TDS & Tax audit

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C A tejal (Querist)
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04 July 2009 Hello,
I have a query regarding TDS liability.

As per Incometax an individual and HUF is liable to deduct tax at source if in the previous year he is covered under tax audit as per section 44AB.

I have a client who has a propritorship which is covered under tax audit from last two year.
He has taken a loan from his family member and paid interest on that which is more than Rs. 10000/- which he shows in his personal books of account NOT in the books of propritorship concern.

Is he required to deduct tax at source on this interest due to his propritoship covered under tax audit?
Is individual and propritorship is treated seperately while deciding the liability for deduction of TDS?

Thanks in advance for reply.

Have a nice day.

Rajesh U. Ameta

Rajesh U. Ameta (Expert)
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05 July 2009 As per rules of TDS, whenever assessee pays interest which is debited as expenses will be disallowed if TDS is not deducted.

In present case assessee "A" has taken a loan and interest exp is not debited to P&L Account, instead it is paid through personal account.

When expense is not debited to PL A/c there is not question of deducting tax.