Disallowance - Section 40(a)(ia)

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M.R.KANNAN

M.R.KANNAN (Querist)
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22 September 2009 A company paid interest of Rs.50,000 to another company on which it is liable to deduct tax at source. Tax was deducted and remitted, but was deducted and remitted in short. Suppose tax deductible is Rs.5,000 (for sake of simplicity)whereas it deducted tds only for Rs.4000 (by oversight)which was paid within due date. What is the consequence of disallowance u/s 40(a)(ia)? Whether whole amount of interest of Rs 50,000 is liable for disallowance, or only a proportionate amount of interest, ie., Rs 10,000 out of Rs. 50,000 alone is disallowable, on the ground that tds was deducted and paid on the interest amount of Rs 40,000 in full. [This short deduction usually occurs when surcharge or educational cess is omitted to be charged alongwith tax by oversight]. Any material supporting the favourable view of non disallowance may be cited.

CA Devanshi Gandhi (Ajani)

CA Devanshi Gandhi (Ajani) (Expert)
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22 September 2009 in this case 10000 will be disallowed

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)
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22 September 2009 yeah. i agree with expert.

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C A GROUP COACHING

C A GROUP COACHING (Expert)
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24 September 2009 V K Singhania has given some good Interpretation on Disallowances with case laws, Go thru it & you may be benifitted by the interpretation to be in your favour