TDS - cheque presented date - how to verify?

This query is : Resolved

Anil (Querist)
Follow

13 April 2008 In Form 3CD auditor needs to report whether TDS is deposited into the bank in time.

For this purpose what is the date that needs to be considered - whether it is the date on which the ITNS challan with cheque is presented to the bank OR the date the bank stamps on the challan ?

If it is the date on which the challan with cheque is presented to the bank in what way can the auditor verify the same as the bank does not acknowledge the date on which the challan+cheque is received by it BUT mentions only the date on which the cheque is cleared.

Kindly quote the relevant section or rule.

Thanks.

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
Follow

14 April 2008 ax payment by cheque : Controversy on the dates - H.P.AGARWAL/ASHISH GUPTA (2000) 108 TAXMAN (TAX LITERATURE) 221.

CHEQUE PAYMETNS- WHEN AN ASSESSEE RECEIVES A CHEQUE AS PAYMENT FOR GOODS SOLD, AND THE CHEQUE IS NOT DISHONOURED, THE PAYMENT RELATES BACK TO THE DATE OF RECEIPT OF THE CHEQUE AND IN LAW THE DATE OF PAYMENT IS THE DATE OF DELIVERY OF THE CHEQUE - CIT VS. OGALE GLASS WORKS LTD. (SC) [1954] 25 ITR 529(SC)

ADVANCE TAX - Payment by cheque relates back to date of delivery of cheque. Followed CIT Vs OGALE GLASS WORKS (P) LTD. 25 ITR 529. - CIT Vs BHARAT MOTOR SERVICE.

TAX DEDUCTION AT SOURCE - SOME COMMON DOUBTS :: The Supreme Court in the case of CIT v. Ogale Glass Works Ltd. [1954] 25 ITR 529 held that the cheques not having been dishonoured but having been cashed, the payment related back to the dates of receipt of the cheques and in law the dates of payments were the dates of the delivery of the cheques, The same is the postition as per rules 79 and 80 of the Central Treasury Rules. However, with effect from June 1, 1983, rule 20 of the Central Government Account (R & P) Rules, 1983 has been substituted for the Central Treasury Rules in respect of all transactions pertaining to the Central Government. This said rule reads as under : Government dues tendered in the form of a cheque or draft which is accepted under the provisions of rule 19 and is honoured on presentation shall be deemed to have been paid - where the cheque or draft is tendered to the bank - on the date on which it was cleared and entered on the receipt scroll. The AAR in P.No. 2 of 1994 in Advance Ruling No. P. 2 of 1994, In re. [1996] 221 ITR has upheld the applicability of C.G. Account (R & P) Rules to income-tax payments., [2001] 116 TAXMAN 16
==========================================================================

DATE OF CLEARING CAN ALWAYS BE VERIFIED FROM BANK STATEMENT

Anil

Anil (Querist)
Follow

14 April 2008 Thank you very much sir for the clarification.

Generally the due date for payment of TDS is 7th. Going by the rules / case laws you have mentioned it seems like one needs to pay TDS 2-3 days before 7th to make sure that the cheque gets cleared on or before 7th.

However with the introduction of mandatory electronic payment of TDS for certain assassees from current financial year, one no more needs to worry about the above issue.

Thank you once again sir.

Upgrade to CAclubindia Pro. Subscribe Now!