Whether landlord is bound to deduct TDS on rental income of Rs 40,000/ per month given for household use in india?

 No, the landlord is not bound to deduct TDS (Tax Deducted at Source) on rental income of ₹40,000 per month given for household (residential) use in India.

According to Section 194IB of the Income Tax Act, TDS is only required to be deducted by the tenant if the monthly rent paid exceeds ₹50,000. The obligation for TDS deduction does not apply for rent payments below this threshold, whether the use is residential or commercial.

So, for a monthly rent of ₹40,000, there is no requirement for the landlord or the tenant to deduct TDS under current Indian tax laws.

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Whether Husband is Entitled To TDS Credit On Interest Earned From Amount Gifted To His Wife?

A careful perusal of sub-rule (2) indicates that where the

income, on which tax has been deducted at source, is assessable in the hands of a person other than deductee, then credit for the

proportionate tax deducted at source shall be given to such other

person and not the deductee. The proviso to sub-rule (2) provides

for deductee filing a declaration with the deductor giving

particulars of the other person to whom credit is to be given. On

receipt of such declaration, the deductor shall issue certificate for

the deduction of tax at source in the name of such other person.

The crux of section 199 read with Rule 37BA(2) is that if the

income, on which tax has been deducted at source, is chargeable

to tax in the hands of the recipient, then credit for such tax will be allowed to such recipient. If, however, the income is fully or

partly chargeable to tax in the hands of some other person because of the operation of any provision, like section 64 in the extant case, the proportionate credit for tax deducted at source should be allowed to such other person who is chargeable to tax in respect of such income, notwithstanding the fact that he is not the recipient of income. It is with a view to regularise the allowing of credit for tax deducted at source to the person other than recipient of income, that the proviso to Rule 37BA(2) has been enshrined necessitating the furnishing of particulars of such other person by the recipient for enabling the deductor to issue TDS certificate in the name of the other person. The proviso to Rule 37BA(2) is just a procedural aspect of giving effect to the mandate of section 199 for allowing credit to the other person in whose hands the income is chargeable to tax. The entire purpose of this exercise of allowing credit to the other person is to ensure that the benefit of tax deducted at source is availed once and that too, by the right person, who is chargeable to tax in respect of such income. It is just to streamline the procedure for giving effect to this intent and rule out the possibility of taking any inappropriate credit for the amount of tax deducted at source, firstly, by the recipient who is not chargeable to tax and secondly, by the person who is rightly chargeable to tax in respect of such income, that the procedural provision has been put in place in Rule 37BA(2). One needs to draw a line of distinction between substantive provision [section 199 read with Rule 37BA(2) without proviso] and the procedural provision [proviso to Rule 37BA(2)]. Non-compliance of a procedural provision, which is otherwise directory in nature, cannot disturb the writ of a substantive provision. {Para 6}

7. Adverting to the facts of the extant case, it is seen that out of

total interest income credited to assessee’s wife as per Form

No.26AS amounting to Rs.39.26 lakh, she included interest from

SBI in her total income to the extent of Rs.1,84,212/-. The

assessee included the remaining interest of Rs.37.42 lakh in his

income because of the applicability of section 64 of the Act. The

assesse and his wife claimed proportionate tax credit, which totals

up to Rs.2,94,474/-. This deciphers 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. As the substantive provision of section

199 talks of granting credit for tax deducted at source to the other

person, who is lawfully taxable in respect of such income, we are

satisfied that the matching credit for tax deducted at source must

also be allowed to him. In view of the fact that the tax of

Rs.2,80,656/- has actually been deducted at source on the interest

income of Rs.37.42 lakh, we hold that the credit for such TDS

should be allowed to the assessee, who has been subjected to tax

in respect of such income. This ground is allowed.

 IN THE INCOME TAX APPELLATE TRIBUNAL

PUNE BENCH, ‘A’ PUNE

BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND

SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER

आयकर अपील सं.

/ ITA No.675/PUN/2022

नधारण वष / Assessment Year : 2021-22

Anil Ratanlal Bohora, Vs. ACIT, Circle-1, Nashik

आदेश / ORDER

PER R.S. SYAL, VP :

Date of pronouncement 19-01-2023

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Income Tax TDS rates for AY 2022-2023

 https://drive.google.com/file/d/1sgk3_qUp0-24WXt0NQa2BcLSqsI1Oaj4/view?usp=sharing

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Whether judgment debtor can deduct income tax out of mesne profits paid under decree of court?

