Real Time Case Study

This query is : Open

udit agrawal (Querist)
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26 June 2009 Dear Sir / Madam,
Pl analyse the following interesting real case study and revert back with your precious opinion as soon as possible.

A co absorb "C division" of B co on Oct,08. Uptill Oct,08 B co deduct and paid TDS on Salary for all the employees of C division and from Nov,08 to March,09 A co does Deduction and payment of tds on salary.
Now the issue is B co has short deducted and short paid the tds on salary for employees of C division and that shortfall now need to be paid by A co but there is a change in the tds provisions with effect from 1st April,2009 vis notificaiton no 858(E) dated 25th March,09.

Questions are:
1.What A co is legally bound to do?
2.Whether shortfall of tds on salary can be paid by A co in June,09 as they aquired whole C division of B co,If not, when and how can the payment is made?
3.If so, what is way to make such payment and which legal provision will rule that ?
4.Does there is any Interest which need to be paid by A co?
5.Your comments and suggestions to this case which is really happend with the co?

Sanjeev Jain

Sanjeev Jain (Expert)
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26 June 2009 Hie, Udit

very interesting case to discuss with you. right

01. As u hv mentioned in ur para that A co. has purchased the the entire divison of B co. and the erstwhile co. has made short deduction of TDS the impact of which is who is going to pay the amount of TDS alongwith intt.

So it is well settled law that the person who has liability to pay will be held responsible to pay its debts Except: -
a) In case of Demerger
b) Amalgamation
c) COnversion of firm into co.
d) conversion of prop. into co.
e) sucession of business i.e. in case of death, inhertince business etc.

In all the above mentioned cases the successor will be held responsible for the act done but in your case it wont get attracted.

02. A co. is not bound to pay the amount of liability of B co.

03.In case of late payment or short deduction sec. 40(a)(ia) get attracted which clearly stated that in case of exp. incurred before March will have to be deposited by the assessee on or before 31st of March of the previous year and in case of march liability on or before return filling otherwise the entire of exp. will be disallowed and will be allowed in the year in which tds will be credited into the govt custody.

04. S far as interest part is concerned A co. will not be liable to pay any amount to the govt.

udit agrawal

udit agrawal (Querist)
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29 June 2009 Dear Mr Sanjeev Jain,
thnks for your kind response but the most interesting part is that A co is making payment of the short tds in this month of june, so now the questions are :

1.what is the last date for payment of tds on salary for fy 08-09 (for Apr-Feb & Mar) ?

2.Is any penlty also to be paid ?

3.Does there is any change in procedure or formalities due to introduction of new notificaiton no 858(E) dated 25th March,09 by CBDT ?

4.Whether shortfall can be paid in June09 by A co ?

5.If yes, Who will claim deduction (A or B C0)

6.Can A co claim it back from B Co ?

Please guide for above particulars.
Thanking you in advance.

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