ITAT Kolkata: Widow Succeeding Husband’s Business Entitled to TDS Credit on His Income
Pranav B Prem
The Income Tax Appellate Tribunal (ITAT) Kolkata Bench has held that a widow is entitled to claim credit for tax deducted at source (TDS) in the name of her late husband, where she has declared his income in her own returns. The ruling came in a set of four connected appeals filed by Lovely Das of Kolkata for Assessment Years (AYs) 2017–18 to 2020–21, challenging the denial of TDS credit by the Centralised Processing Centre (CPC).
The bench of Sonjoy Sarma (Judicial Member) and Rakesh Mishra (Accountant Member) observed that TDS credit must be allowed as per law when the related income is assessed in the assessee’s hands. Referring to Rule 37BA of the Income Tax Rules, the Tribunal noted that the assessee could approach the deductor to correct records so that the TDS appears in her PAN, and furnish evidence before the Assessing Officer (AO) that such credit has not been availed by any other person.
Facts and Procedural History
The late Jagbandhu Das was the sole proprietor of M/s Elco Enterprise, engaged in the business of electrical contracting. Following his death in June 2016, his wife, Lovely Das, took over the proprietorship. For the relevant assessment years, she filed her income tax returns in her individual capacity, declaring both her own interest income and the business income and bank interest earned in her late husband’s name.
Alongside the income, she claimed credit for TDS aggregating over ₹72 lakh across the four years, which was deducted in connection with her husband’s income but deposited under his PAN. For instance, in AY 2019–20, she declared a total income of ₹1,03,12,540 and claimed TDS of ₹46,52,354. The CPC, however, allowed only ₹24,46,260 — the amount appearing in her own Form 26AS — and denied ₹22,06,094 recorded against her husband’s PAN.
The disallowance led to substantial tax demands and interest under Sections 234A, 234B, and 234C of the Income Tax Act. Similar partial TDS disallowances occurred in the other three assessment years, resulting in aggregate demands exceeding ₹72 lakh.
Orders of Lower Authorities
The Assessing Officer, while processing the returns under Section 143(1), upheld the CPC’s restriction, citing Rule 37BA(2), which provides that TDS credit shall be given to the person to whom payment is made or in whose name the deduction has been made. The AO maintained that, since the TDS in dispute was deposited under the late Jagbandhu Das’s PAN, it could not be transferred to the appellant unless the deductors revised their filings to reflect her PAN.
The Commissioner (Appeals) [Addl./JCIT(A)-1, Nashik] confirmed the AO’s view, observing that the appellant had failed to get the deductors to update their records after her husband’s death. It was also held that she ought to have filed returns as a legal heir in her husband’s name, and thereafter claimed TDS in that capacity.
Arguments Before the Tribunal
Appearing through FCA Manish Tiwari, the appellant argued that she had included the income in her own returns in good faith, as she had succeeded to the proprietorship business. Denying TDS credit in such circumstances, she contended, would lead to double taxation — once in her hands without credit and again in the form of TDS deposited in her husband’s name but not claimable. She relied on the express wording of Rule 37BA(3)(i), which directs that TDS credit shall be given to the person in whose hands the income is assessed. The Revenue, represented by the Departmental Representative, reiterated that procedural compliance under Rule 37BA was mandatory and the deductors should have been approached to shift the credit to the appellant’s PAN before filing her returns.
Tribunal’s Findings
The Tribunal noted that Rule 37BA(3)(i) is clear — where income is assessable in the hands of a person other than the one in whose name the tax is deducted, the credit shall be given to such person. Since the appellant had included her husband’s business and interest income in her own returns, she was entitled to the corresponding TDS, provided it was not claimed by any other person.
The bench clarified that the AO is empowered to allow such credit after verifying that no duplicate claim exists. It further observed that the appellant is at liberty to approach the deductors to correct the records so that the TDS appears in her own Form 26AS, thereby facilitating smooth credit.
Allowing all four appeals, the Tribunal directed the Assessing Officer to grant the TDS credit claimed by the appellant in respect of tax deducted under her husband’s PAN, subject to verification that it had not been claimed elsewhere.
Appearance
Counsel For Appellant: Manish Tiwari, FCA
Counsel For Respondent: Soumitra Ghosh, Addl. CIT, Sr. DR.
Cause Title: Lovely Das V. Addl/JCIT, Nashik
Case No: I.T.A. Nos.: 291, 292, 293 & 294/KOL/2025
Coram: Sonjoy Sarma [Judicial Member], Rakesh Mishra [Accountant Member]
