Disallowance u/s 40(a)(ia)
Dixit Jawahar (CA Finalist) (444 Points)
29 August 2008Dixit Jawahar (CA Finalist) (444 Points)
29 August 2008
CA Nitin Wadhwani
(Chartered Accountant)
(4469 Points)
Replied 29 August 2008
Yes.
A.O Is Absolutely Justified Since TDS Is To Be deducted At The Time Of "Payment or Credit" Whichever Is Earlier.
Remedy Available Since The Expenditure Is Disallowed In Previous 2005-2006, U can Claim Expenditure In Year Of Payment i.e 2006-2007.
Dixit Jawahar
(CA Finalist)
(444 Points)
Replied 29 August 2008
Dear Nitin,
There is an amendment to Sec.40(a)(ia) with retrospective effect from the AY 2005-06 in the Finance Act,2008 that if the TDS is paid before the due date of furnishing Return of Income u/s 139(1) ,then in such a case, there can be no disallowance as the TDS will be treated as paid with in the due date. Anyhow thanks for your prompt reply.
Regards,
Dixit
CA Nitin Wadhwani
(Chartered Accountant)
(4469 Points)
Replied 30 August 2008
Plz the Link Of Notification.
sudarshan
(CA)
(745 Points)
Replied 21 August 2009
First of all, commission is payable normally as a percentage of profit only afte accounts are approved in AGM. Tds on salary is deducted only on payment basis as per section 192 of income tax. So it wont be disallowed
sivadas chettoor
(CA)
(2644 Points)
Replied 22 August 2009
You will have to study closely the contract, if any , entered into by the company with the the director concerned. If the terms indicates that it partakes the charactor of salary only then as rightly pointed out by CA Sudharsan, no disallowance is called for. You may also note that it is not the nomenclature which determines the charactor of the payment. It is substance which matters. But if it is pure business commission and have nothing to do with the contractual employment , the disallowance shall be justified. Anyway, thamx for giving food for thoughts.
sivadas chettoor B.com FCA LL.M siva208 @ yahoo.com
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