sec 194C and Sec 205-

TDS 757 views 5 replies

karthikeyan.v

Chartered Accountant

523 Points Joined August 2009

An Assessee "A CONTRACTOR" has filed his return of income after adjusting The TAX DEDUCTED AT SOURCE. The deductor how ever did not provide the TDS certificates after repeted requests. It was subsequently found out that the deductor has not paid the tax deducted to Government.

The deductor has however given a deduction slip along with the cheque issued to the assessee.

It has been found out the the deductor is absconding.

The Assessing officer now claims the amount of TDS from the assessee- is he correct ?

Yout attention is drawn to Sec 205 of the Income Tax Act- Which states that the Assessing officer cannot claim the amount from the deductee..

Your attention is also drawn to Cap.J.G.JosephV. CIT.(2005), 92 ITD 358(MUM) and Yashpal Sahni V.CIT, (2007) 165, Taxman 144 (Bom)

Thankyou in anticipation of a discussion onthe topic

karthi

Replies (5)

Amir

Learner

4016 Points Joined December 2009

Dear Karthi,

Thnks brother I could recollect that few days back when a question similar to this was posted I said that assessee has to deposit the tax on self assessment but then I didn't knew about this fact that if assessee does not deposit then department cannot recover it from the assessee.......

U r rite that-

Sec 205 & the judgements said it clearly that it cannot be recovered from the assessee...

I would say if u can prove that TDS was indeed deducted by the payer then AO cannot force assesee to make the payment........

As far as notice is concerned u just have to file a reply along with the proof that tax was indeed deducted by the payer, if necessary simply cut copy ur question & paste it on the reply......:)

Poornima

Search on.... for knowledge

129 Points Joined February 2010

Dear Amir

If that party who had deducted assessee's TDS is now paying that amount to Assessee then what will be the tax implications on Assessee ?

Amir

Learner

4016 Points Joined December 2009

Dear Poornima,

Damn Good.......!

It will be treated as assesse's Income in the year of receipt...............

Max Payne

employed

2574 Points Joined May 2008

I cant understand the last post Amir bhai,

cos the income would have been offered to tax earlier,

and section 198 says that the TDS deducted is part of income....

So if the amount is paid to assessee, it cannot be treated as income of the year of receipt....

I think at the most AO can impose 234B and 234C......

pls tell me if i am wrong....

Amir

Learner

4016 Points Joined December 2009

Bhai,

TDS deducted is considered as receipt of income, rite...........

Ok lets do this way -

I have got refund of tax from department..is it taxable...no cos it was never allowed as deduction in computing the income or tax...interest on refund is taxable since it is an income...

But in the present case I have got TDS, not from the department but from a Customer, now I had already claimed this amount in computing my liability..

Further don;t u think assesee has doublly benefited or what is called as concept of "Unjust enrichment" under Indirect Taxes...

Under Indirect taxes, the refund is not allowed to assessee unless he proves that he has borne the burden of tax & has not shifted the burden on the customers....

In the present case, First department has allowed him credit of TDS & then he has also got the same from the customer...