TDS on Exps.

This query is : Resolved

Devendra (Querist)
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12 June 2010 During the course of audit ie. after the F.Y end if the auditor comes across an expense which is debited to P&L on which TDS should have been deducted, but is not deducted then is the exps allowed if TDS is deducted on it later on but before 31st May?

CA G. SURYANARAYANAN

CA G. SURYANARAYANAN (Expert)
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12 June 2010 Sections 192 to 196 D of the Incometax Act, 1961 relates to Deduction of tax at source and invariably requires the assessee to deduct tax at the time of credit of such income to the account of the payee8 or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force. Section 40 of the Incometax Act, speaks about the expenses which are not deductible in computing the income of the assessee. Section 40(a)(ia) reads as follows: any interest, commission or brokerage, 91[rent, royalty,] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, 92[has not been paid on or before the due date specified in sub-section (1) of section 139. In the circumstances, if the tax is deducted as per the provisions of Chater XVII B of the Incometax Act, then expenses are not deductible. This is more so, if the deducted tax is not paid within the due date.

GANAPATHY SURYANARAYANAN