one of my client being private company doing manufacturing activity, company has received Rs.40 laks as share application money from one part(say Mr.X) and the Mr.x also contractor to the company, company had given advance amount of Rs.20lakhs and made the TDS thereon. After some months Mr.x has not undertake the work, then the company has adjusted the advance amount of RS.20 lakhs adjusted against share application money.
My query is whether the TDS made on advance can be claimed has refund............
24 July 2009
Company could have deduct the amount of TDS also from the application money & balance should be refunded back to Mr. x.
But its ok if the same has not happend. Now if you can adjust this TDS against any other TDS liability then do it. Otherwise there is circular to take the refund of excess tds deposited.
Find below the relevant circular;
951. Procedure for regulating refund of amounts paid in excess of tax deducted and/or deductible 1. The Board have been considering the manner of refunding the amount paid in excess of the tax deducted and/or deductible (whichever is more) under sections 192 to 194D of the Income-tax Act. The Board are advised that such excess payment can be refunded, independently of the Income-tax Act, to the person responsible for making such payment subject to necessary administrative safeguards.
2. In supersession of the earlier instruction on the subject, the following procedure is laid down to regulate the refund of such excess payments.
3. The excess payment would be the difference between the actual payment made by the deductor and the tax deducted at source or that deductible, whichever is more. This amount should be adjusted against the existing tax liability under any of the Direct Tax Acts. After meeting such liability the balance amount, if any, should be refunded to the assessee.
4. Where the tax is deducted at source and paid by the branch office of the assessee and the quarterly statement/annual return (in case of salaries) of tax deduction at source is filed by the branch, such branch office would be treated as a separate unit independent of the head office. After meeting any existing tax liability of such a branch, which would normally be in relation to the deduction of tax at source, the balance amount may be refunded to the said branch office. The Income-tax Officer, who will refund the amount, would be the one who receives the quarterly statement/annual return (in case of salaries) of tax deduction at source from that branch office and keeps record of the payments of tax deduction at source made by that branch.
5. The adjustment of refund against the existing tax liability should be made in accordance with the present procedure on the subject. A separate refund voucher to the extent of such liability under each of the direct taxes should be prepared by the Income-tax Officer in favour of the income-tax department and sent to the bank along with the challan of the appropriate type. The amount adjusted and the balance, if any, refunded would be debitable under the sub-head Other refunds below the minor head Income-tax on companiesmajor head 020Corporation Tax or below the minor head Income-tax other than Union Emolumentsmajor head 021Taxes on incomes other than corporation tax according as the payment has originally credited to the major head 020Corporation tax or the major head 021Taxes on incomes other than corporation tax.
6. Since the adjustment/refund of the amount paid in excess would arise in relation to the deduction of tax at source, the recording of the particulars of adjustment/refund should be done in the quarterly statement of TDS/Annual return (in case of salaries) under the signatures of the Income-tax Officer at the end of the statement, i.e., below the signatures of the person furnishing the statement.
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