Defective Return ITR-4

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If you've filed an ITR-4 and your Form 26AS shows TDS deductions under sections like 194IA, 194IC, or 194S, your return may be considered defective. These sections often relate to income types not suitable for ITR-4. While you might have shown rental income from plant and machinery under 'Income from Other Sources', this can lead to issues. The correct approach is often to file an ITR-3, declaring rental income under Schedule HP, even if you have presumptive business income.

Subham Agrawal

Subham Agrawal (Querist)

13 August 2024 You have filed your income-tax return in form ITR-4. As per TDS details in your Form 26AS, taxes have been deducted under sections 194IA/194IC/194S/194B/194BB/194BA, etc. of the Income-tax Act, 1961. These sections are reflected as (4IA/4IC/94S/94B/4BB/4BA) in Form 26AS. These sections imply heads of income for which form no. ITR-4 is not the appropriate form.

TDS is deducted under section 194I(a) for rent of plant & machinery. I have shown this income under the head INCOME FROM OTHER SOURCES. I am also showing rent from leasing good carriages under section 44AE and hence ITR-4 was being filed.

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

13 August 2024 The defect can be removed by filing ITR 3.

Message likes : 1 times

Subham Agrawal

Subham Agrawal (Querist)

13 August 2024 So ITR-3 can also be filed in case of presumptive income ?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

13 August 2024 Yes. along with Rental income of plant and machinery

Subham Agrawal

Subham Agrawal (Querist)

13 August 2024 And the Rental income of P&M is to be shown under the head Income from other sources right sir ?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

13 August 2024 No, that is the reason for defect. Declare it under Schedule HP.

Nikhil Kaushik

Nikhil Kaushik (Expert)

13 August 2024 not sure if this is the correct position. Time and again it has been held that the rental income received against Plant and machinery has been taxed under income from other sources.

Nikhil Kaushik

Nikhil Kaushik (Expert)

13 August 2024 most probably issue here is that ITR-4 cannot be used for income from other sources except for the following categories:

Interest from Savings Account
Interest from Deposit (Bank / Post Office / Cooperative Society)
Interest from Income Tax Refund
Family Pension
Interest received on enhanced compensation
Any other Interest Income (e.g., Interest Income from Unsecured Loan)

So the issue here is the choice of return. Not the head of income.

Subham Agrawal

Subham Agrawal (Querist)

13 August 2024 I just filed the corrected return (ITR-3) showing Rental income of P&M under the head Income from other sources and rest of the business income under presumptive scheme. Let's see.

Nikhil Kaushik

Nikhil Kaushik (Expert)

13 August 2024 it should go through normally..

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