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194R(Benefit provided)

21 February 2023

Suppose my debtor is refusing the payment of 5,00,000 and i have written off.

I have provided benefit to my debtor, will section 194R attract?

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5 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 22 February 2023

No. Sec, 194R is not applicable here.

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shivam bhatia (231 Points)
Replied 22 February 2023

How, as I'm providing benefit to a person which is covered in the definition of benefit.
please clarify?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 22 February 2023

- 'Benefits' as defined under the Act – undefined but reference provided u/s 28(iv) – PGBP

-'Perquisite' as defined under the Act – defined under Income from Salaries – restrictive applicability

-Guidelines issued as approved by CG vide circular No.12/2022 dt 16.06.22 are applicable and binding on income tax authorities and specified tax payers providing such benefits or amenities.....

Section 28(iv) – Profits and Gains of Business or Profession ...

(iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession; Applicable to all the Taxpayers carrying on business or profession Taxpayers is receiving such tax benefits from connected stakeholders of the business ( PGBP) Includes benefits received in Cash or kind

Section 17(2) – Definition of Perquisite ..

Income from Salaries – Source of Income 17 (2) “perquisite” includes— (i) the value of rent-free accommodation provided to the assessee by his employer; (ii) the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer....

It is applicable from July 1, 2022 onwards Thus, it is not applicable to any kind of benefit or perquisites provided on or before June 30,2022.
Here, question arises whether it is benefit as per the IT act?

Even if yes, when was it given? Does writing of in books defines its date?

To be justified by relevant evidences...

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shivam bhatia (231 Points)
Replied 22 February 2023

Helpful explanation.
But sale executed on 10.07.2022 and I'm considering it as bad debt on 15.01.2023.
Now this scenario provides that I'm providing benefit to my debtor whether this benefit is converted into money or not.

Now 194R will attract? If not then why?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 22 February 2023

Reference is this regard invited towards the provisions of section 36 of The Income Tax Act, 1961 [hereinafter referred to as the ‘Act’]. The relevant extracts of the said section reads as under:

“Other deductions.

(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28 – ….

(vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year ….

(2) In making any deduction for a bad debt or part thereof, the following provisions shall apply—

(i) no such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the assessee;”

As such if you wish to deduct TDS (rather pay to treasury from your pocket), there is no harm.

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