Section 198 of income tax act' 1961

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 February 2013 How do we apply the provisions of the above mentioned section of the Income Tax Act'1961.

Case : Suppose turnover of a A Ltd., following mercantile basis of accounting, in F.Y. 2011-12 amounted to Rs.15,00,000 (as per actual bills raised during the period).Tds was deducted by B Ltd.(debtor of A Ltd.) on provision basis showing a total turnover of Rs.17,00,000 -- 2% tds amounting to Rs.34,000 (bill for balance amount of Rs.2,00,000 was raised in F.Y. 2012-13 by A Ltd.)

Now, what accounting entry will be passed by A Ltd.Further, what should be the turnover of A Ltd. for the purpose of Income Tax Return filing.Since, tds has been deposited in F.Y. 2011-12, A Ltd. will have to claim it in the same financial year, what & how should it be claimed ??

Quick replies shall be highly appreciated.

Nikhil Kaushik online

Nikhil Kaushik online

(Expert)
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23 February 2013 section 198 talks only about the income being considered received. It doesn't assign it a status of being accrued.

the credit is given under section 199.

you may further refer to Rule 37B - Sub-rule 3(ii) of the Rules reads as under:

"Where tax has been deducted at source and paid to the Central Government and income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax."

You may refer to a detailed discussion in case of Shri Anupallavi Finance & ... vs Department Of Income Tax on 2 December, 2010 IN THE INCOME TAX APPELLATE TRIBUNAL Bench 'A' Chennai

Further, if you may refer ITR4, ITR6, the TDS-TCS sheet has two columns, tax deducted during the year and tax claimed during the year. Only the tax claimed during the year is considered for current year's assessment. the balance is carried over and can be used for next year.