Tds dedcuted but not paid and section 40a

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 April 2012 Dear experts...kindly help me with this...
a company had to deduct tds on loan from NBFCs. However the management had no idea that TDS deduction was required on interest on this loan so they didn't deduct it unknowingly for the first 11 months of financial year. However they came to know in march that tds was required to be deducted therefore they put the entry of tds deduction on the 11nth of march (the EMI is through ECS so entry has to be done of deduction and tds has to be paid out of pocket, later the nbfc adjusts the loan or refunds the deducted amount to company) and paid the tds in april together with penal intt. under section 201(1A) of 1% and 1.5% with proper calculation. They can claim deduction of intt. payment related to march for the same financial year as per section 40a. But the confusion is what abt the rest of 11 months ? can the company claim the intt payment deduction of rest of 11 months for same financial year or the full 11 months deduction is disallowed for this particular F.Y. and is allowed in the next F.Y. when TDS WAS ACTUALLY PAID to the department.

pls explain with reference to section 40a.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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20 April 2012 Since the TDS has been deducted in the previous year and paid prior to filing of return, the entire expenditure will be allowed as deduction.
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W.e.f 1.4.2010, i.e. from AY 2010-11, the amended clause of section 40(ia) clarified the situation.
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The Finance Bill 2012, has brought more clarity to the issue and now no disallowance will be made even in the case on non-deduction, if the payee has filed his IT return by showing the income received from your company and paying the taxes.

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CA Mahesh Vekariya

CA Mahesh Vekariya (Expert)
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21 April 2012 FIRST OF ALL INTEREST PAID ON DIRECT TAX SHALL NOT ALLOWED AS DEDUCTION (AS EXPENSE).

REST OF THE THINGS AGREE WITH BAFNA SIR

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Querist : Anonymous

Querist : Anonymous (Querist)

21 April 2012 Thankyou so much both of you....special thanks to Mr. Bafna..sir i respect you, your answers have helped me in various other posts also...thanks for your guidance.

Querist : Anonymous

Querist : Anonymous (Querist)

21 April 2012 Thankyou so much both of you....special thanks to Mr. Bafna..sir i respect you, your answers have helped me in various other posts also...thanks for your guidance.