Sec-40

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 September 2011

READ CARE FULLY THE LANGUAGE OF SEC-40(a) THEN ANSWER MY QUERY

BARE ACT SEC-40(a) any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable,—
(A) outside India; or
(B) in India to a non-resident, not being a company or to a foreign company,
on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200 :
Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.

MY QUERY IS THAT :-
AS PER THIS PROVISION
OTHER SUM CHARGEABLE TO INCOME TAX SHALL BE DISALLOWED if conditions of this clause satisfied

NOW THE QUESTION IS WHETHER INCOME CHARGEABLE UNDER THE HEAD SALARIES COVERED BY THIS CLAUSE

IF YES THEN READ SEC-40(3):-
any payment which is chargeable under the head “Salaries”, if it is payable—
(A) outside India; or
(B) to a non-resident,
and if the tax has not been paid thereon nor deducted therefrom under Chapter XVII-B;]

NOW AFTER COMBINED READING DECIDE THE CONCLUSION

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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22 September 2011 TDS on salary payable outside India or to a non resident is outside the purview of Section 40(a)(i) because it is specifically covered under Section 40(a)(iii).

It is well settled principle that specific provision prevails over general provision.

Therefore, TDS on salary payable outside India or to a non-resident is not covered under Section 40(a)(i).

Querist : Anonymous

Querist : Anonymous (Querist)

22 September 2011
SIR THANKS FOR UR ANSWER
HOWEVER IT WILL BE APPRECIABLE IF U CAN PROVIDE ME ANY CASE LAW , CIRCULAR OR NOTIFICATION IN SUPPORT OF THE ANSWER

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CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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23 September 2011 There is no need for a circular or notification in this case.

Whenever two or more Sections govern one single situation, the rules of interpretation are applied. Specific section always prevails over the general section.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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23 September 2011 As per sec 40(a)(iii), salary paid to a person outside India and to Non- resident in India on which neither TDS is deducted nor paid to the government is disallowed u/s 40(a)(iii).
In the above case, it is disallowed forever even if deducted and paid in subsequent years.

Querist : Anonymous

Querist : Anonymous (Querist)

24 September 2011 respected sir Siddhartha Bhardwaj

thank u very much

Querist : Anonymous

Querist : Anonymous (Querist)

26 September 2011 SIR Siddhartha Bhardwaj
I GOT THE REASON IN SUPPORT OF THE ANSWER AS FOLLOWS:-
THE PRINCIPLE OF "Generalia specialibus non derogant "WHICH MEANS:-
“Where there is a general provision which, if applied in its entirety, would neutralize a special provision dealing with the same subject matter, the special provision must be read as a proviso to the general provision, and the general provision, in so far as it is inconsistent with the special provision, must be deemed not to apply.[31]”