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Disallowance of unpaid provision of expenses

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This query is : Resolved

amit dadhich (Querist)
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28 June 2019 Dear Experts,

We show Provision for Audit fees every year on which TDS is deducted and paid and Audit fees is booked in P & L , if in case the payment against the provision is not made for more than one year can we disallow the Expenses, if yes under what section.

Kindly provide your expert advice.

Thanks & Regards

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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31 May 2020 Yes. Expenses can be disallowed it TDS is not deducted as per provision of the act. However if the assessee has duly shown such incomes and paid appropriate taxes to the IT Department then such expenses can be allowed as deductions as business.

In order to reduce the hardship, non-deduction or non-payment of TDS on payments made to residents as specified in section 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the amount of expenditure on which TDS is not deducted. Earlier, 100% of such amount is disallowed

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