Query w.r.t. dis allowance u/s 40(a)(ia) for non deduction

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ARYAN (Querist)
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20 September 2016 Respected Sir,

I]. have a query with regard to Dis allowance on account of non deduction & Non-Payment of TDS on Interest on Deposits debited to P&L in AY 2013-14 the asseessee is a Partnership Firm.
2]. The accounts of AY 2013-14 were selected for scrutiny U/s 143(3) wherein the Course of Scrutiny the IT Dept. Officer found that the assessee failed to deduct tax @ 10% on the Interest Amount of Rs.1,87,350/- as required U/s 194-A. Thus interest Expenditure of Rs.1,87,350 was disallowed U/s 40(a)(ia) of Income Tax Act,1961.
3]. The Scrutiny order U/s 143(3) was completed on 29/02/2016 demanding tax on the Interest Disallowed U/s 40(a)(ia), which the assessee paid off the demand u/s143(3).
4]. the assessee paid off the TDS on Disallowed Interest in AY 2016-17 i.e. on 31.03.2016.
5]. In compliance with the provisions of Section 40(a)(ia) which says if "Any expense disallowed on pretext of non-deduction of TDS, then such Expenses shall be fully allowed in the year in which the TDS is paid".
6]. Hence in this case the assessee has paid the TDS on such disallowed Interest Expenses in AY 2016-17 i.e on 31/03/2016 the TDS amount of Rs.18,735/-.
7]. Now my question is how to practically claim it in the Accounts of AY 2016-17...?
8]. whether it is only to be entered in the computation sheet.....or is it to be debited in the P&L a/c ..... am not getting the clarity how to claim it in accounts.........???
9]. i have a Tax Software wherein there's a option to enter the details of Disallowance to be claimed in the year of payment in the computation sheet in the section "Inadmissible expenses & Income not included"under Sub Tab. section 40 Disallowance.
Expenses without TDS disallowed earlier B/F - Deduction in current year.
10].But what is happening is that the partners salary admissible U/s40(b) of Rs19,06,741 is getting reduced by Rs.1,12,409/- to Rs.17,94,332......??? This Change in Admissible remuneration as per U/s40(b) am not able to get it.......
11]. whether the Dis allowance has u/s 40(a)(ia) has anything to do with the Admissible Partners remuneration allowable U/s 40(b)..........please if any one can please clarify me at the earliest i will be obliged.

Kaushik Joshi

Kaushik Joshi (Expert)
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21 September 2016 Dear Aryan, 1. Yes, expense disallowed earlier on account of TDS shall be allowed in the year of payment. Allow it separately computation sheet only. 2. Yes this expense is an allowable expense and therefore it'll be reduced to calculate profit before remuneration thereby reducing the allowable remuneration.