HIGH COURT OF PUNJAB AND HARYANA
Commissioner of
Income-tax
v.
Smt.
Sonal Bansal
M.M. Kumar, J.
IT Appeal No. 412 of
2007
December 17, 2007
Section 199
of the Income-tax Act, 1961 - Deduction of tax at source - Credit for tax
deducted - Assessment year 2002-03 - Whether in relation to interest on Deep
Discount Bonds any deduction made of tax at source and paid to Central
Government is required to be treated as payment of tax on behalf of ‘owner of
security’ or ‘unit holder’ - Held, yes
Circulars
and Notifications : Circular No. 2 of 2002, dated
15-2-2002
Facts
The assessee
had purchased Deep Discount Bonds 1997 of IDBI at the rate of Rs. 9,700 each on 1-1-2001 from ‘V’ who had originally
purchased the same at the rate Rs. 5,500. Thereafter,
on 26-6-2002, the assessee had duly filed return declaring her income of Rs. 1,07,140 and claimed credit of
TDS of Rs. 91,800 in the return of income that was
deducted by IDBI on interest income of Rs. 9 lakhs which was paid by the IDBI to the assessee-secondary
purchaser. The Assessing Officer, however, disallowed her claim. On appeal, the
Commissioner (Appeals) allowed the entire credit relying on Circular No. 2 of 2002.
Further, the Tribunal upheld the order of the Commissioner (Appeals) holding
that as per CBDT Circular No. 2 and section 199, the assessee rightly claimed
the TDS benefit in the matter because TDS certificate was issued in the name of
the assessee being owner and holder of the bond at the time of maturity.
On appeal :
Held
A perusal
of the provisions of section 199 shows that any deduction made of tax at source
and paid to the Central Government is required to be treated as payment of tax
on behalf of the person from whose income the deduction was made. However, with
effect from 1-4-1997, amendments were introduced by Finance Act, 1996 which
resulted in addition of words ‘depositor’ or ‘owner of property’ or ‘owner of
security’ or ‘unit holder’ as the case may be. Therefore, it is clear that any
deduction made of tax at source and paid to the Central Government is required
to be treated as payment of tax on behalf of ‘owner of
security’ or ‘unit holder’. In the instant case, it was obviously the assessee-secondary
purchaser who was owner of security and, therefore, tax deducted at source had
to be regarded as payment made on her behalf. Moreover, certificate under
section 203 had also been issued to assessee. [
Further,
the Tribunal had rightly interpreted the words ‘owner of the property’ or ‘of
the unit-holder’ to mean that the assessee was entitled to the benefit. The
aforementioned situation had been made further clear by CBDT Circular No. 2 of
2002 by issuing Guidelines. One of the Guidelines in the CBDT Circular is that
the TDS is to be made at the time of maturity of the bond and it is to be
issued to the holder of the bond at the time of maturity. It was undisputed
fact that the TDS certificate was issued in the name of the assessee being holder
or owner of the bond at the time of maturity. Therefore, the case of the
assessee was covered by the expressions ‘owner of the property’ or ‘the unit
holder’ which were added in section 199 with effect
from 1-4-1997. Therefore, the views taken by the Commissioner (Appeals) as well
as the Tribunal were the correct views. [
Thus, in
view of above, the appeal was to be dismissed.
Cases referred to
CIT v. Tanjore
Permanent Bank Ltd. [1984] 149 ITR 788/[1987] 30
Taxman 265 (
Yogesh Putney for the Appellant.