I am working with a bank in Hosur.  For AY2012-13, around ₹26,000 was deducted as TDS as per Form 16. According to the return submitted for that year, I was due to get a refund of ₹1,030. But I have got a notice from the IT department demanding ₹26,000 plus ₹10,000 interest. My bank tells me that the TDS deducted was already remitted. But it doesn’t seem to have submitted some quarterly statement relating to TDS to the IT department. What is the way out?

Surya Prabha Srinivasan

As per the ruling of the Delhi High Court on its own motion, the assessee should be allowed credit of all taxes paid by him if he has all the necessary documents/proofs with him.

It has been directed through instructions issued by the CBDT to the Assessing Officers (AOs) that when an assessee approaches them with requisite details and particulars, they should verify whether or not the deductor has made payment of the TDS, and if the payment has been made, the credit of the same should be given to the assesse.

You may note that these instructions are binding on the AOs. It has been decided by various courts that credit of tax should be given to the assessees on the basis of evidence produced for deduction of tax at source. Once it is established that tax has been deducted at source, the IT department cannot recover the same from the assessee again.

You should therefore file a rectification application with the AO under Section 154 of the Income Tax Act along with copy of the relevant Form 16/withholding tax certificate issued by your employer as evidence of deduction of tax at source.

I took a home loan in 2006. My brother is co-borrower of the loan while the flat is in my name. I am repaying the entire EMI, hence availing of the tax benefit. Now, my brother wants to pay the EMI and become a co-owner. If my brother pays the outstanding amount and becomes co-owner of the flat, can I take another home loan. What will be the tax implications of these changes?

 B Prakash

According to the provisions of the Income Tax Act, 1961, for availing of a deduction on interest and principal on a housing loan, the income from the house property should be chargeable to tax in the hands of the individual as an owner and the loan should be repaid by the individual as a borrower of the loan. In respect of joint ownership, where the share of each co-owner is definite and ascertainable, the tax benefits can be availed of in the proportion of the share of funding in the house property.

In your case, the deductions for interest and principal paid can be claimed by you and your brother in proportion to the ownership held in the property. Please note that if there is a transfer of part ownership so that your brother becomes a co-owner, there may be capital gains implications. In case of gift, there will be stamp duty implications. In both the scenarios, you will have to get the valuation to compute the capital gains or payment of stamp duty.

Further, I understand that you can avail of another home loan and accordingly claim deduction of interest in accordance with the provisions of the Act.

The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in

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