Incometax sec40(a)(ia)
RAJKUMAR
(Querist) 02 February 2012
This query is : Resolved
assesse is a civil contracterand made the payment to his labour thrugh his mate.in diffrent places more than 50000.I.T.O.has added whole ammount u/s 40a(ia). please guide me,what plea should be taken in appeal.
Raj Kumar Makkad
(Expert) 02 February 2012
Payment made to contractor and sub-contractor under section 194 IT Act is duly covered under section 40(a)(ia) so TDS is required to be deducted as per provsions.
A V Vishal
(Expert) 03 February 2012
Sri Makkad
Failure to deduct or deposit tax as per s. 194C or Chapter-XVII makes the assessee liable to the consequences provided under the said Chapter-XVII. However, s. 40(a)(ia) is in addition to Chapter XVII. S. 40(a)(ia)(A) provides that if tax is deducted during the last month of the previous year and paid on or before the due date of filing of return as per s. 139(1), then such sum shall be allowed as deduction. In cases where tax is deducted other than the last month of previous year but is deposited before the last day of the previous year, then it will be allowed as deduction. Therefore, the conditions for allowability of deduction are prescribed u/s 40(a)(ia) itself and Chapter-XVII and s. 194C are not relevant. If the condition of deduction and payment prescribed u/s 194C / Chapter XVII are held applicable for dis-allowance of deduction u/s 40(a)(ia), then s. 40(a)(ia) will be rendered meaningless, absurd and otiose. Since the assessee had (belatedly) deducted tax in the last month of the previous year i.e. March 2005 and deposited the same before the due date of filing the return u/s 139(1), deduction had to be allowed u/s 40(a)(ia) (A).
Bapushaeb Nanasaheb Dhumal vs. ACIT (ITAT Mumbai)
S. 40(a)(ia) has been amended by the FA 2010 w.e.f. 1.4.2010 to provide that in all cases if TDS is paid before the due date of filing the ROI, no disallowance shall be made.
C. P. CHUGH
(Expert) 05 February 2012
Mr Raj Kumar,
To answer your querry more facts are required such as Whether your assessee was liabile to deduct tax under chaper XVII of the Income Tax Act. What was his turnover and whether he was liable for maintaining books of accounts and getting them audited u/s 44AB of the Act in the immediately preceeding AY, if such were the situation why was not tax deducted and deposited even upto the last day of filling of return. What were grounds taken before AO.
Whether the return has been filed under presumtive tax under section 44AD ?
Pls post full facts so as to suggests any grounds to be taken up in Appeal.
Thanks
