The assessee is a
Chartered Accountant carrying on his profession under the partnership firm M/s.
Tiwari & Co. for and from the year 1983. The partnership firm
M/s. Tiwari & Co. got dissolved w.e.f. 30.12.2006 and assessee became
proprietor of this firm. The assessee has included the income qua the TDS
certificates issued in the name of M/s. Tiwari & Co. having PAN
AACFT6997P, which stands for the partnership firm and also claimed the credit
for TDS in the individual capacity. The AO completed the assessment whereby he
included the entire income of the firm M/s. Tiwari & Co. but did not allow
the credit for TDS at Rs.1,53,380/- for the reason that the TDS credit is not reflected in
the PAN of Shri Parmanand Tiwari, the Chartered Accountant in his
individual capacity. During the course of assessment proceedings,
assessee submitted proper declaration giving the entire fact that the
income of M/s. Tiwari & Co. has duly been included in the hands of
its proprietor and is assessable in the hands of the assessee. M/s. Tiwari
& Co. under whose PAN this TDS has been deducted, has not made any separate
claim of the TDS and also not declared separate income on this account. After
going through the facts in entirety, I find that this is only a technical
breach and that also for the reason that these professional receipts received
by the assessee are commitment of earlier years when the firm was in existence.
These receipts are earned by the professional work of M/s. Tiwari & Co. as
proprietary concern in individual capacity of Shri Parmanand Tiwari. Wrong
submission of PAN by deductors does not debar for claiming of TDS deducted
particularly when the income is included in the hands of the assessee. Now the
legislature, to mitigate the rigours of law, has amended the provisions of
section 37BA of the Act by the Amendment Rules, 2009 w.e.f. 01.04.2009.
From the above
provisions of Rule 37BA of the Rules, wherein it has clearly been mentioned that
credit for tax deducted at source and paid to the Central Government shall be
given to the person provided that the deductee files a declaration with the
deductor and the deductor reports the tax deduction in the name of other person
in the information relating to deduction of tax referred to in
sub-rule (1) of Rule 37BA of the Rules. Further, sub-rule (3) of Rule 37BA of
the Rules provides that for the purpose of giving credit in respect of tax
deducted in term of provisions of Chapter XVII for the purpose of giving credit
to a person other than those referred to in sub-section (1) and also the
assessment year in which such credit may be given. In view of the above provision of
section 37BA of the Rules and the provisions of section 199(1) of the Act, the
credit for tax deduction could be given to the person from whose income tax has
been deducted. The Rule as amended by the Amendment Rules, 2009 w.e.f.
01.04.2009 makes it abundantly clear that the credit will be given based on the
information by deductor. The proviso to sub-rule (2) of Rule 37BA of the Rules
mitigates the hardship faced by assessee for claiming credit of TDS
whereby deductee files a declaration with the deductor and the deductor reports
the tax deduction in the name of other person in the information relating
to deduction of tax as referred to in sub-rule (1) of Rule 37BA of the
Rules. In such provisions of law, the assessee should have been allowed credit
for TDS in the given set of facts and circumstances of the case. The only issue
is that the amended provision is applicable w.e.f. 01.04.2009 and the relevant
assessment year involved is 2008-09. Whether the amended Rule as amended by
Amendment Rules, 2009 is a beneficial provision mitigating the hardship of the
assessee and in turn the same can be declared as retrospective and will apply
to all pending matters. Similar issue was dealt by Hon’ble Supreme Court in the
case of Allied Motors Pvt. Ltd. Vs. CIT (1997) 224 ITR 677 (SC), wherein it has
been held that “the provisions of the first proviso, which has newly
been inserted by the Finance Act, 1987, with effect from 1st April,
1998, to section 43B is remedial in nature, designed to eliminate unintended
consequences which may cause undue hardship to the assessee and which made the
provision unworkable or unjust in a specific situation, and is of clarificatory
nature and, therefore, has to be treated as retrospective with effect from 1st April,
1984, the date on which section 43B has newly been inserted by the Finance Act,
1983.” Similarly, here also the Rule was inserted by the Amendment
Rules, 2009 to remove the hardship faced by assessees and to give true meaning
to the provision of section 199 of the Act. In such circumstances, I direct the
AO to allow the credit of TDS after verifying declaration to be filed by
deductee in term of proviso to sub-rule (2) of Rule 37BA of the Rules. In term
of the above, the appeal of assessee is allowed.
Parmanand Tiwari vs.
ITO (ITAT Kolkata), I.T.A No.2417/Kol/2013,Date of pronouncement: 02.09.2014
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