The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that Tax Deduction at Source on interest on bank deposit could not be denied due to non-submission of statement by wife while clubbing the income.
The assessee Anil Ratanlal Bohora, filed a return declaring total income and An Intimation was issued disallowing, inter alia, credit for tax deducted at source on interest income. According to the CPC, Form No.26AS did not contained partial amount of TDS with respect to TAN mentioned in schedule.
The assessee submitted before the CIT(A) that he gifted a certain amount to his wife, out of which she made deposits with State Bank of India. As per Form no. 26AS, she earned total interest income with deduction of tax at source. Since the deposit was made out of the gift made by him, the assessee included proportionate interest income in his total income u/s.64 and also claimed credit for proportionate tax deducted at source.
The Commissioner of Income Tax (CIT(A)) observed that the provisions of Rule 37BA (2) were not complied with and as a result, the assessee was not entitled to the credit for deduction of tax at source.
Pramod Shingte appeared on behalf of the assessee and Ramnath P. Murkunde appeared for the revenue.
The Division Bench of R.S. Syal (Vice President) and S.S. Viswanethra Ravi (Judicial Member) allowed the TDS and observed that,
“The total interest income received by the assessee’s wife got taxed partly in her own assessment and partly in the assessment of her husband, the assessee in question, as per the mandate of section 64. The benefit of TDS has also been claimed accordingly. Merely because the assessee’s wife did not furnish declaration to the bank in terms of proviso to Rule 37BA(2), the amount of tax deducted at source, which is otherwise with the Department, cannot be allowed to remain with it eternally without allowing any corresponding credit to the person who has been subjected to tax in respect of such income.”
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