corporate tax - urgent

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jayaram (Querist)
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09 September 2009 Hi

I need urgent information on how to go about dealing with the following situation faced by me in the company. Figures are examples

1. Feb 09 bill inclusive of ST for Rs.
12,00,000 was raised on 12th March 09

2. March 09 bill inclusive of ST for Rs.
10,00,000 was rasied on 4th April 09

3. IT Paybale by company after adjustments
is Rs. 1,50,000

Both the above figures were taken to profit and loss account as per accrual basis.

since INcome tax needs to paid now I asked to the service receiver to giver form 16a for 2008-09 fy covering the above payments .

Instead he gave Form 16a for Q1 2009-10 FY showing the above sums and deduction made thereon which my auditor says I will have reconcialion problem.

My question is how I should go about solving the revenue recognition/ reconcilation and TDS as I need not pay tax had he given the form 16a for 2008-09
Financial year

Appreciate immediate response on this...

M Prabhakar Menon

M Prabhakar Menon (Expert)
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09 September 2009 Reconciliation is understood by all in the commercial world as the Form 16A relates to the next year u can claim credit for TDS only in the next year. The problem arises because TDS is deducted u/s 194 C which states that TDS is to be deducted at the time of credit to the beneficiary u will have a cash flow problem in the meanwhile.U can file ITR without payment of tax if the system accepts it and wait for the assessment for FY 08-09 to be taken up.

jayaram

jayaram (Querist)
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09 September 2009 Thank you But the issue related to deduction under 194J not 194c.

jayaram

jayaram (Querist)
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09 September 2009 If we put march 09 billing of Rs. 10,00,000 as unbilled revenue by

Dr. Party
Cr. unbilled revenue

can i avoid saving tax on this part atleast

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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09 September 2009 Income accrues when assessee acquires right to receive it - Income may accrue to an assessee without actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later, on its being ascertained - CIT v. Shri Goverdhan Ltd. [1968] 69 ITR 675 (SC)/CIT v. Nandram Hunatram [1976] 103 ITR 433 (Ori.).
Tax liability is based on accrual or arising of income and receipt is not the only test - The two words â€˜accrueâ€™ and â€˜ariseâ€™ are used to contradistinguish the word â€˜receiveâ€™. Income is said to be received when it reaches the assessee; when the right to receive the income becomes vested in the assessee, it is said to accrue or arise. Such accrual may depend upon the provisions of certain statutes or agreements which may give rise to such right. Receipt is not the only test of chargeability to tax; if income accrues or arises, it may become liable to tax - CIT v. Ashokbhai Chimanbhai [1965] 56 ITR 42 (SC)/CIT v. A.B.V. Gowda [1986] 157 ITR 697

SINCE YOU HAD RENDERED SERVICE IN MARCH 09 , YOUR RIGHT TO RECEIVE AROSE IN THAT YEAR.THE RIGHT TO RECEIVE IS NOT DETERMINED BY FORM NO 16A. YOU HAVE TO CLAIM TDS IN 09 ONLY.....HOWEVER THERE MAY BE SOME PRACTICAL DIFFICULTIES

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