notes on expenses expressly disallowed under head income fro

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kruti m dhebar (Querist)
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15 January 2011 sir/maam
plz help me wid precise notes for 'The expenses expressly disallowed' from head of income business and profession topic.

thank you
kruti

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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15 January 2011 Disallowed Expenditure:

Following amounts shall not be deducted while computing income under the head Profits & gains of business or profession –
1. Interest, royalty, fees for technical services etc payable to a non-resident or outside India without deducting TDS & its payment;
2. Interest, commission or brokerage, fees for professional services or fees for technical services payable to any resident person without TDS & its payment.
4. Fringe Benefit Tax;
5. Income-tax;
6. Wealth-tax;
7. Any payment which is chargeable under the head "Salaries", if it is payable outside India, or to a non-resident, and the tax has neither been paid in India nor deducted there from;
8. Any payment to a provident fund or any other fund established for the benefit of employees of the assessee in respect of whom the assessee has not made effective arrangement to secure that tax shall be deducted at source from any payment made from the fund, which are taxable under the head ‘Salaries’; and
9. Any tax on non-monetary perquisite actually paid by employer on behalf of employee.
10. 40A(2):Any payment made by an assessee to a related person shall be disallowed to the extent it is excess or unreasonable as per the Assessing Officer. Related person includes both “Relative” and “Person having substantial interest”
11. 40A(3) Where any expenditure in respect of which payment is made in excess of Rs.20000 at a time otherwise than by a A?c payee cheque or draft, 100% of such payment shall be disallowed.
12. No deduction shall be allowed in respect of any provision made by assessee for the payment of gratuity to his employees provided such contribution is not towards an approved gratuity fund or for the purpose of payment of gratuity, that has become payable during the previous year.
13. No deduction shall be allowed in respect of any sum paid by the assessee as an employer towards setting up or formation of, or as contribution to, any fund, trust, company, AOP, BOI, society or other institution for any purpose provided such sum is not by way of contribution towards approved superannuation fund, recognised provident fund, approved gratuity fund.
Deduction in respect of following expenses are allowed only if payment is made on or before the due date for furnishing return of income -
14.section 43A - following sum not paid before due date of filing return of income
1. Any sum payable by way of tax, duty, cess, fee, etc.
2. Bonus or commission to employees.
3. Interest on loan or borrowing from any public financial institutions, etc.
4. Interest on any loans and advances from a scheduled bank.
4. Leave encashment.
5. Contribution to any P.F., superannuation fund, gratuity fund, etc..

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