07 August 2009
one of our client has not deducted tds on freight and the amount of bill is Rs.40000/- and the client has debited the amount of freight to plant and machinery a/c.
i knw that there is liability to deduct tds, what i wnt to knw that what is the penalty for non deduction of tax in this case?
07 August 2009
Since the expenditure is of a capital nature, the proportinate Depreciation on it calculated as per the provisions of Section 32 of the Income Tax Act, will be dis-allowed.
07 August 2009
The penal consequences are: 1. You will be treated as assesse in default and tax will be recovered from you. 2. You will be liable for Interest 3. You will be liable for penalty @ 100% of the tax amount.
However, you can establish that the deductee has included the income in his return of income and has paid advance tax as applicable, you will be absolved from all consequences. The ratio being, the revenue is not in any way prejudiced in any way in such a scenerio.
The question of disallowance does not arise at all. The amount is not claimed as expenditure, hence can not be dis allowed.
With due respect to Deepali's view, I beg to differ. Disallowance is applicablle in case of expenditure claimed. Depreciation is an allowance, not an expenditure.
CAclubindia