The above definition of rent makes it abundantly clear that rent is a payment by whatever name you call it for use of any land or building. Thus, merely because the rent awarded by the Court was called by the Court as damages mesne profits does not mean that it ceases to be income of the Decree Holder. Similarly, I consider that interest over the unpaid amount would qualify as income since the unpaid amount is treated as something lying deposited with the Judgment Debtor. As, a person has to pay income tax on his deposits in the bank or in FDs, he is liable to pay income tax on the interest received by him under Court orders for unpaid amounts. The judgments cited by the Decree Holder are of no help since the judgments deal with different facts and circumstances. In Haryana Urban Development Authority v. Dr. Ashok Kumar Aggarwal MANU/SC/0817/2004 : (2005) 9 SCC 524 the Supreme Court observed that TDS could not be deducted on the payments towards compensation/damages for mental agony and harassment. The Supreme Court was not dealing with mesne profits in lieu of occupation and use of the premises. The view taken by the Calcutta High Court in my opinion is not the correct view. Delhi High Court in case of Mrs. Kanti Singh and Ors. v. The Project and Equipment Corporation of India Ltd. 2001 III AD (Delhi) 686 had given no opinion about TDS and only stated that the Court cannot go behind the decree.

7. I, find no force in the plea taken by Decree Holder that Judgment Debtor could not have deducted tax at source and deposited it with the government when Judgment had to pay rent mesne profits under orders of the Court.

IN THE HIGH COURT OF DELHI

Ex. Appl. No. 405/2009 in Ex. P. No. 351/2008

Decided On: 23.12.2009

Five Star Engg. and Agents Pvt. Ltd. Vs.  P.B. State Industrial Development Corporation

Hon'ble Judges/Coram:

S.N. Dhingra, J.

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Whether Income Tax Can Be Levied On Interest From Motor Accident Compensation?

 We, therefore, hold that the interest awarded in the motor
accident claim cases from the date of the Claim Petition till the
passing of the award or in case of Appeal, till the judgment of the
High Court in such Appeal, would not be exigible to tax, not being
an income. This position would not change on account of clause
(b) of section 145A of the Act as it stood at the relevant time
amended by Finance Act, 2009 which provision now finds place in
sub-section (1) of section 145B of the Act. Neither clause (b) of
section 145A, as it stood at the relevant time, nor clause (viii) of
sub-section (2) of section 56 of the Act make the interest
chargeable to tax whether such interest is income of the recipient
or not. Section 194A of the Act is only a provision for deduction of
tax at source. Any provision for deduction of tax at source in the
said section would not govern the taxability of the receipt. The
question of deduction of tax at source would arise only if the
payment is in the nature of income of the payee.

59. So far as the plain meaning of section 194A(1) read with
erstwhile clause (ix) and substituted clauses (ix) and (ixa) of subsection
(3) is concerned, there can be no doubt or dispute.

However, the fundamental question is does section 194A make the
interest income chargeable to tax if it otherwise is not. The answer
has to be in the negative. The provision for deduction of tax at
source is not a charging provision. It only makes deduction of tax
at source on payment of same, which, in the hands of payee, is
income. If the payee has no liability to pay such income, the
liability to deduct tax at source in the hands of payer cannot be
fastened. In other words, the provision of deducting tax at source
cannot govern the taxability of the amount which is being paid.

61. We may clarify that these observations and conclusions
would apply to interest on compensation or enhanced
compensation awarded by the Motor Accident Claims Tribunal or
High Court from the date of the Claim Petition till passing of the
award or the judgment. Further interest which may be paid for

delay in depositing the awarded amount, would not form part of the
compensation and, therefore, would fall in the bracket of interest
income and would be exigible to tax under the normal provisions.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O.O.C.J.
WRIT PETITION NO.2902 OF 2016

Shri Rupesh Rashmikant Shah Vs  Union of India

CORAM: AKIL KURESHI &
S.J. KATHAWALLA, JJ.

Dated: AUGUST 8, 2019
JUDGMENT (Per Akil Kureshi, J.):

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Whether insurance company can deduct TDS in respect of interest payable on compensation granted under motor accident claim petition?

The Division Bench of this

Court in the case of Gauri Deepak Patel & Ors.(supra) has accepted

the interpretation of Section 194A as laid down in the decision of the

Gujarat High Court in the case of “Smt.Hansagauri Prafulchandra

Ladhani Vs. Oriental Insurance Co.Ltd.”7

and accordingly has laid down   a   procedure   under   which   the   Insurance   companies   or   the owners of the motor vehicles depositing the amount in compliance of

the Award of the Motor Accidents Claims Tribunal.These directions of

the Division Bench lay down a complete scheme which the Insurance

company is required to follow when the amount of compensation is

7 2007 ACJ 1897 (Gujarat)

deposited in pursuance of the Award of the Tribunal which include

the   interest   amount.     The   Division   Bench   issued   the   following

directions to be followed in all the cases arising  before the Tribunal:­

“6. Accordingly,   we   direct   that   the   following

procedure   as   laid   down   in   the   case   of   Hansaguri

Prafulchandra Ladhani, 2007 ACJ 1897 (Gujarat), shall

be followed in the present case and in all similar cases

arising   in   future   before   the   Motor   Accidents   Claims

Tribunal:

(i) The  insurance  companies or   the  owners  of   the

motor   vehicles   depositing   the   amounts   in   compliance

with the awards of the Motor Accidents Claims Tribunal

shall:

(a) first spread the interest amount over the

relevant financial years for the period from the

date of filing the claim petition till the date of

deposit.

