NARESH KUMAR JAIN,DELHI V. DCIT, CIRCLE INTL. TAX-2(1)(2), DELHI

ITA 281/DEL/2025

AI Insights

The case revolves around the denial of TDS credit to Shri Naresh Kumar Jain, a non-resident for the assessment year 2024-25, on the sale of a property that was legally owned by his wife but financially managed by him. The property was sold for Rs. 56,00,000, and TDS of Rs. 56,000 was deducted under section 194-IA of the Income Tax Act, 1961. The assessee claimed the TDS credit in his income tax return, which was denied, leading to this appeal. The Tribunal examined the provisions of section 199 and rule 37BA of the Income Tax Rules, 1962, and concluded that the TDS should be credited to the assessee as he had declared the income/loss from the property in his tax returns.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713385 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2024-2025
• Other Referred Cases: Anil Ratanlal Bohra v. ACIT ITAT Pune (2023) 148 Taxmann.com15
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SINGH SHARMA
• Assessee Lawyers: DEEPAK JAIN
• Keywords: TDS; Residential status

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘D’ BENCH, NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 281/DEL/2025 [A.Y 2024-25] Shri Naresh Kumar Jain Vs. The Dy. C.I.T B-63, Saraswati Kunj Circle – 2(1)(2) I.P. Extn, Nr Manglam Hospital International Taxation East Delhi Delhi PAN – AACPJ 4189 M (Applicant) (Respondent) Assessee By : Shri Deepak Jain, CA Department By : Shri Vikram Singh Sharma, Sr DR Date of Hearing : 09.07.2025 Date of Pronouncement : 30.07.2025 ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order of the ld. CIT(A), Patna dated 14.11.2024 u/s 250 of the Income-tax Act, 1961 [the Act, for short] pertaining to A.Y 2024-25. Printed from counselvise.com ITA No. 281/DEL/2025 [A.Y 2024-25] Naresh Kumar Jain Vs.The Dy. C.I.T Page 2 of 9 2. The solitary Ground raised by the assessee reads as under: “The Ld. CIT(A) has erred in law and on facts in not directing the Assessing Officer to allow the credit of TDS of Rs.56,000 (28,000 + 28,000) claimed by the assessee deducted on the sales consideration of the property sold during the year which was in the name of the wife of the assessee, Mrs. Nidhi Jain whereas the LTCL on the sale of the said property is duly included in the income of the assessee in terms of the provisions of section 64 of the Act even if the formality of Rule 37BA of Income Tax Rules is not completed.” 3. Brief facts of the case are that the assessee is an individual and his residential status is that of Non-Resident during the A.Y 2024-25. During the A.Y. under consideration, his income in India included income from capital gain on sale of shares and securities, interest from banks and dividend. In addition, a residential flat which was in the name of his wife Mrs Nidhi Jain was also sold during previous year ended on 31.03.2024 relevant to A.Y. 2024-25 for a sale consideration of Rs. 56,00,000/- to Shri Arun Kumar Singh and Ms. Biva Singh. The capital gain arising out of the transaction was offered to tax by the assessee. The TDS of Rs. 56,000/- (Rs. 28,000 by each joint buyer) on the sale of the said property was deducted under section 194-IA of the Act in the name of the wife of the assessee. Printed from counselvise.com ITA No. 281/DEL/2025 [A.Y 2024-25] Naresh Kumar Jain Vs.The Dy. C.I.T Page 3 of 9 4. This aforesaid flat was booked and the purchase amount as well as registration cost was paid during the FYs 2010-11 and 2011-12. The purchase payment of this flat was made by the assessee mainly through Home Loan and EMIs were also paid by the assessee. After Possession until the sale of this flat, income from this flat from renting out was also clubbed with the income of the assessee in terms of the provisions of Section 64 of the Income Tax Act, 1961 (in short 'Act'). 5. Accordingly, Long Term Capital Gain/Loss was computed on the sale of the aforesaid flat and the resultant (LTCL) amounting to loss of Rs (-) 19,50,046/- was clubbed in the hands of the assessee. The assessee correspondingly claimed TDS of Rs. 56,000 (28000+28000) deducted by the buyers of the property u/s 194-IA of the Act and the Income Tax return for A.Y. 2024-25 was filed on 06.07.2024 claiming a refund of Rs. 57,262/- including TDS of Rs 56,000/- u/s 194-IA of the Act which was deducted in the name of wife of the assessee, Mrs. Nidhi Jain as the property was in her name. 6. The said TDS of Rs. 56,000/- (28,000 deducted by each joint buyer) was not claimed by wife of the assessee in her return. The return filed by the assessee was processed u/s 143(1) of the Act and the aforesaid Printed from counselvise.com ITA No. 281/DEL/2025 [A.Y 2024-25] Naresh Kumar Jain Vs.The Dy. C.I.T Page 4 of 9 LTCL of Rs. (-) 19,50,046 was duly included in the hands of the assesse but credit of TDS of Rs. 56,000 (28,000+28,000) deducted in respect of the sales consideration of the aforesaid property sold was not allowed to the assesse and a refund of Rs. 1,262/- (plus interest of Rs. 36 minus deductions of TDS of Rs 11) was allowed against refund claimed of Rs. 57,262/-. 7. On these factual aspects, the assessee went in appeal before the ld. CIT(A) who issued direction to the Assessing Officer to verify the correctness of the claim of the assessee and determine and allow eligible amount of TDS in accordance with the provisions of Rule 37BA of the Rules. 