tds when cash system is followed by one person

This query is : Resolved

CA. Sameer Kashikar (Querist)
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12 October 2007 Mr.A maintains his books on mercantile system of accounting

Mr.B maintains his books on cash system of accounting

Mr.A deducts TDS on amount payable to Mr.B in F.Y.2006-07 and issues TDS certificate to Mr.B in F.Y. 2006-07 for A.Y. 2007-08
Mr.A makes payment to Mr.B in f.y.2007-08
for Mr.B tds is deducted on income which he has not yet booked in his books for f.y.2006-07

in such a case for which F.Y. year TDS credit can be claimed by Mr.B

CA. Rayan Sequeira

CA. Rayan Sequeira (Expert)
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13 October 2007 IN such a case you will have to show the tds portion as a cash reciept for the year and the remaining portion account it in the year in which the cash has been recieved

Ravikumar.G

Ravikumar.G (Expert)
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13 October 2007 TDS rule is Credit or payment whichever is earlier.

Meanwhile if the company registered under co' act 1956, there is no choice it should follow only mercantile system of accounting.

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CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)
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21 December 2007 With due rspect, I would like to be in disgareement with Mr. Rayan. Section 199 is very clear in this regard.Credit of the TDS deducted will be given to the deductee for the Assessment Year in which his inome is/was taxable. Date or year of deduction of taxes is nothing to do with the credit of such TDS. Yes, I agree there are some practical problems in this field, bu law is law. This type of cases always happns in case of Government Contracts, Professional Fees etc. In the quote case in my opinion and as per section 199, Mr. B will get the credit of TDS in the AY 2008-09.
Further more, the new ITR forms are taking care for this typr of situations.