Disallowance of expenditure on which tax not deducted at source

This query is : Resolved

ssankaran (Querist)
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10 December 2007 For the last 2 assessment years, the expenditure on which tax has not deducted at source/not remitted within the due dates needs to be disallowed in its entirety.

This is particularly severe in cases of 194C deductions wherein the entire expenditure is disallowed if a small % i.e. 1%/2% is not deducted / remitted under the said section.

I would like to know if anybody has filed any suit questioning the legality of this draconian provision.

regards,
Sankaran

Shyam Lal Naik

Shyam Lal Naik (Expert)
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11 December 2007 I don't think so.

It is well settled that equity and taxing statues are alien. I don't think the provision can be challenged.

The remedy is provided in the act itself. Remit the tax in later years and claim deduction in the year of payment.

I too am facing the same ordeal and have some query.

We have not deducted tax during the financial year 2004-05 and the same has not been paid yet. Now if we remit the tax now(ie. during the financial year 2007-08), how do we issued TDS Certificate? How do we submit TDS return?

kartik_somu

kartik_somu (Expert)
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19 March 2008 These are no different interpretations as regards the words in the Section goes. If you want to avoid the liablity, the only option is to pay tax.

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