u/s 40(a)(ia)

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Hirachand Chheda (Querist)
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29 October 2009 dear all

In A.Y. 2005-06 TDS was deducted after the due date and same is paid before the due date of filing the return. And in computation of Income in A.Y. 05-06 i disallowed the same amount and in A.Y. 2006-07 i claimed Amount inadmissible u/s 40(a) for A.Y. 2005-06 but TDS paid during the year hence it is allowable during the year. But the AO in A.Y. 2006-07 mentioned in the body of the assessment order
"it is found from th computation of income that assessee has claimed the TDS Credit of Rs. 844613/- against disallowance made u/s 40a(ia) of the Act for a.y. 05-06. On Verification of the details filed in this regard, it was found that all the payments were related to the month of march 2005 and has been paid before the due date of filing the return for A.Y. 2005-06. In view of the recent amendment in the act such claim would be allowed only in a.y. in which payment was actually been made. hence, the same is disallowed in the relevent assessment year and added to the total income of the assessee"

Kindly guide me what can i do

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
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29 October 2009 Sec 40(a)(ia) speaks about disallowance of expenses on which TDS not deducted or not paid within due date for deposit of TDS. This is TDS deductible by you on payment of certain expenses. Such expenses will be claimed in the year in which you have deposited the TDS.

Now I am a bit confused reading the word "TDS credit" as the â€œtotal expensesâ€ should disallowable in AY 05-06 and should be shown in Sl. No. 8 b of other information in the return for AY 2006-07.

If you have done that then the AO is wrong and u should go for an appeal and even if he knows about any "recent amendment" of the act then you can pray for rectification of mistake for AY 2005-06, although I have not heard about such amendment.