Neelam Gupta v. Ito

I.P Bansal, J.M:— This is an appeal filed by the assessee. It is directed against the order dated 5 July, 2011 passed by the CIT(A) for assessment year 2008-2009. The grounds of appeal read as under:—

“In the light of the facts and circumstances of the case, the learned CIT (Appeals) erred:

(i) in restricting the allowance of credit of TDS 1/5 only which was not an issue of grounds of appeal nor the body of A/O order passed by the A.O rather jumped above the process which led to the ultimate computation or assessment & otherwise the claim of TDS was rightly allowed by the A.O at the assessment stage being General Power of Attorney on behalf of the owner of the property was in the name of the appellant i.e, Neelam Gupta and in the light of GPA, the appellant had entered into contract with CWC and Ambuja Cement Ltd. for letting away the Godown which had resulted the release of rent and Form 16A in the name of GPA i.e, Neelam Gupta.

(ii) In restricting the claim without serving a notice to the appellant.”

2. At the outset, it may be mentioned that the appeal fees paid by the assessee was a sum of Rs. 2,600/- and, thus, short by Rs. 885/-. The defect notice was issued to the assessee that the appeal filing fees is short by Rs. 885/- and the appeal was also listed for hearing on 20th March, 2012. In response, a letter has been received through fax in which it has been stated that the amount of Rs. 885/- is being paid under protest. The earlier deposit of Rs. 2600/- was deposited in view of the fact that substantial relief has been given by learned CIT (A) and after giving appeal effect to the said relief the assessable income will be only to the tune of Rs. 1,54,762/-, therefore, the earlier fees paid by the assessee is sufficient. It is further submitted in the reply that the regular appeal should be disposed of on merits in the absence of the assessee.

3. We have carefully considered the aforementioned submissions of the assessee. The obligation to deposit appeal fees in case the appeal is filed before the Tribunal is described in Section 253(6) and the fees for the appeals made on or after 1 day of 1998 is linked with the income computed by the Assessing Officer. Therefore, we find no justification in the contention of the assessee that appeal fee should be computed with reference income remained assessable after giving effect to the order of CIT (A). Since the assessee has paid the balance fees, we proceed to decide the present appeal on merits after hearing the learned DR and after considering the facts made available on record.

4. As it can be seen from the grounds of appeal, the only grievance of the assessee is that learned CIT (A) has erred in restricting the credit of TDS to the assessee to 1/5 only as the said issue was not considered even by the Assessing Officer while passing the assessment order and the assessee is justifying the action of the Assessing Officer in giving the full credit of TDS on the ground that general power of attorney on behalf of the owners of the property was in the name of the assessee.

5. It will be relevant to mention a few facts here. The assessee had shown rental income from two properties which were rented out to Central Ware Housing Corporation and Ambuja Cement Company. The tax was deducted at source by both these parties at Rs. 22,020/- and Rs. 23,138/- respectively on the gross rental value at Rs. 1,42,464/- and Rs. 1,50,000/- respectively. However, in the return of income the assessee has shown rent from these two parties at Rs. 28,492/- and Rs. 30,000/- respectively. The Assessing Officer required the assessee to explain as to how the rental income in respect of these properties were shown at Rs. 28,492/- and Rs. 30,000/- respectively. It was submitted that the assessee was owner of 1/5 share of both these properties, hence, 1/5 rent was shown as income of the assessee. The relevant documents were also filed to justify such claim. However, the Assessing Officer ignored those documents and made inquiries from Tehsildar and, according to the records, the Assessing Officer found that the assessee was the sole owner in their record. In this manner, the Assessing Officer assessed whole of the rent of aforementioned two properties in the name of the assessee and as whole of the income was assessed in the hands of the assessee, the credit for the entire tax deducted at source was given. Learned CIT (A), after appreciation of the documentary evidence filed by the assessee has come to the conclusion that the assessee in fact was owner of 1/5 share of the aforementioned two properties, hence, was assessable only to the extent of 1/5 of rental income. However, learned CIT (A) has restricted the claim of TDS to 1/5 and the assessee is objecting to such direction of the learned CIT (A).

6. It was submitted by the learned DR that since the assessee is claiming that she is the 1/5 owner of the premises which have been given on rent and the income should be assessed only to the extent of 1/5, then, in accordance with the provisions of Section 199, the credit of TDS has to be restricted only to 1/5. Therefore, he pleaded that learned CIT (A) has rightly held that the credit for tax deducted at source should be given to the assessee only to the extent of 1/5.

7. We have carefully considered the submissions of the learned DR. We have also carefully gone through the assessment order as well as the order passed by the learned CIT (A). The return of income filed by the assessee has shown taxable rent in respect of aforementioned two properties only to the extent of 1/5. The mandate of Section 199 is clear. Section 199(1) read as under:—

“199. (1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be.”

8. In the aforementioned provision, it has been clearly stated that wherever tax is deducted at source, the same shall be treated as payment of tax on behalf of the person from whose income the deduction was made. As per own version of the assessee she is the owner of 1/5 share only. Therefore, the credit of TDS, if any, can be given to the assessee only to the extent of 1/5 share. We find no infirmity in the order of the CIT (A) vide which it has been held that the assessee is entitled to credit of tax deducted at source only to the extent of 1/5. So far as it relates to the contention of the assessee that Assessing Officer has granted her the credit for entire TDS, therefore, the CIT (A) was wrong in restricting the same to 1/5, it may be mentioned that the action of giving credit of the entire TDS by the Assessing Officer was on the basis of the fact that the entire income was considered to be assessable in the hands of the assessee. However, when the income has been held to be assessable only to the extent of 1/5, therefore, the credit for tax deducted at source has also to be restricted. Finding no force in the claim of the assessee, we dismiss the grounds raised by the assessee.

9. In view of the above discussions, the appeal filed by the assessee is dismissed.