Section 434 — Refund for Denying Liability to Deduct Tax | ITA 2025

Section 434 of the Income-tax Act, 2025 corresponds to s. 239 A of the Income-tax Act, 1961. STATUTORY ARCHITECTURE FA 2022 provision (effective 1-4-2022). Where deductor, having borne TDS under contractual arrangement (net-of-tax),…

Section 434 — - REFUND FOR DENYING LIABILITY TO DEDUCT TAX

Section 434 of the Income-tax Act, 2025 corresponds to s. 239A of the Income-tax Act, 1961.

Statutory text — Income-tax Act, 2025

(1) Where,—

(a) under an agreement or other arrangement, in writing, the tax deductible on any income, other than interest in section 393(2) (Table: Sl. No. 17), is to be borne by the person by whom the income is payable; and

(b) such person having paid such tax to the credit of the Central Government claims that no tax was required to be deducted on such income, he may, within thirty days from the date of payment of such tax, file an application before the Assessing Officer for refund of such tax in such form and such manner, as may be prescribed.

(2) The Assessing Officer shall, by an order in writing, allow or reject the application as referred to in sub-section (1).

(3) No application under sub-section (1) shall be rejected unless an opportunity of being heard has been given to the applicant.

(4) The Assessing Officer may, before passing an order under sub-section (2), make such inquiry as he considers necessary.

(5) The order under sub-section (2) shall be passed within six months from the end of the month in which application under sub-section (1) is received. Refund on appeal, etc.

STATUTORY ARCHITECTURE

FA 2022 provision (effective 1-4-2022). Where deductor, having borne TDS under contractual arrangement (net-of-tax), wishes to dispute the underlying chargeability and recover the deducted tax, he can file refund application directly. Allows the actual bearer of TDS to recover when income is later determined non-chargeable.

PRACTITIONER PLANNING NOTES

Net-of-tax contracts (foreign remittances): the deductor (Indian resident) bears the tax; without s. 434 [239A], could not recover.
30-day filing window from date of payment; appeal lies u/s 357 if rejected.
Particularly relevant for cross-border consulting / royalty / FTS contracts where chargeability is later disputed via Engineering Analysis (SC) ratio.

CROSS-REFERENCES

s. 263 (filing of return).
s. 270 [143(1)] (intimation).
s. 245 (set-off of refund against demand).
s. 119(2)(b) (condonation of delay).

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INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
2025 provision	1961 counterpart
s. 434 -- Refund for Denying Liability to Deduct Tax	s. 239A