Tds v/s 40(a)(1)

As per Sec 40(a)(i) cartein payments are not deductible from business income when TDS is not deducted

with in said dua dates...!!!!!!!!!!

My doubt is Mr.A deducted from Mr.X (contractor) of amount Rs.1,000 as per 194C on amount Rs.1,00,000 . 

           But Mr.A is deposited only Rs.500 to the credit of C.Govt .

In this case can Mr.A claim  expenditure  Part amount or not???

 

Thanks in advanceyes

 

 

Replies (3)

Yes the Assessee can claim deduction to the extent of TDS deduction

Kindly go through the highlighted part. Following is the words in Act. As per the provisions even if tax is deducted but if not paid then that amount will not be allowable. i.e. it will be disallowed u/s 40(a)(ia)

 any interest, commission or brokerage, 19 [rent, royalty,] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, 20 [has not been paid on or before the due date specified in sub-section (1) of section 139 :]

21 [Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.]

You Have to change the book entry to cliam part payment as expense in my opinion.

That Means up to part payment you have to show book entry as advance paid and then the balance you have to show as payable.

At the time of balance payment it is allowed as deduction in this case.

 

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