COMMISSIONER OF INCOME TAX Vs. SONAL BANSAL

JUDGEMENT

(1.) THIS order shall dispose of IT Appeal Nos. 412, 413 and 414 of 2007 because similar issues are involved and the Tribunal vide its order dt. 25th Jan., 2007 has disposed of all the three appeals by one composite order.

(2.) THE appeals have been filed under Section 260A of the IT Act, 1961 (for brevity "the Act") challenging composite order dt. 25th Jan., 2007 passed by the Tribunal, Delhi SMC Bench, New Delhi in ITA Nos. 4097, 4098, 4099/Del/2006 in respect of the same assessment orders of 2002 -03 concerning assessee respondent Smt. Sonal Bansal, Smt. Ritu Bansal and Smt. Meenu Gupta (Annex. A -3). The Revenue has claimed that following two substantial questions of law would emerge for determination of this Court:

(3.) THE tax deduction certificate filed for gross interest of Rs. 9,00,000 was also duly accounted for. The assessee -secondary purchaser had duly filed her return on 26th June, 2002 declaring her income of Rs. 1,07,140. The AO discovered at the time of processing of return on 31st March, 2003 that the assessee had claimed credit of TDS of Rs. 91,800 in the return of income that was deducted by IDBI on the interest income of Rs. 9,00,000 which was paid by the bank to the assessee -secondary purchaser. In her return, the assessee -secondary purchaser had declared interest income at Rs. 60,000 only. The AO allowed her credit for TDS of Rs. 6,120. Accordingly the credit as claimed by the assessee -secondary purchaser to the tune of Rs. 91,800 at the interest income of Rs. 9,00,000 was not allowed by relying upon Section 199 of the Act. The assessee filed an application Under Section 154 of the Act on 6th Oct., 2003 with a request to the AO to allow her full credit of TDS deducted by IDBI which was rejected on 17th Nov., 2003 placing reliance on Section 199 of the Act. The AO followed the reasoning that the provision of Section 199 of the Act stipulates that credit of TDS was to be given to the assessee -secondary purchaser for the amount so deducted on furnishing of a certificate under Section 203 of Act for the assessment year for which such income was assessable. On further appeal filed by the assessee, the CIT (A), Karnal accepted the contention of the assessee by placing reliance on Circular No. of 2002 issued by the Central Board of Direct Tax (to be referred as, "CBDT"). The CIT (A) concluded that the effect of Circular No. of 2002 issued by CBDT was that the entire TDS benefit was to be given to the holder of the bond at the time of maturity and the assessee -secondary purchaser was entitled to the same. The CIT (A) disagreed with the approach adopted by the AO that the TDS benefit was to be given whenever the income is declared because it was not a workable proposition as there can be a number of persons to whom the said credit may belong and that there can be different AO of such persons. The CIT(A) held that the credit was not to be available to other persons because the TDS certificate could not be issued in anyone else's name and that this was the intention and the meaning of the circular. It was further found that the assessee -secondary purchaser was required to declare interest income in respect of the period for which she had held the bond which has been correctly offered and there was no dispute on that question. The TDS certificate has also been correctly issued in the name of assessee -secondary purchaser as per the Circular No. of 2002 issued by CBDT because she was the holder of the bond at the time of maturity. The only option was to give credit of TDS to the assessee -secondary purchaser. The CIT(A) holding that there was no other person to whom the credit should be given of any one portion of the TDS amount, the entire TDS credit was required to be given to the assessee -secondary purchaser only as per Circular No. of 2002. Accordingly, direction was issued by the CIT(A) to the AO to allow credit to the assessee -secondary purchaser for the entire amount of TDS amounting to Rs. 91,800.