Case Law Details
Anant Singhania HUF Vs ITO (ITAT Mumbai)
In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Mumbai ruled in favour of Anant Singhania Hindu Undivided Family (HUF) in a case against the Income Tax Officer (ITO). The core issue of the appeal was the denial of TDS credit to the HUF following the sale of housing property. The verdict offers an essential understanding of tax regulations related to housing property sales by an HUF.
This case centers around the denial of Tax Deducted at Source (TDS) credit of Rs. 15 lacs by the Assessing Officer (AO), a decision that was upheld by the Commissioner of Income Tax (Appeals). The assessee, Anant Singhania HUF, challenged this, citing that the property sale, as well as the capital gains from the sale, were reflected in the HUF’s books and not in the individual’s account. The Tribunal agreed with the assessee, basing its decision on the fact that Anant Singhania had not claimed the TDS in his individual income return.
The Tribunal also made reference to the decision of the Gujarat High Court in a similar case (Naresh Bhavani Shah (HUF) vs. CIT), which allowed for TDS credit to be given to an HUF under certain circumstances. The court’s decision hinged on the fact that the AO could not deny TDS credit to the HUF when the capital gain from the property sale was taxed under the HUF’s name.
Conclusion: The ITAT Mumbai’s ruling is significant as it offers clarity on the conditions under which TDS credit can be allowed to an HUF for the sale of housing property. This case underscores the importance of accurately reflecting income and deductions in the appropriate accounts, whether they are individual or HUF, to ensure appropriate tax benefits. The ruling in favour of the assessee reiterates the need for the accurate attribution of income and credits to avoid tax disputes. It also emphasizes the willingness of the courts to ensure justice and fairness in tax matters.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) u/s.250 of the Income Tax Act, 1961 (‘the Act’), pertaining to the Assessment Year (‘A.Y.’ for short) 2018-19.
2. The assessee has challenged the non granting of TDS credit amounting to Rs.15 lacs by the Assessing Officer (A.O. for short) and upheld by the ld. CIT(A).
3. The brief facts of the case are that the assessee is an HUF and had filed return of income dated 14.08.2018, declaring total income at Rs.36,18,374/-. The assessee’s case was selected for limited scrutiny under the e-assessment scheme of 2019 on the issue of capital gains deduction claimed by the assessee. The A.O. passed the assessment order u/s. 143(3) r.w.s. 143(3A) and 143(3B) of the Act where the return income of the assessee was accepted by the A.O. vide order dated 28.08.2020. The A.O. in the computation of the income sheet had denied the TDS credit u/s. 194IA of the Act amounting to Rs.15 lacs on sale of house property and had also levied interest u/s. 234B and 234C of the Act amounting to Rs.4,40,191/- and Rs.69,223/- respectively.
4. Aggrieved, the assessee was in appeal before the ld. CIT(A) who had allowed the credit of TDS by remanding it back to the A.O. with a direction to the assessee to follow the procedure prescribed under Rule 37BA(2) of the Income Tax Rules for the purpose of allowing the credit of TDS.
5. The assessee is in appeal before us, challenging the order of the ld. CIT(A).
6. The learned Authorised Representative (ld. AR for short) for the assessee contended that the A.O. has accepted the return of income filed by the assessee but had denied TDS credit in the computation sheet where the TDS is reflected in the individual name. The ld. AR further stated that the share of income from partition was assessed in the hands of Shri Anand Singhania in his individual capacity, which was subsequently shown as ‘income’ in the returns filed by Shri Anand Singhania, HUF the assessee. The ld. AR for the assessee stated that the sale of property belonging to HUF was shown in the books of HUF and capital gains on the said sale was offered to tax in the hands of the assessee HUF but TDS deduction reflected in 26AS of Shri Anand Singhania as the buyer deducted tax in the name of Shri Anand Singhania for the reason that he was the registered owner of the properties. The ld. AR for the assessee stated that all these details were furnished before the lower authorities but was not considered. The ld. AR relied on the decision of the Hon’ble Gujarat High Court in the case of Naresh Bhavani Shah (HUF) vs. CIT [2017] 84 taxmann.com 53 (Guj) on identical facts.
7. The learned Departmental Representative (ld. DR for short) for the Revenue, on the other hand, controverted the said facts and relied on the decision of the lower authorities.
8. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has shown LTCG of Rs.13,57,61,063/- from the sale of immovable property and is said to have invested Rs.6,35,04,000/- in the capital gain account and Rs.50 lacs in NHA bond for which the assessee is said to have claimed deduction u/s. 54 and 54EC of the Act. It is also observed that the TDS has been deducted in the hands of the individual Shri Anand Singhania along with his PAN number. The ld. CIT(A) in his order has stated that the assessee has mentioned the wrong PAN in the sale deed and has directed the assessee to follow the procedure prescribed u/s. 37BA(2) of the Act for the purpose of getting the TDS credit. The assessee has challenged the action of the ld. CIT(A) in directing the assessee to follow the procedure prescribed u/s. 37BA(2) of the Act for the purpose of getting TDS credit. The capital gain on sale of two properties was offered to tax in the assessee’s return of income and the assessee has thus claimed the credit of tax deducted in its return of income. The assessee submits that no credit was claimed in Shri Anand Singhania’s individual return of income and to substantiate that TDS was not claimed twice, the assessee is said to have filed TDS schedule ITR of Shri Anand Singhania to ensure that TDS of Rs.15 lacs was not claimed in the individual capacity. It is also pertinent to point out that the A.O. has charged capital gains in the hands of the assessee HUF but had refused to give TDS credit for the same. It is observed that an affidavit of Shri Anand Singhania, HUF along with PAN number was filed before the first appellate Tribunal to substantiate that TDS was not claimed in Shri Anand Singhania’s return of income. We would like to place our reliance on the decision of the Hon’ble Gujarat High Court in Bhavani Shah (HUF) (supra) wherein it was held that under special circumstances TDS credit can be given to the assessee HUF upon filing affidavit by the individual that the income does not belong to him and that he has not claimed credit of TDS. It was further held that in genuine case relief could be granted on this issue.
9. On the above facts of the case, it is evident that Shri Anand Singhania has not claimed the TDS in the individual’s returns. The A.O. cannot deny the credit of TDS in the assessee’s name when the corresponding capital gain on the said transaction was taxed in the assessee HUF’s name and cannot take benefit of the mistake crept in, in the sale deed. It is also pertinent to point out that the provision of section 199(3) mandates that credit may be given to person other than those mentioned in sub-section (1) & (2), which allows deviation in giving credit in suitable cases.
10. From the above observation, we are of the considered view that the assessee is entitled to claim TDS for the impugned transaction and the A.O. is directed to allow the TDS credit in the hands of the assessee HUF after verifying that the same was not claimed in the hands of the individual.
11. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 07.06.2023
