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Query regarding income tax refund.

Nilesh (CA) (97 Points)

09 October 2011  

 

1.       Mr. ABC - Chartered Accountant by profession, following ‘Cash System’ of Accounting for professional income.

 

2.       ABC had conducted Branch Audits of the Central Bank of India for the year 2008-09 in the month of    April 2009 and received Audit Fees by cheque on 26-6-2009 after deduction of TDS u/s 194J of    Rs. 11,000/-  alongwith Form No. 16A – Certificate of TDS dated 16-6-2009 from the said Bank’s  Z. O.

 

3.       ABC following Cash Basis of Accounting, ABC have credited Audit Fees in books on   26-6-09 i.e. in the F. Y. 2009-10 relevant to A. Y. 2010-11 and claimed TDS u/s 194J of   Rs. 11,000/- in the Return of Income for A. Y. 2010-11 filed on 29-7-2010.

 

4.       On enquiry for Refund of Tax for A. Y. 2010-11, it is stated by the ITO, that “as the said TDS of   Rs. 11,000/- pertains to F. Y. 2008-09. Therefore, the claim for F. Y. 2008-09 can not be allowed in   F. Y. 2009-10 relevant to A. Y. 2010-11”.

 

5.       As stated in point No. (3) here in above, that ABC have accounted income from audit fees and TDS thereon in F. Y. 2009-10 on ‘Cash System’ as per my normal and consistent accounting policy and I have not claimed the said TDS of Rs. 11,000/- in the Return of Income for  F. Y. 2008-09 relevant to A. Y. 2009-10 which may be noted (The Return of Income for A. Y. 2008-09 was filed on 31-7-2009)

 

6.       As per Form No. 26AS for F. Y. 2008-09 (A. Y. 2009-10) the status of Booking of TDS of  Rs. 11,000/- of Central Bank of India Z. O.  is ‘P’ and date of booking mentioned is  5-6-2009 i.e. of the F. Y. 2009-10.

 

7.       In the above case refund of  Rs. 25,000/- for A. Y. 2009-10 is already received on 31/12/2009 ( In that amount said TDS amount of Rs. 11,000/- is not included)

 

In the above, what steps are taken by CA ABC for received refund of Rs. 11,000 ?


 7 Replies

Shashi Bhushan (Learner, Jalandhar) (996 Points)
Replied 09 October 2011

I think its difficult now. you should have claimed 11000 in AY 2009-10 only. that return can not be revised now as time expired.

 

CA Goutam Sharma (Chartered Accountant in Practice)   (468 Points)
Replied 09 October 2011

Its quite a technical issue. I think, Recognition of revenue and payment of tax are two separate issue. Fees received in the year 2009 will definately form the part of Income of PY in which the income is received by adding the amount of TDS with net receipt.

However, TDS, is neither an income, nor an expense. It is mere advance collection of tax out of your total tax liability which will be computed at the end of PY. So the amoun of TDS could be adjusted with tax liability of assessment year 09-10. You could have claimed it an year earlier.

 

I welcomr other thoughts

shalu sharma (------) (33 Points)
Replied 10 October 2011

As per  income tax act ,tds on any income shall be claimed in the year in which the said income is offered for taxation ,since you are following cash basis the tds claim is rightly made for in the AY 09-10.I simply cannot understand why is it not allowed  !!

Shashi Bhushan (Learner, Jalandhar) (996 Points)
Replied 10 October 2011

Originally posted by : shalu sharma

As per  income tax act ,tds on any income shall be claimed in the year in which the said income is offered for taxation ,since you are following cash basis the tds claim is rightly made for in the AY 09-10.I simply cannot understand why is it not allowed  !!

can you quote the section of income tax act to corroborate it please?

shalu sharma (------) (33 Points)
Replied 10 October 2011

sure !! Sec 199 credit for tax deducted.

Shashi Bhushan (Learner, Jalandhar) (996 Points)
Replied 10 October 2011

Agree with you Shalu, thanks for correcting..

 

Hey Nilesh you have correctly filed the return. just show the AO Rule 37BA of the income tax act. you will be allowed the claim.

shalu sharma (------) (33 Points)
Replied 10 October 2011

 thanks Shashi !!

also if they do not allow you can always  go for an appeal !!


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