Mr A files his return u/s 44AD. He provides gaming services to individuals and corporates. One of his parties deducted TDS u/s 194I(a) instead of 194C and deposited the tax. He uploaded his return showing his entire turnover of 750500/- u/s 44AD.
But he got the intimation of defective return mentioning that the TDS is deducted u/s 194I which is ineligible for presumptive taxation.
There was no event of renting out of anything nor his invoice mentions rent etc. How can the defect be rectified?
13 July 2024
Rambhia Sir, the party is not ready to revise their TDS return saying they are correct. Can we show this transaction under other income, though the TDS is deducted u/s 194I(a)? And rest of sale u/s 44AD? He is registered u/s GST also.
13 July 2024
Sir, the business of Mr A is loss-making and also the books were not properly maintained by him, so presumptive taxation was opted since last year.
He has only savings interest as other income. The other party filed tds u/s 194I(a) this year, his return got defective. What if we file his return as a normal return showing loss in response to the defective return notice?? will the tax audit be applicable then?? Kindly guide. Regards, Suraj
13 July 2024
Sir, no other solution except to revise TDS return?? without his mistake.... His income is hardly anything and now if Tax audit is to be done then it will be costly affair for him. Is tax audit to be done for next 4 years also?
13 July 2024
Hmmmmm Yes sir... But that other party is not even ready to revise TDS return nor provide contact details of their CA... Actually IT dept should provide some solution in such cases.....
13 July 2024
Sir, IF HP mean Income from House Property? or to show under Income from Other Sources?? IFHP activity is not registered under his GST registration. I'm sorry if I am annoying you.
13 July 2024
Yes, you need to register there as early as possible, if the TDS is & will be deducted u/s. 194 I(a), there is no alternative. It is renting of machinery & not House property only.
13 July 2024
I will ask him to update his GST registration. Will show this full transaction amount of 2.85 lakhs under other sources as It won't accept u/s 44AD, Thank You sir for reverting to my doubts, and queries so patiently.
13 July 2024
It is doubtful now, whether the system will accept the income under IFOS, as for the TDS section over the income. So, be careful. Good Luck.
25 July 2024
Dear Sir, the party corrected their TDS return by changing the section from 194I(a) to 194C in their TDS return. The correction is reflected in Mr A's Form 26AS. So the defective return u/s 139(9) was filed after correcting the defecting. But now again Mr A received the same notice:
" 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. Thus, the required schedules for reporting incomes pertaining to said TDS sections are not present in your return of income filed in form no. ITR-4."
What could be the possible reason for this? The revised Form 26AS shows F in booking status against the entry of 194I(a) and the new entry of Section 194C is correctly appearing. AIS takes time to update. The Mr A's party corrected their TDS return on 19th Feb and so response to defective return was filed on 21st Feb 2024 after the revised form 26AS Please guide.
25 July 2024
Ohh....... sir, I heard that AIS takes time to update. But in AIS, they also mention following:
- If there is variation between the details of tax paid as displayed in Form26AS on TRACES portal and the information relating to tax payment as displayed in AIS on Compliance Portal, the taxpayer may rely on the information displayed on TRACES portal for the purpose of fling of tax return and for other tax compliance purposes.
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