My son is NRI as per income tax act 1961.He invested in Mutual fund from NRE account.On redemption TDS was deducted.In return income on which TDS was deducted was shown under exempt income and refund was claimed of TDS amount as his other income from investment in India was not taxable.ITO raised a point that income on which TDS was deducted was not shown under head of income.It was explained that income from Mutual fund was exempted from tax hence income was shown under heading Exempt income.He raised point if income was exempted then why TDS was deducted.
My questions iare
was Mutual fund correct in deducting TDS.Which provisions of Income tax applies
Was I wrong in showing such income under heading of Exempt income
Did ITO raised non maintainable question
Please advise correct situation and ruling of Income Tax Act on TDS on income from Mutual Funds if investment is of NRI from his NRE account.when redemption amount was remitted in NRE account
Thanks
CAclubindia
