TDS & Allowability of Expenditure

This query is : Resolved

Subash Gaijes (Querist)
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08 April 2008 Hi Experts.....

on 31st March 2008 i book professional fees as follows:

Professional Fees A/c Dr. 100000
To Professional Fees Payable 100000.
(TDS has not been provided)

Expected date of payment : 15th July 2008
The Company will deduct TDS on 15th July 2008 and remit the TDS to the I.T. Dept.

My friend's opinion: The expenditure will be allowed in the year of Payment, i.e. F.Y. 2008 - 2009, as per sec 43B.

My Opinion: The expenditure will be permanently disallowed, because as per sec 40(a)(ia), the expenditure will be allowed only if TDS is deducted. (Date of credit or payment, whichever falls earlier). So in the above case TDS has not been deducted, so the expenditure is ineligible for allowance.

Suggest me, which opinion is correct.
Explain me in detail

Thank You Experts

MANAS ROUT

MANAS ROUT (Expert)
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08 April 2008 Tds will be allowed in the year in which you have paid. but disallowed if you have not dedcted and not paid.as per 40 a ia.
in your case if you have not paid before 31/05/08 it will be disallowed for the asst.year 2008-09 and if you are paying in 15/07/08 it will be allowed in the asst year 2009-10.

CA Praveen Chopra

CA Praveen Chopra (Expert)
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09 April 2008 THIS EXPENDITURE IS TO BE ALLOWED ONLY IN THE FINANCIAL YEAR 2008-2009.i.e.assessment year 2009-2010

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