40(a)(ia)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 May 2011 If TDS of Dec,10 deducted in May,11 and deposited in Sep,11 then it will be allowed under section 40(a)(ia) ???

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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14 May 2011 IN THIS CASE TAX IS BEING DEDUCTED IN THE YEAR SUBSEQUENT TO YEAR OF PAYMENT THE SUM PAID WILL BE ALLOWED IN THE YEAR 2011-12 AND NOT IN THE YEAR 2010-11
CA MANOJ GUPTA
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Querist : Anonymous

Querist : Anonymous (Querist)

15 May 2011 Thnks, also if TDS of Mar,11 deposited in May,11 then it will be allowed in which section i.e, 40 a ia or 43B ???
and, also payment of any expense mentioned in 43B made in excess Rs. 20000 cash payment then which section will prevail 43B or 40(A)3 ???

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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15 May 2011 If TDS of Mar,11 deposited in May,11 then it will be allowed.

Existing provisions of section 40(a)(ia) of Income-tax Act provide for the disallowance of expenditure like interest, commission, brokerage, professional fees, etc. if tax on such expenditure was not deducted, or after deduction was not paid during the previous year. However, in case the deduction of tax is made during the last month of the previous year, no disallowance is made if the tax is deposited on or before the due date of filing of return.
Finance Act 2010 proposed to amend the said section to provide that no disallowance will be made if after deduction of tax during the previous year, the same has been paid on or before the due date of filing of return of income specified in sub-section (1) of section 139.

This amendment took effect retrospectively from 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-11 and subsequent years.

Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2011 Thnks, bt my second que. is still unanswred that any expense specified in 43B is paid in cash more than Rs. 20000 then whether it will be allowed or not ???

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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16 May 2011 Those payments of expenditure which are governed by Section 40A(3) and not specifically excluded from the per view of Rule 6D, must be made in adherence to Section 40A(3).

We can say , Section 43B decides the point of time to claim the expenditure only.

Querist : Anonymous

Querist : Anonymous (Querist)

17 May 2011 But sir Section 43 B contains a statement in the starting that "Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of.........." then what it interprets ???
and,
Then sir when a company pays Bonus of thousands of Rs. to its employees then why it allowed ???

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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17 May 2011 Anonymous Sir,

Section 43B, as rightly pointed out by you is an overriding section on other provisions of the act. However, the punctuation mark (,) followed by the non ostensible clause restricts the scope of this section to those deductions which are otherwise allowable under this act.

It clearly shows that this Section does not applies to those expenses which are otherwise disallowed under this act.

Payment of an expenditure in cash, in excess of Rs 20000/ is disallowed under the act hence 43B has no overriding effect on the expenses which are otherwise disallowable under the act.

In case of Bonus payments to individual, under Section 40A(3) payment to each individual is considered as a separate expenditure and as such individually the limits laid down under the section are required to be complied.

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Querist : Anonymous

Querist : Anonymous (Querist)

19 June 2011 why Sec 43B dosent cover TDS, as it mentions that 'any tax, duty, fees'. It dosen't mention which type of tax, then why we do not considered TDS under sec. 43B ???

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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19 June 2011 As pointed out in my reply of 17th May 2011, The scope of section 43B is limited to those deductions which are otherwise "allowable under this act". TDS amount is not otherwise allowable as an expenditure but Vat Tax is an amount Allowable as an expenditure.

As TDS Payable is not an expenditure of the assessee's business but
it is a liability of the assessee, hence Section 43B is not applicable in the case of TDS Payable.

Querist : Anonymous

Querist : Anonymous (Querist)

20 June 2011 Sir,

"Notwithstanding anything contained in any other provisions of this act‘ denotes that section 43B overrides all the sections in Income Tax Act, 1961."

This line clearly means that the other sections dosent hv any impact on 43B then why we considered other sections provisions and please elaborate yours 'non-ostensible clause' point sir ???

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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20 June 2011 Section 43B :
Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of -
(a) Any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force,.....
*
We have to pause for a moment at the punctuation mark(,) and not to stop.
the phrase "a deduction otherwise allowable under this Act in respect of -" is also there. This phrase limits the scope of section 43B to only deductions.
*
Deductions are further specified as -"otherwise allowable under this Act in respect of ..." .
*
This section does not have any application for the expenses which are otherwise not allowable under this Act.

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