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CA Final · Direct Tax Laws & International Taxation · Assessment of Various Entities

Under section 270, Kaveri Pvt. Ltd. received an intimation under sub-section (1) showing refund of Rs 50,000. Later a regular assessment under sub-section (10) determined refundable tax as Rs 20,000. What is the consequence for the excess refund?

The excess of Rs 30,000, being the refund of Rs 50,000 granted at processing less Rs 20,000 refundable on regular assessment, is deemed to be tax payable by the assessee under section 270(15)(b), and the Act's provisions apply to it accordingly.

  1. AThe excess Rs 30,000 is deemed to be tax payable by the assessee, and the Act's provisions apply accordinglyCorrect
  2. BThe excess Rs 30,000 is forgiven
  3. CThe excess Rs 30,000 is treated as income of the next tax year
  4. DThe entire Rs 50,000 must be repaid

Explanation

Section 270(15)(b) provides that where the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the excess is deemed tax payable by the assessee. Excess = 50,000 - 20,000 = Rs 30,000. Option D is wrong as Rs 20,000 remains properly refundable.

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