs. 40.43 crore was not granted. 3. The TDS credit of Rs. 40,42,92,666 which has not been granted by the CPC is in respect of the tax deducted by Tata Power Company Ltd. (TPC) on payment made to Adani Electricity Mumbai Ltd. (AEML) having PAN - AADCD0088F. The TDS credit for the same is appearing in Form 26AS of AEML. The TDS credit has been claimed by the assessee in its original as well as revised return of income. The claim of TDS credit in respect of AEML was revised to Rs. 40,42,92,666 in the revised return of income filed on 27.05.2021 from Rs. 40,13,40,000 claimed in the original return of income filed on 06.02.2021. AEML in its return of income filed for AY 2020-21 had not claimed credit for TDS of Rs. 40.43 crore appearing in their Form 26AS. Instead AEML has transferred the credit of TDS to the PAN of Reliance Infrastructure Ltd. ("Rinfra") i.e. AACCR7446Q in the return of income since the corresponding income does not belong to AEML and has not been accounted and offered to tax in its retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owledgment of ITR of AEML along with transfer of TDS to the PAN of appellant has been furnished by appellant in the reply and is reiterated here." 6. The ld. CIT DR submitted that, when there is a proper procedure laid down and there is a requirement under Rule 37BA, then same should be complied with, so that the TDS credit is available to the assessee. She further submitted that now process of requirements of Rule 37BA cannot be bypassed. She requested the bench that Tata Power Company should be directed to revise their TDS return substituting the Name and PAN of the assessee in place of AEML so that the credit of TDS is reflected under the PAN of the assessee and thereby, TDS credit would be automatically granted to the assessee. 7. She further stated that now the process of granting TDS credit is system driven and only when the credit as reflected under the PAN of the assessee in Form 26AS on the Income Tax Portal, credit for TDS and consequential refund can be granted. There is no manual intervention in the procedure of granting TDS credit. Therefore, it was very essential for TPC to revise their TDS return substituting the name of AEML with that of the assessee so that the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable. The AAR categorically held that income so received by AEML is taxable in the hands of the assessee on principle of diversion by overriding title. The CIT of AEML had also filed the report with the AAR that the income does not belong to AEML but it is taxable in the hands of the assessee. Thus, there is no dispute that this income belongs to the assessee and is taxable in the hands of the assessee. Accordingly, the corresponding TDS on the said income is to be allowed in the hands of the assessee. 10. The provision of Section 199(1) reads as under:- "199(1) 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 of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be." 11. Thus, deduction is allowed for the amount paid to the Treasury of Central Government which shall be treated as payment of tax on behalf of the person from whose income the deduction was made, where the TDS was deducted on income which has been shown and of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee. Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax given to the person whom payment has been made or credit has been given. The case of the ld. CIT DR is that this procedure has not been followed by the assessee as provided in the Rule 37BA(2) and therefore, tax credit is not allowable and accordingly, the ld. AO is justified in denying the credit of TDS and on that ground, the appeal has been dismissed. 13. What needs to be seen is harmonious construction of Section 199(1) read with the conditions provided in rule 37BA and intention of the legislature was not to deny the credit, if the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, whereas the intention is to grant credit for the tax deducted at source on behalf of the person from whose income the deduction has been made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and deposited the tax thereon and filed the TDS return accordingly and if a revised TDS return is filed and a revised TDS certificate in favour of Rinfra would be issued, they would receive queries from the Income tax department resulting in unnecessary litigation. They suggested the following alternatives to the assessee in their email, the copy of which has been filed before us: * AEML may declare in their return of income that TDS pertains to Rinfra and Rinfra may claim TDS in their assessment following the provisions of section 199. * Rinfra/ AEML may approach the AO/CIT(TDS) for Issue of direction to TPC for issue of revised TDS certificate in the name of Rinfra. 16. To the above alternatives suggested by TPC Officials, Rinfra Official vide email dated 19.05.2020 provided point wise response that the alternative options suggested by TPC were not viable and the only legal and proper course of action was that TPC should revise the TDS return and substitute the name of Rinfra in place of AEML who received the amount as trustee on behalf of Rinfra. To this the TPC official once again vide their email dated 23.05.2020 did not agree to the revision of TDS return and did not c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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