Income from business and profession

This query is : Resolved

C.A.Prachi Shah (Querist)
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28 November 2010 I just want a brief idea on Expenses expressly disallowable while calculating taxable business income with specific reference to:
1) Payment without TDS
2) Excessive pay to relative
3) Expenses excluding Rs.20000 paid otherwise than an account payee cheque
4) Provision of section 43(b)

Aditya Maheshwari

Aditya Maheshwari (Expert)
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28 November 2010 1. If expenses like interes, professional fees, etc is paid without deducting TDS or if after dedution not paid within the due date then expenses disallowable u/s 40(a)(ia)
2. Payment should be reasonable as per prevailing market conditions otherwise the expenses will be disallowable u/s 40A(2).
3. Expenses paid in case will be disllowable if a single payment is made more than Rs. 20,000
4. If some statutory dues is not paid within the due date of deduction of filing return then expenses disallowabe u/s 43B

CA. BHAVIK DILIPBHAI MEHTA

CA. BHAVIK DILIPBHAI MEHTA (Expert)
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28 November 2010 1) Not allowed. Where the TDS was deductible & deducted during march of relevant p.y. and the same is deposited on or before due date of filing the return then the deduction shall be allowed in the p.y. in which the expenditure is incurred. If the TDS is deducted in March is deposited after due date of filing return, the expense shall be allowed in the year in which tax has been deposited.

2)Excessive payment to relative shall be disallowed to the extent it is excessive having regard to market value of goods & services.

3)Payment in excess of Rs. 20,000/- is disallowed fully. However from 1/10/09 in case of business of plying,hiring or leasing gooods the amount of Rs. 35,000/- is to be considered instead of Rs. 20,000/-. Exceptions given in rule 6dd

4)Taxes,PF contribution,Bonus or commission payment should be made before due date of furnishing the return of income.However if the payment of outstanding liability is made after due date, deduction can be claimed in the year of payment.

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C.A.Prachi Shah

C.A.Prachi Shah (Querist)
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03 December 2010 THANKS 4 SOLVING MY DOUBT