Suppose an assessee has incurred certain expense on credit basis.During the assessment this expense was diss-allowed by A.O on the grounds of non-deduction of TDS.
Now if the assessee w/off these credtiors in his book as he is not going to pay them any amount,would it be included in his income u/s 41(1)?
The expense was transportation charges for the year 2007-08 and it was o/s till 31/3/08. The A.O diss-allowed this expense since tds was not deducted on it.
Now if in the C.Y year the assessee want to w/off these ceditors,will it be included in income of the assessee and taxable u/s 41(1) or not as the related expense was not allowed to be claimed as deduction to the assessee.
Since the related expense was not allowed in P.Y same could'nt be taxed in current year only on account of credit now written off.
thank you for your guidance in solving my query,but since the transportation charges were claimed as an expenses by the assessee and they were diss-allowed by the A.O on account of non-deduction of TDS.
And these two are differentr sections :diss-allowance of TDS and Creditors w/off,so i am still confused whether creditors w/off will forn the part of income or not,More so ever i have heard that there is some Calcutta bench(not sure about it) judgement reated to this type of case,where w/off of such type of creditors(whose related expenses were diss-allowed) were included in taxable income of the assessee. Pls rply
I am not sure whether such a judgement is available. Will be very happy, if you can provide the same
incase there is a judgement regarding the same, that will mean that one need to deposit the TDS on the transportation charges & claim the same as expenses & at the same time offer the w/off of the creditors as taxable income...
You can possibly pass the adjustment entries regarding the TDS in the respective creditors' individual ledgers to lessen the impact of tax liability arising on account of w/off.
Will be very happy to hear the views of experts on this, as this is a very typical scenario.
CAclubindia
