section 40(a)(ia)

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poonam sharma (Querist)
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12 October 2009 assessee has purchased machinery which includes delievery and transportation charges also but the tds was not deducted u/s 194C on the contractual payment made to the transport agency. whether the proportionate depreciation can be disallowed on the transportation charges capitalised to the cost of the machinery.

Rajeev

Rajeev (Expert)
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12 October 2009 Section 40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession,

(a) in the case of any assessee

[(i) any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is PAYABLE,

(A) outside India; or

(B) in India to a non-resident, not being a company or to a foreign company,

on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200

The provisions say that expenses which are PAYABLE on which TDS is not deducted is not allowable u/s 40(a)(i)

i think proportionate depreciation would be disallowed ( to the extent of transportation expense capitalised )

CA Akshat

CA Akshat (Expert)
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13 October 2009 Here, it is to be noted that 40(a) (ia) will be applicable when the assesse is claiming expenditure u/s 36 to 38. Machinery depreciation is covered u/s 32 so here these complication will not be arised in my opinion. so, Assessee can claim full depreciation. However, it is to be noted that the sec 201 will be applicable which says that here assessee is assessee-in-default and penalty will be levied equal to the amount of TDS.

Rajeev

Rajeev (Expert)
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13 October 2009 Sir the sections so applicable are from 30-38 and not from 36-38 as mentioned by you.:)Request you to check the first line of the said section .

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