TDS

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 August 2010 X is a sole proprietor.
F.y 09-10= Turnover 45 lakh
F.y 08-09= Turnover 39 Lakh
F.y 07-08= Turnover 50 lakh
He has paid a royalty of Rs 35,000/- to a company on march 25, 2009 without deducted TDS.
Disallowance U/s 40(a)(ia) is applicable in the case or not?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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11 August 2010 Disallowance Not applicable since tax audit is not applicable in Fy 2008-09.

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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11 August 2010 No disallowance as turnover is less than 40 lacs in FY 2008-09 & the royalty was paid during the same FY 08-09.

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Querist : Anonymous

Querist : Anonymous (Querist)

11 August 2010 Immediately financial year will be considered not the f.y 2008-09, in the f.y 2007-08 turnover is more than 40 lakh, However, provisions of Section 194 J are applicable in the case of royalty only when the payer is a person other than an individual/ Huf, Tax is therefore, not deductible in this case.

mohinder kansal

mohinder kansal (Expert)
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11 August 2010 Disallowance shall be applicable as prop. is liable to deduct TDS u/s 194J if his turnover from business exceeded the limit specified u/s 44AB in the immediate financial year in which financial year the payment of royalty is made. in this case turnover in FY 2007-08 was Rs. 50 lacs. so assessee should have deducted TDS from the eligible payment made in the financial year 2008-09.
Extract of provisin of section 194J

"Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum by way of fees for professional services or technical services is credited or paid, shall be liable to deduct income-tax under this section"

Querist : Anonymous

Querist : Anonymous (Querist)

12 August 2010 Mohinder Ji i think it covers only professional services and technical services not the royalty.

Please quide......

mohinder kansal

mohinder kansal (Expert)
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12 August 2010 clause (c) and (d) in section 194J(1) was inserted by the Taxation Laws (Amendment) Act, 2006 which require to deduct TDS from payment of Royalty also.