The frequently asked question arises in assessing that since the amount is credited in the 26AS form, i.e. that the taxpayer has deducted the tax and deposited it in the government account, it is the beneficiary’s income. The Honble Tribunal hit the right line and clarified the legal position on the matter.
Chapter XVII-B talks about the withholding tax deduction and several sections have been treated in accordance with the nature of the transaction and therefore the tax rate that the debtor must deduct when paying or credit from a customer is also prescribed . this amount in the evaluator’s accounts. This is the payer’s responsibility and in no way represents any liability for the payment of taxes. The obligation to pay taxes depends on the collectability of such income, as defined in section 4 of the law.
“When a central law provides that income tax is charged at any rate or rate for each fiscal year, income tax at that rate or rates is charged for that year in accordance with and without prejudice to the provisions of this law “
Income is not taxable if it is not part of the assessed total income. The amount of total income is defined in chapter 5 of the law:
(1) Subject to the provisions of this Act, the total revenue of a resident of the previous year includes all revenue from any source, which:
to. it was received or is believed to have been received in India in that year by or on behalf of that person; or
b. it grows or arises or should emerge or originate in India in that year; or
c. in that year he arrives outside India or originates for him
Provided that, in the case of a person who is not ordinarily resident in India under subsection (6) of Section 6, income accrued or generated outside of India is not counted unless it is derived from a company subject to an audit or profession founded in India.
(2) Subject to the provisions of this law, the total income of a person who is not a resident of a previous year includes any income derived from any source –
to. it was received or is believed to have been received in India in that year by or on behalf of that person; or
b. it grows or arises or should emerge or originate in India in that year
In the case of Lieutenant Edulji Framroze Dinshaw (EFD) 103 Taxmann.com 452’s real estate administrator, the On’ble Tribunal stated that if, pursuant to section 4, an amount is not of an income nature and therefore the itself cannot be converted into income just because the taxpayer deducts the sum of taxes according to the law.
Income and collectability are two separate terms defined in Law 2 (24) and in the admissibility of Section 4. Each transaction must be individually tested as defined by law and only the provisions of chapter XVII – B of the law can be applied.
According to the facts of the case of Lt. Edulji Framroze Dinshaw (Supra), the payer opened a bank account in the name of the Valued using the KYC documents of the person unrelated to the creditor and an amount deposited according to the joint development agreement concluded by the assessor in 1995, who was subsequently challenged due to a series of fraudulent activities by the payer and the case, he entered into controversy and went to the High Court. The High’ble High Court instructed the payer to keep an account of the amount collected by the property owners and also instructed the payer to invest the amount collected in a fixed deposit, which would be part of the final trial court decision. During the trial period, the payer deposited the amount into the aforementioned bank account, FD and the bank credited the interest to that bank account and deducted TDS from those interest. The periodic evaluation by the AO and made no addition. Subsequently, the case was handled by the CIT for revision 263 commissioning the AO to assess the FD interest which it considered inaccurate and harmful to the interest. The assessor appealed to ITAT against the contested decision.
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