B.Prasanna (Chartered Accountant) (44 Points)
06 December 2011Dear Friends,
TDS was deducted on various expenses incurred upto test run stage in a mfg. company.
At the end of the year, substantial amount of expenses were capitalised as set-up & test run expenses.
Now, if TDS was not deposited till the date of filing IT return, what will be consequenses?
Since expenses are capitalised, whether depreciation on assets will be dissalowed?
CA PRASANNA
Anant
(Article Assisstant)
(22 Points)
Replied 06 December 2011
Interest will be charged u/s 201(1A) @ 1.25% till the date of deposit from the date it had to be deposited.
Further, the assessee will not enjoy deduction of expenses for the same in that PY. Since the assessee has capitalized the expenditure, he will get the benefit and will be allowed to claim depreciation on the same.
C.A. Jignesh N. Mehta
(C.A.)
(1030 Points)
Replied 06 December 2011
Depreciation will be allowed but interest on failure to deposit TDS to governments credit will be payable and you shall be ASSESSEE in DEFAULT for the period the default continues. Also penalties are leviable for such u/s 271C.
C.A. Jignesh N. Mehta
(C.A.)
(1030 Points)
Replied 06 December 2011
(w.e.f. 1-7-2010) the interest on delay in payment of TDS will be 1.50 %. u/s 201(1A)(ii).
as under:
Consequences of failure to deduct or pay.67
201. 68[(1) Where any person, including the principal officer of a company,—
(a) who is required to deduct any sum in accordance with the provisions of this Act; or
(b) referred to in sub-section (1A) of section 192, being an employer,
does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax:
Provided that no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax.]
69[(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,—
(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and
(ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid,
and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200.]
SHASHI KUMAR CG
(CA Final - Waiting for results)
(40 Points)
Replied 23 December 2011
I agree with Mr. Jignesh. If tax is deducted and not remitted within due date then int. rate would be 1.5% p.m. from the due date till it is remitted.
However if tax deduction is delayed then interest rate would be 1% p.m. Ex: tax is suppose to be deducted in october but deducted during December, then interest rate would be 1% p.m. for 3 months which comes to 3%.
Further if tax is not deducted on any expenditure which is capitalized later, then depreciation will be disallowed during the course of assessment.
Regards,
Shashi Kumar C.G.
CAclubindia
