When it comes to selling a jointly owned property, one common complication arises around the claim for Tax Deducted at Source (TDS), especially when the entire TDS is deposited under one party’s name. The recent ruling by the Mumbai Income Tax Appellate Tribunal (ITAT) in the case of Rahul Dinesh Bajpai vs. Deputy Director of Income-tax (2024) provides valuable insights into how TDS credit should be allocated in such situations.
The Situation at Hand
In this case, the assessee (Rahul Dinesh Bajpai) and his wife jointly sold an immovable property. They declared capital gains arising from the sale equally. However, the entire TDS was deposited solely in the name of the assessee (Rahul), rather than being split between him and his wife. As a result, the assessee claimed the entire TDS credit in his return.
The Dispute
When the Centralized Processing Centre (CPC) processed the return, it granted the TDS credit only in proportion to the capital gains declared by the assessee. The balance of TDS that had been deposited in Rahul’s name alone was disallowed. The Commissioner of Income-tax (Appeals) upheld this decision, prompting the assessee to appeal to the Mumbai ITAT.
The ITAT’s Verdict
The Tribunal emphasized that the key issue was the fact that TDS was deposited solely in the name of the assessee. Although the property was jointly owned and the capital gains were declared equally by both parties, the ITAT noted that TDS credit should follow the person who the tax was remitted under, not automatically split just because the property was jointly owned.
The Tribunal clarified that the entire TDS credit could be claimed by the assessee if his wife did not claim any portion of the TDS herself. It directed the Assessing Officer to verify whether the wife had made any claim for her share of the TDS. If she had not, the assessee was entitled to claim the entire credit.
Key Takeaways
This decision reinforces an important principle: TDS credit is linked to who the tax is paid under, not just ownership or the declared capital gains. In this case, since the TDS was deposited in the name of the assessee and his wife did not claim any credit, the assessee was entitled to the full TDS benefit.
The ruling also underlines that joint property ownership does not automatically lead to a proportional TDS credit split. Instead, the actual claimant’s records and TDS remittance details must be considered for an accurate claim. The assessing authorities should ensure that both parties' claims are properly verified to avoid unjust TDS allocation.
Conclusion
The Mumbai ITAT’s ruling provides clear guidance on TDS credit in cases of joint property ownership. If TDS is deposited under one party’s name, that party can claim the entire TDS credit, provided the other party does not make a claim for it. This highlights the importance of accurate documentation and clear claims when dealing with TDS, especially in joint property transactions.
