Income Tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 August 2010 Dear Experts,

Kindly clarify on following

Is non provision of TDS liability towards expenses payable for taxable services at year end will result in disallowance of the amount for tax purposes. For eg. at year end (31st March 2010), I made a provision of Audit Fee for Rs. 5 Lac and Credit Audit Fee Payable without deducting TDS , will result in disallowance of the provision made. Kindly confirm.

Thanks for your answers.

CA Debasish Banerjee

CA Debasish Banerjee (Expert)
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05 August 2010 Yes. You are to deduct TDS for the expense to be allowed for the year in which the TDS has been deducted and deposited. You can still deposit the TDS with interest and rectify the lapses.

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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05 August 2010 Yes. In case TDS is not deducted and depoisted the above expensiture will be disallowed. So deposit the TDS now with interest.

Rate of Interest 1% upto 30.06.2010
from 01.07.2010 it is 1.5%
You are required to deposit the TDS by due date of filing your IT return.

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Querist : Anonymous

Querist : Anonymous (Querist)

05 August 2010 Dear Experts, Thanks a lot, TDS was deducted and deposited in this F.Y. when Auditors presented their invoice dated in current F.Y. (i.e. 2010-2011), Can still the provision for last F.Y. 2009-2010 will be disallowed.

Thanks for your support

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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05 August 2010 No the provision will not be disallowed.

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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05 August 2010 Agreed with the experts...

Expense will be disallowed.

This will be allowed only in the year in which the TDS will be deposited alongwith applicable interest.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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05 August 2010 No. Subhash Ji i said the provision will not be disallowed i.e. the amount of provision will be allowed as TDS amount deposited along with interest before the due date of filing of return.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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05 August 2010 AGREED WITH EXPERTS. PROVISION FOR EXPENSE WILL NOT BE DISALLOWED EVEN IF AUDITOR RAISED INVOICE IN NEXT YEAR, BECAUSE IN INVOICE , HE HAS MENTIONED THE PERIOD OF AUDIT.
IF YOU WILL NOT MADE PROVISION AT THE END OF YEAR, THEN NEXT YEAR, YOU WILL NO BE ABLE TO CLAIM EXP EVEN IF INVOICE DATE IS CURRENT YEAR, BUT IT IS RELATED TO PRIOR PERIOD.

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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05 August 2010 The queriest has stated in the query
"TDS was deducted and deposited in this F.Y."

As per Section 40(a)(ia) on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, 92[has not been paid on or before the due date specified in sub-section (1) of section 139 :

So the main point in the section is that tax should have been deducted in the last financial year itself though be paid now. Since this has not been done provision will be disallowed.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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05 August 2010 Dear Author,
The provision made on 31.03.2010 will be allowed if you pass entry of TDS deduction on 31.03.2010 and deposit the deducted TDS with interest before the due date specified in sub-section (1) of section 139 of filing return. Also the amount should have been deposited in ITNS 281 selecting AY 2010-11.
Regards
CMA. Sanjay Gupta.

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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05 August 2010 For the expenses to be allowable in the previous year TDS should be deducted on 31.03 itself though paid now.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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05 August 2010 agreed, now you have not deducted tds , hence deduct tds on 31.03.2010 and depsoit with interst before due date of filing of return.
if your concern is firm or individual firm in which tax audit applicable or if it is company,then you have time to deposit it before 30th sept 2010,
and claim expense in last fy itself.
Noted : You have to revised E-tds return also in which you have not taken this entry.

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