8. Aggrieved further, the assessee in appeal before us. 9. Before us, the ld. counsel for the assessee vehemently stated that on the one hand the Revenue has accepted the income from the said property, offered in the hands of the assessee throughout, benefit of TDS was not extended to the assessee. The ld. counsel for the assessee prayed that the TDS benefit may be granted to him in light of the Printed from counselvise.com ITA No. 281/DEL/2025 [A.Y 2024-25] Naresh Kumar Jain Vs.The Dy. C.I.T Page 5 of 9 provisions of section 199 of the Act. The ld AR relied on the decision of Anil Ratanlal Bohra v. ACIT ITAT Pune (2023) 148 Taxmann.com15. 10. Per contra, the ld. DR stated that the assessee has since long filed his return of income declaring the wrongly the income in his own hands when the property was in the name of the wife of the assessee and all income accruing/arising from the property should have been offered and taxed in the hands of the wife of the assessee. Since the assessee’s wife has not offered the same to tax, TDS benefit cannot be granted. 11. We have heard the rival submissions and have perused the relevant material on record. We find that the Revenue has accepted the income accruing from the said property in the hands of the assessee. The Revenue does not dispute that the funds for purchase of the said property was procured by the assessee and that the assessee is the owner of the said property. The revenue also does not dispute that the said property was purchased in the name of the wife. We find that the said property was sold and the assessee has offered the capital loss arising from the said sale under his name which has been accepted by the Revenue. The TDS benefit, however, has been denied to the assessee. Printed from counselvise.com ITA No. 281/DEL/2025 [A.Y 2024-25] Naresh Kumar Jain Vs.The Dy. C.I.T Page 6 of 9 12. To appreciate the issue of credit of TDS in the hands of the assessee at hand, we examined the provisions of section 199 which is 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. (2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. (3) ***** We are of the view that the substantive provisions contained in Section 199 of the Act read with rule 37BA(2), provides that TDS, paid to the Government, shall be treated as payment of tax on behalf of the person who is owner of the property and from whose income the deduction was made. In the instant case, the income/loss from the sale of the said property was offered by the assessee and accepted by the Revenue, therefore, the assessee is entitled to the credit of TDS deducted on the sale of the said property. Merely because the Rule 37BA is not adhered Printed from counselvise.com ITA No. 281/DEL/2025 [A.Y 2024-25] Naresh Kumar Jain Vs.The Dy. C.I.T Page 7 of 9 to by the wife, the assessee can not be denied the benefit of TDS on income which he had declared. We are also of the view that the proviso to rule 37BA (2) is just a procedural aspect of giving effect to the mandate of section 199 for allowing the credit to the other person in whose hands the income is chargeable to tax. We further find that the wife of the assessee has not claimed any such TDS credit in her own ITR for this AY concerned. We therefore, are of the considered view that the assessee is entitled to the credit of TDS of Rs. 56,000 and the same be allowed in the hands of the assessee. We are fortified in our view from the decision of coordinate bench of ITAT in the case of Anil Ratanlal Bohra v. ACIT (supra) which held as follows: “Whether as substantive provision of section 199 talks of granting credit for tax deducted at source to other person who is lawfully taxable in respect of such income and rule 37BA is procedural provision which cannot disturb writ of a substantive provision, credit for tax deducted at source at Rs. 2.80 lacs should be allowed to assessee, who had been subjected to tax in respect of interest income of Rs. 37.42 lacs - Held, yes [Paras 6 and 7] [In favour of assessee] Following the said decision, we accordingly direct the Assessing Officer to grant TDS benefit to the assessee. Ground 1 is allowed. Printed from counselvise.com ITA No. 281/DEL/2025 [A.Y 2024-25] Naresh Kumar Jain Vs.The Dy. C.I.T Page 8 of 9 13. In the result, the appeal of the assessee in ITA No. 281/DEL/2025 is allowed. The order is pronounced in the open court on 30.07.2025. Sd/- Sd/- [VIKAS AWASTHY] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 30th JULY, 2025. VL/ Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Sl No. PARTICULARS DATES 1. Date of dictation of Tribunal Order . 2. Date on which the typed draft Tribunal Order is placed before the Dictation Member 3. Date on which the typed draft Tribunal Order is placed before the other Member 4. Date on which the approved draft Tribunal Order comes to the Sr. P.S./P.S. 5. Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr. P.S./P.S 7. Date on which the final Tribunal Order is uploaded by the Sr. P.S./P.S. on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal Order 9. Date of killing off the disposed of files on the judiSIS portal of ITAT by the Bench Clerks Printed from counselvise.com ITA No. 281/DEL/2025 [A.Y 2024-25] Naresh Kumar Jain Vs.The Dy. C.I.T Page 9 of 9 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes for xerox 12. The date on which the file goes for endorsement 13. The date on which the file goes to the Superintendent for checking 14. The date on which the file goes to the Assistant Registrar for signature on the Tribunal order 15. Date on which the file goes to the dispatch section 16. Date of Dispatch of the Order Printed from counselvise.com "