Section 432 — Person entitled to claim refund in certain special cases. Successor to s.238 of the 1961 Act.
Section 432 is in Chapter XX — Refunds, which runs from section 431 to section 438.
Sub-section (1) decides who may claim a refund where income is taxed in another's hands: where the income of one person is included in the total income of any other person under any provision of the Act, that other person alone is eligible for a refund under this Chapter in respect of that income.
Sub-section (2) deals with a person unable to claim or receive a refund due to him on account of death, incapacity, insolvency, liquidation or other cause. In such a case his legal representative, or the trustee, guardian or receiver, is entitled to claim or receive the refund for the benefit of that person or his estate.
A refund follows the tax, and where the Act has taxed one person's income in another's hands the two could otherwise both claim it. Sub-section (1) settles that by giving the claim to the person actually assessed, and only to him. Sub-section (2) covers the opposite problem — a valid claim with no one able to make it — by naming the representative who may step in, while keeping the benefit with the person entitled or his estate.
The word "alone" in sub-section (1) is exclusive: the person whose income has been included cannot claim a refund in respect of it, however clearly the tax relates to his income, because the claim belongs to the person in whose total income it was included. Sub-section (2) is a rule about who may act, not about who benefits — the representative claims or receives for the benefit of the person or his estate, so the money does not become the representative's own. The list of causes is open-ended: death, incapacity, insolvency, liquidation "or other cause", so it is not confined to the four named situations.
A minor's interest income is included in a parent's total income under a clubbing provision, and tax deducted on that interest exceeds the tax due. Only the parent, in whose total income the income was included, may claim the refund under sub-section (1); the minor cannot. If the parent then dies before claiming, sub-section (2) lets the legal representative claim or receive that refund for the benefit of the estate.
When a refund claim is made or a refund is issued, and in a rejection based on the claimant not being the person in whose total income the income was included. Sub-section (2) is what a legal representative relies on to pursue a deceased assessee's refund.
the latter alone shall be eligible for a refund under this Chapter in respect of such income
his legal representative or the trustee or guardian or receiver, shall be entitled to claim or receive such refund for the benefit of such person or his estate
See the full 1961 to 2025 concordance.