Assessee is entitled to full TDS credit when buyer inadvertently deducted entire amount in his name for jointly held property.

Full TDS Credit Allowable to Co-owner if Corresponding Income is Taxed Separately

Brief Facts

The assessee, an individual, jointly owned an ancestral property with his son. ¹They sold the land for a total consideration of ₹13 crore, with each receiving an equal share of ₹6.5 crore. However, the buyer inadvertently deducted the entire Tax Deducted at Source (TDS) of ₹13 lakh in the name of the assessee alone.

In his income tax return, the assessee declared the long-term capital gain based on his share of the sale consideration (₹6.5 crore) but claimed the full TDS credit of ₹13 lakh as reflected in his Form 26AS. ⁴⁴⁴⁴His son also filed a return, declared his share of the income, and paid the due taxes without claiming any TDS credit. 

The Central Processing Centre (CPC) issued an intimation under Section 143(1) and subsequently passed a rectification order under Section 154, allowing only a proportionate TDS credit of ₹6.5 lakh, corresponding to the income declared by the assessee. This action was later upheld by the Additional/Joint Commissioner of Income Tax (Appeals) [Addl./JCIT(A)].

Aggrieved by the decision, the assessee filed an appeal with the Income Tax Appellate Tribunal (ITAT), arguing that since the entire TDS was credited to his PAN and his son had already paid taxes on his share, he should be granted the full TDS credit.

Decision

The ITAT ruled in favor of the assessee. The Tribunal held that a deductee should not be made to suffer due to a procedural mistake made by the deductor. It observed that the Revenue cannot enrich itself at the expense of the assessee, especially when it is undisputed that the assessee’s son had already declared his share of the income and paid the corresponding taxes without claiming any TDS credit.

Relying on previous judicial precedents and CBDT instructions, the Tribunal emphasized that when a TDS mismatch occurs, the Assessing Officer (AO) should verify if the tax has been deposited into the Government account and grant credit accordingly.The ITAT set aside the order of the Addl./JCIT(A) and restored the matter to the CPC/AO with a direction to allow the full credit of TDS amounting to ₹13 lakh to the assessee after necessary verification. ^12121212The appeal was partly allowed for statistical purposes.

Citation Details

Case: Nanasaheb Bhagawan Sasar vs. Income Tax Officer, Ward 2(2), Pune

Appeal No.: ITA No.722/PUN/2025 

Bench: ITAT “A” BENCH, PUNE 

Date of Order: 22-09-2025