PAYMENT OF TDS  IS COVERED u/s 40(a) which specifies that  an expenditure incurred in the month of april till february  will be allowed if the amount(tds) is paid till the last date of the financial year i.e 31st of march. For an expenditure due in the month of march can be allowed if the amount is paid till the date of filling of return of income .

in my opinion the word tax used in sec.43b is for indirect taxes like sales tax,service tax etc.because the direct tax component are specifically disallowed under the act except the legal fees paid for income tax matters such as for filling returns, for submit a case before authority.tds can never be claimed as expenses so definately it will not cover u/s 43b. we can look expenditure amount on which tds is being deducted or not u/s 40a. so it's the expenditure where we can see the disallowance and allowance. i never seen a case where we are looking for tds allowance or disallowance aspect so where is the applicability of sec.43b on tds.

my poinion is it will be disallowed.

regards

tarun rustagi

Dear Friends,

TDS is 1st deducted by the deductor from the amount payable or paid to the deductee and then paid to CG. So there is no expenditure in it and hence not considered under the expenses sections of PGBP.

Sec 43B mainly deals with Indirect Taxes. i.e taxes relating to the busines like service tax ,sales tax etc.Tax Deducted at Source will not be considered as a expenditure for the assesse.

Sec 43 B mainly deals with the following items

1)Tax payable(Tax relating to the business)

2)Bonus or Commissiion to employees

3)employer contribution to PF

4)Leave Encahment

5)interest on term loan

According to one of the rules of interpretation of law, namely specific provision always prevails over general provision, TDS shall not be covered u/s 43B (General provision which coveres any tax) but also shall be covered u/s 40(a) (Specific provision which covers only TDS).

Now if there is the following question in mind of any one

that sec 40(a)(ia) does not cover TDS on salary, hence the same shall be coverd u/s 43B

in this context I would like to say that this approach is wrong due to the follwing reasons

(1) If the intention of law makers were to regulate TDS on salary, then the same would have been regulated u/s 40(a) itself.

(2) the nature of both section are quite different as follows:

u/s 43B only tax element is disallowed and

u/s 40(a)(ia) entire portion including tax element is disallowed.

Now it is very clear that the nature of  payment of TDS on salary is matching with the nature of sec 40(a)(ia)

(3) From salary various deduction are made such as Provident fund, ESI, TDS. section 43B specifically covers Providend fund, ESI but not TDS. If the intention of law makers were to cover TDS under sec 43B, then TDS would have been also specifically covered under sec 43B.

Sec 43B reads "Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of—

a b c ... etc"

Plz see this highlighted portion of 43B that says 43B disallows only those exp which are otherwise allowable under the Act and if any specified expense as mentioned in 43B falls in line with disallowance conditions then only that will be disallowed.

As u know TDS is not any exp and NOT OTHERWISE ALLOWABLE UNDER THE ACT so it goes out of the purview of 43B.

Hope it helps... 

Section 40(a)(ii) refers to the income tax of the assessee filing the income-tax return, whereas for the purpose of Section 43B, we are considering the tax deducted at source (TDS) i.e. income tax of the person receiving from the assessee. Thus this logic doesn't suffice.

What all is covered under Section 43B?