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Disallowance U/s 409a) (ia)

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Pankaj

Manager

295 Points Posted on 04 October 2010

I have Two question.

1) If A is partnership Firm & Tax Audit is applicable for F Y 09-10.

If Labour payment has been paid to Mr Y . Details are as follows :

Rs 18000/- 05.05.09

Rs 18000/- 05.10.09

Rs 18000/-05.03.10

Total 54000/-

Then on which amount TDS should be deducted? on Rs 54000/- or 4000/-

2) If Labour payment has been paid to Mr Z . Details are as follows :

Rs 25000/- Paid on 30.04.09

Rs 100000/- Paid on 30.09.09.

Rs 75000/- Payable on 31.03.10.

But in this case , A has not deducted TDS on such expenses.

As per provision u/s 40(a)(ia) , which amount will be disallowed , means Rs 75000/- ( payable amount ) or total amount.

Please any one explain me

Thanks

Replies (1)

K.Sivakumar

Chartered Accountant

60 Points Posted on 04 October 2010

Hi Pankaj

1) For your first question, the TDS deduction under Sec 194 (c) should be on the total amount once it exceeds the prescribed amount i.e.50,000. So you need to deduct Tax on the total amount of Rs.54,000

2) For your 2nd question, again, the amount disallowable will be Rs.2,00,000 and not Rs.75,000. I assume that since the wordings are used in Sec 40(a)(1a) is payable, you think the amount outstanding on the close of the year is disallowable. But the purpose of this section is to disallow all expenses, if payments are made out of India or to a Non-resident without deducting tax. So the full amount should be disallowed.

Thanks

Sivakumar. CA - 98802 63100