Defective return u/s 139(9) as per rule 37ba rw sec 199


Audit Manager

Our client is a professional and offered gross receipts from profession Rs.55 Lakhs in the profit and loss account as well as in the ITR accurately. Gross receipts as per 26AS is only 30 Lakhs, which is liable for TDS to the deductors. However, the return is defective u/s 139(9), the error descripttion is "as per rule 37BA of the income tax rules, 1962, read with section 199, credit of TDS shall be given for the assessment year for which such income is assessable. As seen from the ITR filed, credit of TDS has been claimed but the corresponding receipt/income has been ommitted to be offered for taxation. The above ommission is a defect, as per clause (a) of the explanation provided under sec.139(9)". Probable resolution mentioned in the 139(9) received is  " The gross receipts/income, on which tax has been deducted, are to be entered in the schedule under the respective heads of income, as they are assessable in the year in which the credit for the TDS is being claimed". 

Our client is liable for audit and in the ITR filed we had disclosed gross receipts from profession is more than the gross receipts as per 26AS. Please give us a solution.

Thanks

 
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KVO Merau Kutchh

Under which section TDS was deducted?

What is the code of business declared in ITR?

 
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Audit Manager

Sir,

TDS Ddeducted u/s 194J & business code declared in ITR is professionals .

Thanks

 
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KVO Merau Kutchh

As per the defect marked by system, the income has not been offered to tax in the ITR, for which the TDS is been deducted.

Verify the return, whether the receipts of 30 lakhs has been offered in different head of income.

if the income has been offered to tax as per P&L submitted........... disagree the defect, justifying the income offered to tax.


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Hello, in our case we are service provider and we have lot of re-imburshment expenses also, hence we net off our income after deducting expenses, i also currently got notice where my 26 as shows 50 pacs and my return i have showed 20 lacs as income as 30 lacs was reimbursement and no TDS was dediucted, i am not finding any column on ITR to show reimbursement separately.
 
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Hi Lokesh- What did you finally do? I too got a 139(9) notice for mismatch in my Form 26AS and net income shown in ITR. 26AS included Service tax, which is not taxable. I had to deduct that and that's why the net income was different from Form 26AS. Did you disagree to the notice?? What is the status of your return. Your reply would be most useful for me. 

 
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We have also got similar notice . In this We are going to reply that we are maintaining account on Mercantile basis & raised bill immediately after completion of  service but parties releasing fee after six months or even after lapse of one year in such case parties deducting fee at the time of payment  but we have already account for income in the year of billing & paid tax   . Similarly companies under mercantile system account for fee immediately & paid TDS  in that year but we start work & complete after the date of accounting year & raised bill in that year & include  income in the year in which bill raise . In such case comparison of Income.with 26 As is irrelevant  WE ready to got verify any bill on the basis of in which raised . if not accept we file  appeal if not allowed or contention

CA S K BAKLIWAL 

 
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I have received same notice. Assessee engaged in construction business. TDS deducted on advance received u/s 194IA but as revenue booked on the basis of execution of sale deed which was not made in F.Y. 17-18 so we claimed whole TDS in F.Y. 17-18 as reflected in 26AS but received notive U/s 139(9) r.w.s. 199. Kindly guide 

 
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Our client is a traders  offered gross receipts  Rs.55 Lakhs in the profit and loss account as well as in the ITR accurately. Gross receipts as per 26AS is only 65 Lakhs, different is GST TDS to assess rs. 10 lac. However, the return is defective u/s 139(9), the error descriptttion is "as per rule 37BA of the income tax rules, 1962, read with section 199, credit of TDS shall be given for the assessment year for which such income is assessable. As seen from the ITR filed, credit of TDS has been claimed but the corresponding receipt/income has been ommitted to be offered for taxation. The above ommission is a defect, as per clause (a) of the explanation provided under sec.139(9)". Probable resolution mentioned in the 139(9) received is  " The gross receipts/income, on which tax has been deducted, are to be entered in the schedule under the respective heads of income, as they are assessable in the year in which the credit for the TDS is being claimed".  Our client is liable for audit and in the ITR filed we had disclosed gross receipts from profession is more than the gross receipts as per 26AS. Please give us a solution.  

trading a/c sale 55 lac

as per 26as 65 lac

different on GST TDS 10LAC

ALSO MENTION IN BALANCE SHEET FOR PROVISION ON MARCH PAYABLE TAX 

 
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sir i have a receive same notice assessee doing  a work contract business in  F Y 17-18 he received payment of Rs 8211153 those showing in 26 AS but payment of Rs 1069968. revived in  FY 17-18 but bill already raised in march 017 and also book in last F Y P&L and ITR also. But I T department send this notice   ---

As per Rule 37BA of the Income Tax Rules, 1962, read with Section 199 of the Income Tax Act, 1961, credit of tax deducted at source shall be given for the assessment year for which such income is assessable. As seen from the return of income filed, credit for TDS has been claimed but the corresponding receipts/income has been omitted to be offered for taxation. The above omission is a defect, as per clause (a) of the Explanation provided under section 139(9).

 
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