Where income is shared by two or more persons, credit for withholding tax is to be shared in same ratio

Background

In a recent ruling in the case of Punjab Financial Corporation (“the assessee”)1, the Punjab and Haryana High Court (“the Court”) held that credit for withholding tax (“WHT”) would be available in the same proportion in which the parties share the income under the provisions of section 1992 of the Income Tax Act, 1961 (the “Act”).

Facts of the case

• The assessee entered into an agreement with the State of Punjab3. The modalities of the agreement were:

– The State of Punjab deposited funds with the assessee, and in turn, the assessee invested the same in securities.

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