High Court disposed of the writ petition relying on a prior order (W.P. No.9723 of 2020). It allowed the claim for TDS credit by the estate despite TDS being deducted in executors' names, holding that credit should be given to the person offering income after verifying no double claim.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
W.P. No.20535 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 15.12.2023
CORAM
THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ
W.P. No.20535 of 2021 and W.M.P. Nos.21775 and 21776 of 2021
Estate of VS Tyagaraja Mudaliar, No.68, Chamiers Road, R.A.Puram, Chennai 600 028. Rep. by its Executor Mr.V.T.Somasundaram
.. Petitioner
Vs.
PRAYER: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorarified Mandamus to call for the records of the 1st Respondent in his proceedings leading to the passing of the order vide C.No.217/U/S.264/PCIT-1/2020-21 dated 12.02.2021 quash the same and further direct the Respondents to allow the claim of the TDS deducted on the fixed deposits.
For Petitioner : Mr.S.Sathiyanarayanan For Respondents : Mr.B.Ramanakumar
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ORDER
The present writ petition is filed challenging the proceedings of the 1st Respondent dated 12.02.2021 insofar as it denies giving credit of the TDS to the petitioner on the premise that the TDS was not deducted in the name of the assessee but instead in the names of Mrs.Neelothpalambal and Shri V.T.Somasundaram, the erstwhile executors of the estate of Shri V.S.Tyagaraja Mudaliar.
respondent in unison that the issue that arises for consideration in this writ petition stands covered by the order of this Court in W.P.No.9723 of 2020 dated
16.03.2023. The aforesaid order is extracted hereunder:
“The petitioner is the Estate of Mr.V.S.TyagarajaMudaliar. The request for quash of order dated 08.05.2020 emanates from the non~grant of credit of the tax deducted at source (TDS) under the provisions of the Income tax Act 1961 (Act), in respect of certain fixed deposits. The estate of V.S.Tyagaraja Mudaliar was allotted PAN No.AAAAE0156C by the Income Tax Department.
2.Since the State Bank of India, R.A.Puram did not allow the opening of an account in the name of an Estate, the accounts, including fixed deposits of the Estate were held in joint names of the Executors, then Mrs.Neelothpalambal and Mr.V.T.Somasundaram. With the demise of Smt.Neelothpalambal in 2011, Mr.V.T.Somasundaram became the sole executor of the petitioner.
3.As a consistent practice, it is the Estate that has been offering to tax the income from the fixed deposits and this position is stated to continue till date. For the assessment years (AY) upto 2008-09 the claim of the Estate for credit of TDS, though TDS certificates were in the name
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of the individual executor, was accepted.
5.It is the case of the petitioner that no effective orders were passed in the petitions filed in Section 154. Thus, the petitioner filed petition under Section 264 on 27.12.2018 that has come to be rejected on 08.05.2020 by the Principal Commissioner of Income Tax. The sole reason for the rejection is that, upon verification from the computer operator section, it was ascertained that the tax deducted under one PAN cannot be given credit in another PAN, even if it is the assessee holding the latter PAN that had offered the corresponding income to tax.
6.The conclusion as above is patently erroneous both in light of Rule 37BA(2) of the Income Tax Rules, 1962 as well as bearing in mind proper and fair norms of assessment, Rule 37BA (1) and (2) along with the proviso read as follows:
“37BA. (1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income~tax authority or the person authorised by such authority.
(2) [(i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source 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 referred to in sub-rule (1).]”
7.Thus, legislature has taken note of a situation where it is possible that income is offered to tax in one hand whereas tax is deducted (PAN 1) and given credit to in the hand of an alternate
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assessee (PAN 2). In such an event, a reconciliation is possible in light of the proviso to Rule 37BA(2) that provides for a Declaration to be made in this regard confirming that no double deduction has been made by both the assessees. Even in the absence of such a Rule it stands to reason that credit must be offered to the person offering the income to tax subject of course to a verification that there is no double claim of credit.
8.In light of the discussion as above, the impugned order is set aside. The application of the petitioner under Section 264 stands restored to the file of the Commissioner of Income Tax and the same shall be decided within a period of six (6) weeks from date of receipt of the order, after hearing the petitioner. The CIT shall, in line with the observations and conclusions in this order, grant credit of TDS after effecting a verification that there is no double claim in that regard, one by the Trust and the other by the individual.
15.12.2023
Speaking (or) Non Speaking Order Index:Yes/No Neutral Citation: Yes/No Spp
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To:
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MOHAMMED SHAFFIQ, J.
Spp
W.P. No.20535 of 2021 and W.M.P. Nos.21775 and 21776 of 2021
15.12.2023
2 issues framed by the court
Whether credit of tax deducted at source can be claimed by an estate holding PAN different from the PAN in which TDS was deducted.
Whether verification under Rule 37BA prevents granting credit to the person offering income when tax was deducted in another name.
3 provisions across 3 enactments
Estate of VS Tyagaraja Mudaliar (Rep. by Mr.V.T.Somasundaram)
Chief Commissioner of Income Tax (OSD)
Assessing Officer, Non Corp Ward 2(5)
MOHAMMED SHAFFIQ
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