(b) thereafter, if the interest for any particular

financial   year   exceeds   Rs.50,000/­,   separately

deposit before the Tribunal the amount liable to

be   deducted   at   source   under   the   provisions   of

section 194­A(3)(ix) of the Income Tax Act,1961.

Such amount shall not, however, straightaway be

paid over to Income Tax Department.

(c) produce   before   the   Claims   Tribunal   a

statement of computation of interest by spreading

the amount over the relevant years from the date

of claim application till the date of deposit if the

interest for any particular financial year exceeds

Rs.50,000 and also request the Tribunal to treat

the amount as a separate deposit.

(ii) The   Tribunal   shall   ensure   that   the   amount   of

interest accrued each year is apportioned amongst claims

on year to year basis.

(iii) If the interest payable to any claimant during any

particular   financial   year   exceeds   Rs.50,000,   Claims

Tribunal shall permit the insurance companies/owners to

pay   over  the   amount  liable   to  be  deducted  at   source

under   Section   194­A(3)(ix)   to   the   Income   Tax

Department in respect of that particular claimant for the

particular year, without prejudice to the claimant's case

that he is not liable to pay any income tax for that year.

(iv) For the financial year(s) for which the interest

payable   to   the   concerned   claimant   does   not   exceed

Rs.50,000, that Tribunal may permit such claimant to

withdraw the amount deposited as per direction (i)(b)

without   producing   the   certificate   from   the   concerned

income tax authority that there is no income tax liability

on the interest which has accrued on the compensation

awarded by the Tribunal.

(v) It   is   clarified   that   the   amount   other   than   the

amount liable to be deducted at source under Section

194­A(3)(ix) shall be invested/disbursed by the Tribunal.

(vi) When the claimants make applications before the

authority under the Income Tax Act,1961 for the refund

of the amount deducted under the provisions of Section

194­A(3)(ix) of the Act, the concerned authority shall

decide such applications with utmost expedition.”

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.1770 OF 2015

The New India Assurance Co.Ltd.  vs Hussain Babulal Shaikh 

­­­

CORAM:      G.S.KULKARNI, J.

Dated:  15 November 2016

  Citation: 2017(2) MHLJ393

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Madras HC:TDS should not be deducted from compensation payable under motor accident claim petition

 Hence, with due respect I am unable to concur with the findings of the Karnataka High Court, the Chattisgarh High Court and this Court cited by the Revision Petitioner.  This Court is of the view that the Division Bench judgment of the Himachal Pradesh high Court and the judgment of the Single Judge of the Punjab and Haryana High Court lay down the right law and hence, this Court arrives at the conclusion that the compensation awarded or the interest accruing therein from the compensation that has been awarded by the Motor Accident Claims Tribunal cannot be subjected to TDS and the same cannot be insisted to be paid to the Tax Authorities since the compensation and the interest awarded therein does not fall under the term 'income' as defined under the Income Tax Act, 1961.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Pronounced on  :02.06.2016
CORAM
The Hon'ble Mr.Justice M.V.MURALIDARAN

CRP (PD) No.1343 of 2012
and
M.P.No.1 of 2012

The Managing Director, Tamil Nadu State Transport Corporation (Salem) Ltd Vs Chinnadurai
        

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Whether TDS can be deducted from interest paid on compensation granted by court?

The UT State Consumer Disputes Redressal Commission, headed by Justice (retd) Sham Sunder has ruled that the judgment debtor cannot deduct TDS on the amount of interest paid to a consumer in compliance with a decree passed by the consumer courts.

Earlier, in a complaint case, Shipra Estates Ltd. was held guilty of deficiency in service and vide order dated March 16, 2015, was directed to refund Rs 19,58,491 along with the interest at the rate of 10 per cent per annum from the dates of deposit which were made in 2012. An amount of Rs 50,000 was awarded as compensation and Rs 10,000 as litigation charges. The company failed to comply with the order. The complainant, Brij Mohan Jain, filed a contempt petition against the builder.

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No Notice for minor amounts of short deduction of TDS

This news is a great relief for thousands of tax deductors , who have been getting notice from ITO ( TDS) in respect of short deductions in TDS amounts.

The Board has decided that minor amounts of short deductions will be ignored.  These cases are :

• A deductee having short deduction of less than Rs. 10 AND
• Where total short deduction for the return is less than Rs. 100

The relevant instruction is reproduced below :

INSTRUCTION NO. 8/2010  DATED 8-12-2010

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