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P@R@G (Accounts Head & Final CA & CS)     02 July 2011

Deduction u/s 40a

Whether Payer of Income is liable to pay the amount of short/non-deduction of Tax if Payee has already paid tax on relevant income? S. 201(1)

Example:- Mr.x paid Rs.1,00,000/- to Mr.B TDS suppose to be deduct Rs.10,000/-(10%) but actually deducted Rs.2,000/-(2%) short dedication  Rs.8,000/-

can i have claim full expenses u/s 40a ?

 3 Replies


KIYOSH (TAX CONSULTANT)     02 July 2011

I think No.

But you can deposit TDS, related to any month of previous year by due date for Income return Filing date and can claim expense in previous year.And this provision is proposed to be applicable from financial year 2009-10.



C.A SHASHANK GOYAL (Chartered Accountant)     02 July 2011

Hi, for non - deduction of TDS you will be deemed to be the assessee in default u/s 220 and also penalty equal to amount of TDS will be levied u/s 271C which shall be imposed by joint commissioner .

Point regarding admissibilty of expense if tax  has not been deducted in accordance with the provisions of chapter XVII-B such expenses shall be disallowed by virtue of provision of section 40(a)ia).

I did not have clear idea about short deduction but such expense in my opinion  , entire expenses  shall be disallowed since TDS has not been deducted in accordance with the provisions of that chapter . 


Anjaly.P.A ( Article( CA Final))     02 July 2011

There are 2 views,

One is Allow the propotionate expense

& the other is allow the whole expense, it will attract interest.

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