Rule 37BA

Rule 37BA — the law in short

What the courts have decided on section Rule 37BA, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Naresh Bhavani Shah (HUF) v CIT High CourtHelps taxpayer
  The HUF's money was invested in the karta's own name, so the TDS certificate and the 26AS entry carry his individual PAN. The HUF offered the interest to tax and the karta claimed no credit. The department says PAN mismatch, no credit. What now?
  The credit was directed to be given to the HUF. The Court held that the ordinary route is Rule 37BA(2) - the deductee files a declaration with the deductor, and the deductor issues the certificate in the name of the person entitled to credit - and that this procedure must invariably be completed before credit can be claimed where the certificate shows someone else's name and PAN. But it also held there is no dearth of power in the department to give credit in a genuine case, and on these special facts it directed credit on the karta filing an affidavit that the money and the income were not his and that he had claimed no credit.
• IVRCL-KBL (JV) v ACIT High CourtHelps taxpayer
  My joint venture bid for and won the contract, the whole of it was back-to-backed to a constituent member, and the government deducted TDS from the JV's bills. The Assessing Officer refuses the JV credit under Rule 37BA(2)(i), saying credit belongs to the member who did the work. Who gets it?
  The joint venture does. Rule 37BA(2)(i) displaces credit from the deductee to another person only where some provision of the Act makes the income assessable in that other person's hands, and only where the proviso's machinery has been followed - the deductee files a declaration with the deductor and the deductor reports the deduction in the other person's name. Neither condition was met, and the Court set aside the assessment orders to the extent they denied the JV credit.
• CIT-15 v Relcom High CourtHelps taxpayer
  A vendor billed my sister concern but put my PAN on the TDS certificate, so my 26AS shows receipts and TDS that are not mine. The tax has been paid by the sister concern. Can I claim the credit without offering that income?
  On these facts, yes. The Delhi High Court refused to let s.199 be used as a technical bar where the corresponding income had been assessed in the sister concern's hands, that concern had claimed no credit and raised no objection, and the deduction was undisputed. The Court declined to require the assessee to first chase the vendor for a corrected certificate, holding that procedure is the handmaid of justice.
• Bhandari Bros v ITO, Bundi ITATHelps taxpayer
  Tax was deducted in my PAN under s.194Q on the whole mandi turnover, but I am a kachha arahtiya and I only offer my commission to tax. CPC has cut my TDS credit down in proportion. Can I still claim the whole deduction?
  Yes, on this order. A commission agent in the Bundi grain mandi declared commission receipts of Rs 2,94,975 and claimed TDS of Rs 2,37,479, of which Rs 74,072 had been deducted by purchasers under s.194Q on sale proceeds that belonged to the farmers; CPC allowed Rs 10,037 under s.143(1)(a) and the Commissioner (Appeals) upheld the withholding of the s.194Q component. The Jaipur SMC Bench held that once an amount has been deducted from the assessee's income and paid into the Government treasury against his PAN, credit cannot be refused on the ground that the deduction ought to have been made in somebody else's hands, and found no merit in the Commissioner (Appeals)'s reliance on s.199 read with rule 37BA(2). Note what this is not: the Tribunal did not decide any question about the scope or correct application of s.194Q, and expressly proceeded on the footing that the deduction may have been made wrongly.
• Investcorp Real Estate Yield Fund v ITO — an AIF assessed as a representative assessee under s.160(1)(iv) read with s.164(1) gets credit for advance tax and TDS paid under its beneficiaries' PANs ITATCuts both waysNo later treatment found
  Our fund is a SEBI-registered AIF trust that offers the whole of its income as a representative assessee. Part of the year's advance tax and TDS went in under the beneficiaries' PANs and part under the fund's own. The CPC has refused the beneficiary-PAN credits. Can the fund claim them?
  Yes, on these facts. The Mumbai Tribunal upheld the appellate finding that because the corresponding income had been offered by the trust in its capacity as representative assessee within the meaning of section 160(1)(iv) read with section 164(1), the trust deserved the credit for the advance tax and the tax deducted at source as claimed in its return, including the advance tax of Rs.2,84,60,753 paid under the beneficiaries' permanent account numbers and the TDS of Rs.65,57,000 that had been disallowed. The Assessing Officer was directed, while allowing those credits, to ensure that no similar credit was availed by the beneficiaries. The assessee's appeal — which was against that anti-duplication direction and against the interest under sections 234B and 234C — was dismissed.
• Adroit Structural Engineers Pvt Ltd v ADIT (CPC) ITATHelps taxpayerNo later treatment found
  The payer deducted and reported my TDS one year early, so it sits in the previous year's 26AS. CPC disallowed the credit in the year I offered the income, and the CIT(A) said 26AS is 26AS. What is the answer?
  Rule 37BA(3)(i) gives credit for the assessment year for which the income is assessable, so credit belongs to the year in which the income was offered, not the year in which the deductor happened to report it. The Tribunal held that where there is no double claim the assessee is entitled to credit in the year the corresponding income was offered and the invoices were raised, and restored the matter to the Assessing Officer to verify that the same credit had not been claimed in another year.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.