Search Results For: tax deducted at source


QUERY: Assessee has not deducted tax at source on certain provisions made on last day of the financial year? Assessee refers to the decision of Special Bench of ITAT and takes a view that no disallowance u/s. 40(a)(ia) can be made?
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The view of the assessee is not correct. In fact, the Special Bench in Merilyn Shipping & Transports v. ACIT [136 ITD 23 (Visakhapatnam) (SB)] has specifically held that the provisions of section 40(a) (ia) are applicable to the amounts of expenditure which are payable as on March 31 of every year. However, the said provisions could not be invoked to disallow expenditure which has been actually paid during previous year without deductions of tax.

QUERY: S. 40(a)(ia) lays down that the expenditure mentioned therein viz., interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services or payment to a contractor/ sub-contractor on which tax is deductible at source under Chapter XVIIB, but has not been deducted or after deduction not been paid, would not be allowed as a deduction in computing the business income of the payer-assessee till such TDS is paid within specified time limit. Can Assessing Officer disallow the depreciation on the amount capitalized on which no TDS was deducted, for payments made to contractor who is resident?
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Section 40 starts with “notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head “Profits and gains of business or profession”: –

(ia) any interest, commission or brokerage, [rent, royalty] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor,

QUERY: A Pvt. Ltd., and B Ltd. are sister concerns. A Pvt. Ltd. has made the payment of job work charges to B Pvt. Ltd. A.O. has made the disallowance of job work charges u/s. 40(a)(ia) for non deduction of TDS, in the hands of A Pvt. Ltd. B Pvt. Ltd, offers the job work income from A Pvt. Ltd., in the return of income. Since A Pvt. Ltd., closes its business operations in subsequent year, it cannot claim deduction of the TDS deposited to the credit of government will A Pvt. Ltd., still be liable for disallowance u/s. 40(a)(ia)?
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Yes. As per section 28 of the Income-tax Act 1961, the assessee should carry on the business during the year. Section 28 reads as under:

“The following income shall be chargeable to income tax under the head” Profits and gains of business or profession” –

QUERY: During the year, the amounts have been paid to the contractors and shown as ‘advances for supply of labour’. However, at the end of the year, the same have been transferred to ‘labour charges’, on which no tax was deducted. The Assessing Officer has disallowed the said payments under section 40(a)(ia) of the Act, whether action of Assessing Officer is correct?
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Section 40(a)(ia) reads as under:

“any interest, commission or brokerage rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub contractor,

QUERY: While making the assessment, the Assessing Officer has disallowed certain of expenses mentioned in section 40(a)(ia) of the Act, on the ground that no tax been deducted at proper rate, whether disallowance is justified?
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In DCIT vs. S. K. Tekriwal [48 SOT 515 (Kol)], the Tribunal held that the condition laid down under section 40(a)(ia) for making addition is that tax is deductible at source and such tax has not been deducted. If both the conditions are satisfied, then such payment can be disallowed under section 40(a)(ia). But where tax is deducted by the assessee,

QUERY: Is the notice pay compensation taxable in the hands of employer? If yes, it would amount to double taxation i.e. once when salary was paid by the employer who had deducted the tax at source under section 192 of the Act, and again when he receives a notice pay compensation from employee?
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Generally, a notice pay compensation is deducted by the employer before releasing any amount of gratuity or any other sum, the employer deduct the tax at source under section 192 of the Act. Hence, there is no double taxation.