The Income Tax Appellate Tribunal in its recent order ruled that firm cannot claim refund under the income Tax Act when TDS certificate is issued in the name of the partner of the Firm.
The assessee-firm filed return of income declaring total income at Rs.2,15,986 only after receiving notice under section 148 was issued against the non-filing of return. The A.O. found that assessee is deriving income from contractor-ship business and the AO disallowing certain expenses computed the income under section 147/143(3) of the Income Tax Act.
In return CIT, Rohtak however, was not satisfied with the re-assessment order and issued show cause notice under section 263 of the Income Tax Act and found that assessee is being assessed to tax since 2001- 2002 onwards in the status of Individual as well as Firm.
Later, it was revealed that assessee has filed an application requesting for refund of Rs.25, 80,265 on account of total TDS of Rs.26, 47,006. Thus, the payment of contract and TDS deducted on payment is not verifiable from the system.
The assessee is in appeal challenging the order under section 263 of the Income Tax Act.
According to the Revenue Department, the Individual Partner of the Assessee-Firm had taken a Contract which he has transferred to the Assessee-Firm. Once TDS certificate is issued in the name of the individual, then, refund is to be claimed by the individual against the TDS.
However the assessee claimed that entire contract works were transferred to the firm as well as entire work as per contract has been executed by the firm.
The counsel for the assessee submitted before the tribunal that TDS is directed to be allowed by the ITAT, Delhi Bench in the case of assessee in ITA.No.2027/2016. The Tribunal in the same year has also mentioned that in comparable cases of Shri Ranbir Singh, the A.O. allowed TDS benefit on identical facts.
Following the above decision, the bench concluded that once the income is taxable in the hands of the Assessee Firm of the contract taken in the name of individual, there is no question of denying the benefit of TDS deduction to the Assessee Firm which was granted in the name of individual.
Finally the bench comprising of Judicial Member Bhavnesh Saini and Accountant Member L.P. Sahu ruled that when entire income is assessed in the hands of the Assessee-Firm and have not been disputed in the impugned order, assessee has rightly made claim for refund of the amount deducted as TDS in the name of the individual.
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