Tax deducted at source partly
e.g paid to contractor Rs.20 lakhs, Tax deducted @ 2.24% i.e. Rs.44,800/- instead Rs.44,880/- @ 2.244%. There is short deduction of Rs.80/-.
Deductor has paid Rs. 44,880/- to govt. on due date.
What will be disallowance u/s 40 ?
1) Whole amount of Rs. 20 Lakhs or
2) Proportionate amount to the extent of Short deduction of Rs.80/- i.e Rs.3,565/- or
3) any other
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Disallowance u/s 40
Replies (2)
In my opinion, nothing would be disallowed as the short deduction can be deposited along with the interest @ 1%p.m. after the due date also.
As per literal interpretation of the section entire amount may be disallowed ......but this is not the legislative intention and as per principles of interpretation as per legislative intention and as per SC judgment to avoid absurd interpretation , in my opinion the disallownce should be restricted to short deduction only . :) . However in the case of contractor it is his income and not expenditure and such the question of any disallownce of expenditure in the hands of contractor for short deduction by govt does not arise. :)
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