Assessee has given property on rent to Bank. Bank has given a deposit and has deducted TDS on the amount of deposit.
Query:
1. Whether the bank has wrongly deducted TDS?
2. For taking credit of TDS, what income assessee will have to consider as it is deposit and is therefore refundable at the time of completion of lease period?
3. Whether the assessee has to collect service tax on the above deposit received from the bank?
1) If the deposit is of refundable nature then the bank should not deduct Tax on it, the reason being it is not a income to the assesse.
2)The assessee should not take credit of the income tax as no income is earned. Instead he should ask the bank to repay the tax wrongly deducted.
3) Service tax need not be collected if the nature of the deposit is refundable. If it is to be adjusted against any rent to paid / payable service tax needs to be collected.
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