TDS Credit Cannot Be Denied When Form 26AS Reflects Deduction in Assessee's Name: ITAT Kolkata on Rule 37BA

Case Background

Case Name: Samir Kumar De Vs DCIT (ITAT Kolkata)
Appeal Number: ITA No(s). 1880/KOL/2026
Date of Order: 25/08/2026
Assessment Year: 2020-21
Bench: Kolkata SMC Bench — Shri Yogesh Kumar US (Judicial Member) & Shri Rakesh Mishra (Accountant Member)

Overview of the Dispute

The Income Tax Appellate Tribunal, Kolkata, delivered a significant ruling concerning the grant of TDS credit where the deduction appeared in the assessee's Form 26AS but the corresponding income had been clubbed in the hands of his spouse under Section 64 of the Income Tax Act, 1961. The Tribunal, after examining Section 199 of the Act alongside Rule 37BA of the Income Tax Rules, 1962, held that the denial of TDS credit in such circumstances constituted a mistake apparent from the record, rectifiable under Section 154, and accordingly remanded the matter to the lower appellate authority for fresh adjudication.

Facts of the Case

The assessee, a senior citizen, earned income under two heads — salary and bank interest. For Assessment Year 2020-21, he filed his return of income on 16.11.2020 declaring total income of ₹30,95,050/-. State Bank of India had deducted TDS of ₹79,330/- on interest earned from a fixed deposit held in the assessee's name, and this deduction was duly reflected in his Form 26AS.

However, the assessee did not offer this fixed deposit interest as part of his own taxable income. His position was that the income was liable to be clubbed in the hands of his wife, Smt. Sumita Dey (PAN: AJLPD4243J), under Section 64 of the Income Tax Act, 1961. Accordingly, no corresponding income was reported under this head in his own return.

Following the processing of the return, the assessee filed a rectification application. The Assessing Officer, however, passed an order under Section 154 of the Act on 08.09.2023 disallowing the TDS credit of ₹79,330/-. The AO's reasoning was rooted in the fact that the interest income had not been included in the assessee's own return, making the grant of credit untenable from the Revenue's perspective.

First Appellate Authority's Decision

Aggrieved by the rectification order, the assessee preferred an appeal before the Addl/JCIT(A)-2, Lucknow. The first appellate authority upheld the AO's decision and dismissed the appeal, primarily on the following grounds:

  • The assessee had failed to furnish the declaration mandated under Rule 37BA(2) of the Income Tax Rules, 1962.
  • No deductor certificate had been produced as required under the said Rule.
  • There was no evidence to establish that the corresponding interest income had been declared in the spouse's return of income.
  • Since the conditions prescribed under Section 199 of the Act and Rule 37BA of the Income Tax Rules had not been complied with, TDS credit could not be granted.

Grounds Raised Before the ITAT

The assessee challenged the appellate order before the Tribunal on multiple grounds, the key contentions being: