Tds Disallowed U/s 143(3) of A/y 2007-08
This query is : Resolved
09 December 2009
sir
in one of our case of A/y 2007-08 tds had not been deposited during d previous year or upto due date u/s 139(1)& return was filled without disallowing d respective exp but same was deposited next year i.e. previous year 2007-08. then we also filed return for previous year 2007-08 after due date u/s 139(1) & we did not claim such exp allowed since we had not disallowed d same earlier year in our return
now in scrutiny assessment u/s 143(3) d AO has disallowed d exp for A/y 2007-08 on a/c of non deposited tds U/s 40(a)& raised a demand
Now my Question is we r eligible for allowance of such exp in A/y 2008-09 since we have deposited tds in following year but we have not claimed d same in our return for A/y 2008-09 & also we cannot revise d return since it is belated. in such case what is d provision for claiming d deduction of disallowed exp. should we make an apllication for rectification u/s 156 or what will be d other solution of this problem
it's urgent please refer provision regarding ur opinion if any
thanx in advance
in one of our case of A/y 2007-08 tds had not been deposited during d previous year or upto due date u/s 139(1)& return was filled without disallowing d respective exp but same was deposited next year i.e. previous year 2007-08. then we also filed return for previous year 2007-08 after due date u/s 139(1) & we did not claim such exp allowed since we had not disallowed d same earlier year in our return
now in scrutiny assessment u/s 143(3) d AO has disallowed d exp for A/y 2007-08 on a/c of non deposited tds U/s 40(a)& raised a demand
Now my Question is we r eligible for allowance of such exp in A/y 2008-09 since we have deposited tds in following year but we have not claimed d same in our return for A/y 2008-09 & also we cannot revise d return since it is belated. in such case what is d provision for claiming d deduction of disallowed exp. should we make an apllication for rectification u/s 156 or what will be d other solution of this problem
it's urgent please refer provision regarding ur opinion if any
thanx in advance
09 December 2009
U have to pay the tax as per the demand notice , but u can claim the deduction of Expenses in the Asst Year 2009-10
09 December 2009
thanx for ur reply sir
Anand sir we agree to pay demand but we deposited d tds in f/y 2007-08 so we should be given allowance in A/y 2008-09 as per sec 40(a) but we cant. is there any provision in Act which enable us to claim d same in year other than year in which tds is deposited
please refer provision if any ...............
Anand sir we agree to pay demand but we deposited d tds in f/y 2007-08 so we should be given allowance in A/y 2008-09 as per sec 40(a) but we cant. is there any provision in Act which enable us to claim d same in year other than year in which tds is deposited
please refer provision if any ...............
09 December 2009
sir please give me any suggetion it's urgent
11 December 2009
you can claim this in the A.Y.2009-10......As such there is no such provision .....but AO can allow this in the A.Y.09-10
12 December 2009
thanx bikash sir but does sec 40(a) not state deduction "shall be" allowed in subsequent year in which such tds would be deposited by the assessee
is there any case law in regarding this provision
is there any case law in regarding this provision
27 July 2025
You're absolutely right in citing **Section 40(a)(ia)** of the Income Tax Act, and yes, there is **legal support and procedural clarity** on how disallowed expenses due to non-deduction or non-payment of TDS can be **allowed in the subsequent year** when TDS is actually deposited.
---
## 🔍 Issue:
* In A.Y. 2007–08, TDS was not deposited on or before the due date under section 139(1), so the expense was **disallowed under section 40(a)(ia)**.
* TDS was deposited in the following year (F.Y. 2007–08, i.e. A.Y. 2008–09).
* The return for A.Y. 2008–09 was filed **belatedly** and did **not claim** the disallowed expense.
* You **cannot revise** the belated return now.
* So the question is: **Can you still claim the expense in A.Y. 2008–09 (the year of deposit)? If not, what remedy is available?**
---
## ✅ Legal Provision:
**Section 40(a)(ia)** clearly states:
> “...such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.”
This means the expense **must be allowed** in the year in which the TDS is **actually deposited**, regardless of whether it was claimed earlier or not.
---
## 📌 Problem:
Since the return for A.Y. 2008–09 was **filed belatedly** and the expense was **not claimed**, and revision is **not permitted** for belated returns (under old law applicable to that year), the expense remains unclaimed.
---
## ✅ Solution:
### Option 1: **Rectification under Section 154 (Not Section 156)**
* File a **rectification request under section 154** for A.Y. **2008–09** with the **jurisdictional AO**, requesting allowance of the expense based on **TDS deposit proof**.
* Justify your request citing **Section 40(a)(ia)** and attach:
* Copy of TDS challans
* Original return filed
* Computation showing how the expense was not claimed
> Section 154 allows rectification of a **mistake apparent from record**, and this qualifies if the TDS was deposited and related documents are available on record.
---
### Option 2: **Claim in A.Y. 2009–10 (the year after TDS deposit)**
* Though technically **Section 40(a)(ia)** allows deduction in the **year of deposit** only (A.Y. 2008–09), some courts have allowed flexibility.
#### 📚 Case Law:
* **CIT v. Rajinder Kumar (Delhi HC) \[2014] 362 ITR 241**
Held that Section 40(a)(ia) is **remedial and not penal**, so deduction **must be allowed in the year of deposit**, even if return is not revised.
---
## ✅ Recommendation:
1. **First approach AO for rectification under section 154 for A.Y. 2008–09.**
2. If AO refuses, **file a letter requesting claim in A.Y. 2009–10**, citing hardship and substance over form.
3. **If still not resolved**, consider **filing a petition under section 119(2)(b)** with CBDT for **condonation and allowing claim of refund/relief** in light of genuine hardship.
---
### 🔖 Summary:
| Issue | Solution |
| ---------------------------- | ------------------------------------------------------------ |
| TDS deposited late | Expense disallowed u/s 40(a)(ia) in A.Y. 2007–08 |
| Not claimed in A.Y. 2008–09 | File **rectification u/s 154** |
| Cannot revise belated return | Try **claiming in A.Y. 2009–10** or file application to CBDT |
| Legal basis | Section 40(a)(ia), **Delhi HC ruling in Rajinder Kumar** |
---
Let me know if you’d like a sample draft for the rectification application or references to relevant circulars and case laws.
---
## 🔍 Issue:
* In A.Y. 2007–08, TDS was not deposited on or before the due date under section 139(1), so the expense was **disallowed under section 40(a)(ia)**.
* TDS was deposited in the following year (F.Y. 2007–08, i.e. A.Y. 2008–09).
* The return for A.Y. 2008–09 was filed **belatedly** and did **not claim** the disallowed expense.
* You **cannot revise** the belated return now.
* So the question is: **Can you still claim the expense in A.Y. 2008–09 (the year of deposit)? If not, what remedy is available?**
---
## ✅ Legal Provision:
**Section 40(a)(ia)** clearly states:
> “...such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.”
This means the expense **must be allowed** in the year in which the TDS is **actually deposited**, regardless of whether it was claimed earlier or not.
---
## 📌 Problem:
Since the return for A.Y. 2008–09 was **filed belatedly** and the expense was **not claimed**, and revision is **not permitted** for belated returns (under old law applicable to that year), the expense remains unclaimed.
---
## ✅ Solution:
### Option 1: **Rectification under Section 154 (Not Section 156)**
* File a **rectification request under section 154** for A.Y. **2008–09** with the **jurisdictional AO**, requesting allowance of the expense based on **TDS deposit proof**.
* Justify your request citing **Section 40(a)(ia)** and attach:
* Copy of TDS challans
* Original return filed
* Computation showing how the expense was not claimed
> Section 154 allows rectification of a **mistake apparent from record**, and this qualifies if the TDS was deposited and related documents are available on record.
---
### Option 2: **Claim in A.Y. 2009–10 (the year after TDS deposit)**
* Though technically **Section 40(a)(ia)** allows deduction in the **year of deposit** only (A.Y. 2008–09), some courts have allowed flexibility.
#### 📚 Case Law:
* **CIT v. Rajinder Kumar (Delhi HC) \[2014] 362 ITR 241**
Held that Section 40(a)(ia) is **remedial and not penal**, so deduction **must be allowed in the year of deposit**, even if return is not revised.
---
## ✅ Recommendation:
1. **First approach AO for rectification under section 154 for A.Y. 2008–09.**
2. If AO refuses, **file a letter requesting claim in A.Y. 2009–10**, citing hardship and substance over form.
3. **If still not resolved**, consider **filing a petition under section 119(2)(b)** with CBDT for **condonation and allowing claim of refund/relief** in light of genuine hardship.
---
### 🔖 Summary:
| Issue | Solution |
| ---------------------------- | ------------------------------------------------------------ |
| TDS deposited late | Expense disallowed u/s 40(a)(ia) in A.Y. 2007–08 |
| Not claimed in A.Y. 2008–09 | File **rectification u/s 154** |
| Cannot revise belated return | Try **claiming in A.Y. 2009–10** or file application to CBDT |
| Legal basis | Section 40(a)(ia), **Delhi HC ruling in Rajinder Kumar** |
---
Let me know if you’d like a sample draft for the rectification application or references to relevant circulars and case laws.
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