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Allowance of disallowed expenditures

SENTHIL SELVENDRAN (chartered accountant) (201 Points)

24 May 2010

one of client not deduct tax for the expenditure of Rs.40 lacs he has incurred for the f.y 2006-07 subsequently 143 notice has been issued and the ITO disallowed entire expenditure. Now on 31.03.10 he has remitted all the taxes to the govt. which was not deducted earlier and the TDS return not filed yet.

1.Can he claim the expenditure for the a.y 2010-11

2.Despite he has remitted the taxes, TDS return is compusory for allowing those expenditures.

3.Nature of deduction is sub contract

4.On Rs.40 lacs he has deducted 1.13%

5.The ITO treated the entire expenses as income in the repective year.

6.How long he will avail or brough forward those disallowed exps.

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1 Replies

Shudhanshu Agrawal (Business) (2570 Points)
Replied 24 May 2010

As per Section 40(a) of Income Tax Act, 1961 if you have not deposited TDS on sub contractor before the due date of filing return u/s 139 then it that year the expenses will be disallowed but in the year of deposition the same expenses will be allowed.

In your case the expenses will be allowed in the A.Y. 2010-11 if TDS deposited before due date of filing return u/s 139 and they can be carry forward like normal business losses.

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