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TCS

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This query is : Resolved

Bipin.M.Patel

Bipin.M.Patel (Querist)
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28 May 2011 A ltd.agrees to sale scrap to B ltd for Rs 100000.
B ltd. gives Rs 20000 as advance (say security deposit)
later on B refuses to pay and hence A ltd. forfeit the amount of Rs 20000 paid by B ltd.
Do A ltd. is required to collect TCS on the amount of Rs 20000. i.e take 19800 as Misc Receipt and 200 as TCS OR Take full amount of Rs 20000 as misc receipt without considering TCS Effect and under which section of Income Tax?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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28 May 2011 When Scrap is a trading Asset :
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The amount has been received as advance against sales and as such the entire amount can be said to be collected against sales.
You can simply credit the amount as trading income in the books.

When Scrap is of Capital Asset:
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Credit the amount to the respective block to which the scrap belongs.

In both the case TDS is not required to be deducted or collected by either parties.

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