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Disallowance u/s40(a)(iii) delay in deposit of tds on salary

Andy A (Student) (72 Points)

31 May 2008

If a Company deducts TDS on salary .

Deposit TDS to the government. However there is a slight delay.

Will that salary will be disallowed as expenses u/s 40(a).

As per my research it will be NOT DISALLOWED. bcos 40(a)(i) covering interest specfically mentions regarding delay in deposit of TDS but under 40(a)(iii) there is no such provisions.

Your thoughts on this are welcome with relevant judgements.

I have 4 favourable judgments with me .. however they are regarding 40(a)(i) before the amendment regarding the delay in deposit will also attract disallowance

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11 Replies

Shyam Lal Naik (Service) (6156 Points)
Replied 31 May 2008

Sir, you are right.

The referred section applies in cases of non deduction/non payment of TDS. Delay in remittance of TDS has no relevance to decide allowability.

Murlee (Professional) (204 Points)
Replied 31 May 2008

i agree with Shyam

Tarun Munjal (Advocate) (46 Points)
Replied 31 May 2008

according to me also there is no chance of disallowance, the employer has to pay the interest on that Delayed TDS. shyam is rite

M.Sriram Shenoy (CA Final) (814 Points)
Replied 31 May 2008

Salary will not be disallowed for non deduction or late remittance of TDS. The employer has to remit the TDS amount along with interest for the default period.

Ranjini.V (CA Student) (141 Points)
Replied 31 May 2008

There is no disallowance for non deduction or late remittance of TDS on salary unlike the other expenses where TDS arises. The amount of TDS along with the interest for the delayed period must be remitted.

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 31 May 2008

SECTION 40(a)(ia) uses the words deducted and also the word paid ..............so when the legislature wanted payment as precondition it has said so.

But section 40(a)(iii) does not prescribe any condition for payment

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 31 May 2008

SECTION 40(a)(ia) uses the words deducted and also the word paid ..............so when the legislature wanted payment as precondition it has said so.

But section 40(a)(iii) does not prescribe any condition for payment

Andy A (Student) (72 Points)
Replied 09 June 2008

I agree with you Sampant , but there are no case laws supporting 40(a)(iii)

(Guest)

IF I PAY TDS AMT IN JUN WHICH WAS SUPPOSE TO BE PAID IN MAY, WHAT IS THE RATE OF INTEREST OR PENALTY AMT

(Guest)

I would like to know that amendment made in section 40 (a) late payment of TDS will not disallow expenditure, if expenses related to March itself. and kindly give provisions in detail.

Ashu Gosain (Service) (25 Points)
Replied 04 November 2011

U can refer to Delhi Tribunal ruling in the case of Dolphin Drilling . 121 TTJ 489 or Mumbai Tribunal in the case of Rolls Royce MArine India 2009-TIOL-570-ITAT-MUM. The case is squarely covered and such salary expense shall not ne disallowed if TDS has been deposited before filing of ROI.