How can a legal hier can claim refund for tax deducted?

 CBDT Circular No 573 dated August 21, 1990, it has been noted that “gratuity payment to a widow or other legal heirs of any employee who dies in active service shall be exempt from income tax.” This means that the gratuity exemption in such a case can be fully availed of, irrespective of any monetary ceiling and further, no tax is required to be deducted at source by the employer making such payment. 

The aforesaid 1990 circular states that “clarifications have been sought from the Central Board of Direct Taxes whether a lump sum payment made gratuitously or by way of compensation or otherwise, to the widow or other legal heirs of an employee, who dies while still in active service, is taxable as income under the Income-tax Act, 1961. The issue has been examined by the Board and it is clarified that any such lump sum payment will not be taxable as income under the a foresaid Act.”
 
The logical reasoning, for supporting the view that gratuity received by a widow or a legal heir of the deceased employee should not attract any tax, has been lucidly explained by the ITAT Madras Bench in its decision in the case of ‘Smt L K Thangammal vs ITO.’ Dealing with this situation, the tribunal held that “gratuity will be includible in the assessment of the legal representative, only if it had accrued to the deceased before death. The right to receive gratuity arose on account of death and became payable thereafter and hence it was not includible in the widow's hands as the legal representative of the deceased.” 

The TDS should have been deducted, if at all, in the legal heir account and not in deceased employee's acc.

So, ITR should be filed for corrosponding year to reclaim TDS...