Expense allowable??

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 December 2013 An assessee has incurred advertisement expenditure of Rs. 1 lakh. Payment has also been made.

TDS has NOT been deducted.

The assessee has deposited the TDS from its own pocket and shown the sum as recoverable.

Will the advertisement expense be allowed as deduction??

Please refer Section & case law, if any.

Manish Bhandari

Manish Bhandari (Expert)

23 December 2013 Yes it will be allowed.

Ganeshbabu K

Ganeshbabu K (Expert)

23 December 2013 Sec.40(a)(ia)
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if tds deductable and tds not deducted it is disallowed and required to be reported in tax audit report

Manish Bhandari

Manish Bhandari (Expert)

23 December 2013 As you have shown the sum as recoverable produce the tds certificate to the ad agency and demand the TDS money back,

Querist : Anonymous

Querist : Anonymous (Querist)

23 December 2013 Can somebody provide more clarity??

Nikhil Kaushik

Nikhil Kaushik (Expert)

24 December 2013 1. As you said that the receiver has Deposited the TDS and shown it as recoverable, it means that the said TDS must have been shown against your TAN. So to that extent TDS has been deposited.

2. For 40(a)(ia) shall not be applicable in this case anyways, refer second proviso to the section.

3. You need to pay to the receiver the TDS amount to close your books.

4. Even in case TDS was not deducted at all but the receiver had paid taxes (income tax) on it, 40(a)(ia) cannot be invoked.

So in nutshell the said expense shall be allowed.

Message likes : 1 times

Ganeshbabu K

Ganeshbabu K (Expert)

24 December 2013 Yes, if you have paid tds from your own pocket and shown as receivable it is okay and expence is allowable,..
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as and when you collect that tds amount from party their debit balance in your books will get nullified
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