The Hindu Business Line : Will more tax deducted at source come back on its own?

The person deducting tax at source can refund only if he has not already deposited the same with the treasury. If he has deposited, he cannot possibly take up the issue with the income-tax authorities.

The person from whose income the tax has been so deducted in excess will file his return and give details of tax paid. One of the sources of payment would be TDS.

The other is advance tax. To the extent tax has been deducted at source in excess, this person need not pay advance tax. In which case the matter gets resolved sooner than later.

But if he has already paid all the instalments of advance tax and has no leeway left to adjust the excess deduction, the only course left for him is to bide his time and await refund of excess tax paid. There is no need to make a special application for refund of excess tax paid.

It is incumbent upon the tax administration to refund excess tax paid. And in terms of the second proviso to Section 143(1), this must be done within one year from the end of the financial year in which the return was filed.

Company deposit

AS PER the Rule 2 (b)(ix) of Companies (Acceptance of Deposits) Rules, 1975 read with Section 58A of the Companies Act, 1956 loans/deposits accepted by a public limited company from its directors were exempted from the definition of deposits if the directors declare that the loan was not given out of borrowed amount.

This exemption was available to the Companies till September 25, 2001, when a new notification came and this exemption to public limited companies was taken back.

Now deposits accepted from directors also fall under the general category or in the category of shareholders, if they are so.

Again on March 12, 2004, this exemption was granted to public limited companies by not treating the amount received from directors as loan/deposit. Now the deposit/loans from the directors of a public limited company will fall under the exempted deposits lists.

My question is: A public limited company accepted deposits from directors and proprietary firms of directors in 1999-2000 on the term that the amount will be repayable on demand or after six years and received the required declaration that amount was not given out of the borrowed funds. In this period such deposits were exempted deposits.

The deposits were continued till March 2005 and were not demanded.

Will such deposits be treated as deposits under Section 58A of the Companies Act in the period after September 25, 2001, till March 12, 2004, while the basic term of the deposit was `repayable on demand'.

Or we can say that at the time of acceptance the deposits fall under the category of exempted deposits so until the deposits are renewed, it will be in the same category of what it was at the time of acceptance. Kindly advice and clarify the above query and oblige me.

Manju Mundra, Indore

The normal principle of law is amendments are prospective unless otherwise expressly provided.

Therefore, the original deposits from directors would continue to remain exempted from the purview of deposit rules unless retrospectivity was expressly conferred by the first amendment to the rules mentioned by you.

Is HRA better?

NOW that the income-tax rules on valuation of rent-free accommodation have been amended against the interests of the employees, would it be better to take HRA instead?

T. Rammurthy, Pattukottai

Yes, the value of a house provided by the employer to his employee rent-free would be valued at 20 per cent of his salary where the same has been taken on lease by the employer. Earlier this percentage was only 10 per cent.

The Government perhaps realised that 10 per cent was too soft which rendered the House Rent Allowance option unattractive.

But rent-free house could still be the better option depending upon the facts of the case. It would be difficult to adjudge either as the better for all seasons and all reasons.

For example, if a person gets a salary of Rs 10,000 per month and his employer gives a house for which he pays a rent of Rs 10,000 per month, the value of perks on this account per month is only Rs 2,000 whereas had he preferred to take the same amount as HRA and in turn paid a rent of Rs 10,000, the taxable amount of HRA would be Rs 5,000 assuming the house is in one of the four metros.

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