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section 40a(ia)

rahul (CA Final student) (76 Points)

06 November 2007

IN CASE OF CO. NOT DEDUCTING TAX AT SOURCE ON PAYMENT OF RENT TO AN INDIVIDUAL, SUCH RENT WILL BE DISALLOWED AT THE TIME OF COMPUTING TOTAL INCOME OF THE CO....

PERSON RECEIVING THE RENT WILL PAY TAX ON SUCH INCOME AT RATES APPLICABLE THERE TO....

NOW IN ORDER TO GET THE ALLOWANCE U/S 40a(ia) CO. WILL PAY TAX ON SUCH RENT EARLIER DISALLOWED U/s 40a(ia)...

NOW DOES IT NOT BECOME TAXATION OF SAME INCOME TWICE ????

PLS SUPPORT UR ANSWER ....

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16 Replies

ASHISH YADAV (Chartered Accountant) (119 Points)
Replied 06 November 2007

No the REnt reciver will get refund on such income .so there is no double taxation. also ur Question is not clear,in this case the company will take cash/cheque from the rent reciver and that will be deposited as TDS which was not deposited earlier

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(Guest)

hi dear as per yours querry company didnt cut the TDS ON THE RENT PAID. suppose if Co cut/deposit the tax after prescribed period of the filing of ITR of individual then issue the TDS certificate to individual and individual file the Revised Return and CAN claim TDS and Co. can allowed its expenditure. if u not followed the provision then kindly read section 271C OF TE INCOME TAX ACT and judgement 253 ITR 745 197 ITR 338, 256 ITR 679

Sana Baqai (Chartered Accountant) (29 Points)
Replied 06 November 2007

In case TDS was not deducted at all, Co. can not claim allowance of rent on subsequent deduction of TDS. Even if the Co. will pay TDS from their own pocket, even then payment of rent will be disallowed u/s 40a(ia). And further when the reciepient of rent pay taxon the same. there will not be double taxation of the same.

CA. Praveen Kumar P (CA & CS) (113 Points)
Replied 06 November 2007

Please go through the following judgement "HINDUSTAN COCA COLA BEVERAGE (P) LTD. Vs. CIT (2007) 293 ITR 226 (SC)" given in our CA newsletter - November, 2007 (Vol 11 No. 6) page no18

Sathish Karunakaran (ACA) (614 Points)
Replied 06 November 2007

Dear peer, Acc. to sec. 40 a (ia), payment of rent is disallowable if tax has not been deducted or deducted but not remitted in th previous yr. But an exception is, if the assessee deducts or remits which was earlier deducted, in the subsequent yr., then the rent expenditure is allowable in the subsequent yr's. P&L A/c. However, before any deduction by assessee in subsequent yr., if the rent recipient pays his tax liability & files ITR, then assessee has no option to claim the expenditure in its P&L a/c. but at the same time no need for remittance of TDS on such rent from its pocket, which the assessee has failed to deduct, as per aforesaid judgement of hindustan coca cola.

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CA NITIN KHODE (sevice) (52 Points)
Replied 07 November 2007

IT IS NOT TAXABLE IN THE TWO HANDS BECAUSE WHENEVER THE CO DEPOSIT TDS THE CO WILL GET DEDUCTION IN THE YEAR OF TDS DEPOSIT. BUT PERSON WHO RECEV THE RENT INCOME TAXABLE ON DUE BASIS. CA NITIN

(Guest)

Please provide clarification on deduction of tax at source on service tax amount included in the bill

(Guest)

The receiver of the rent has to pay tax on that income, however he does not get credit for and TDS, since it has not been paid by the payer. Due to this non payment of TDS on the rent, the payer looses the claim on the expense and has to pay the tax. Obviously the same item is being taxed twice in the same year. However, in the next year when such TDS is deposited, the payer gets the deduction of the rent expenditure (expense not incurred during the year) and the receiver gets credit of the TDS (income not taxable in that year). So it evens out and nobody looses anything.

Avish Kailash Agrawal (C A ) (21 Points)
Replied 05 May 2008

I want to know whether t d s can be deposited upto due date of filing of return & whether expenses will be allowed as deduction under section 40 (a) (ia) of income tax act if so please specify circular no & date

manoj (final) (49 Points)
Replied 24 June 2008

M/s X Ltd., is a Constuction Co., it entered into agreement with Mr.A regarding that construction of 100 residential flat, The agreement is as follows,

1. M/s X ltd., has to build the residential unit, 2. There is no Cash transcation between both, 3.Mr A will give 50 flats to M/s X ltd., as consideration for construction.

my question, a. which AS will Applicale for revenue recongnisation, pls ans for this .

yours

manoj

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(Guest)

properter firm paid service pertaiing to 31.3.2008 in april 2008 is it necessary to add back to his income. please give feed back

NIRANJAN AGRAWALLA (CA) (30 Points)
Replied 04 November 2008

Originally posted by :Guest
"	I want to know whether t d s can be deposited upto due date of filing of return & whether expenses will be allowed as deduction under section 40 (a) (ia) of income tax act if so please specify circular no & date	"

Krishnadas S (CA Final) (43 Points)
Replied 25 June 2009

Originally posted by :Avish Kailash Agrawal
"	I want to know whether t d s can be deposited upto due date of filing of return & whether expenses will be allowed as deduction under section 40 (a) (ia) of income tax act if so please specify circular no & date	"