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TDS U/s 194 & 194I

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Shikha Bajaj

433 Points Posted on 13 December 2009

Any one, Pls answer to my query-

Sec 194A says that TDS on dividend will be deducted only if dividend is covered under Sec. 2(22)(e). Sec. 2(22)(e) says that where a co. advanced to a shareholder a sum for construction of a building to be taken on lease, the amt. so advanced was to be adjusted against future rent, such amt. will be treated as deemed dividend & as per prov. of Sec. 194, TDS will be deducted.

Now my question is- when in future, the amt. will be adjusted thru rent A/c, by passing a JV debiting rent & crediting advance A/c, then if it exceeds the annual limit of Rs. 1,20,000/- as prescribed under Sec. 194I, will the co. again deduct the TDS.

If yes, then what will be treatment of the amt. of TDS in the books as the credit is not given to party, only a JV is passed.

If no, then will the prov. of Sec .40(a)(i)(a) be applicable?

Thanks in Advance!

rgds

Shikha

Replies (1)

Amol Gopal Kabra (CA,CS,DISA)

Practicing CA

8639 Points Posted on 13 December 2009

In such case there is no need to deduct tax again when the amount is transferred to rent account. Further as it is deemed to be dividend, the recipient has already shown it as income in his books of accounts. Again, the same amount cant be taxed twice at different times under two different heads. So, no need to deduct tax again.