Case Law Details
RELEVANT PARAGRAPH
15. It will also be relevant to mention that in the Memorandum explaining the provisions relating to direct taxes in the Finance Act, the above clause has been described under the head `Measures to plug revenue leakages’ and the relevant portion of Memorandum Explaining the Provisions Relating to Direct Taxes is reproduced below:-
Enforcing compliance of provisions of TDS Under the existing provisions of sub-clause (/) of clause (a) of section 40, failure to make deduction at source from payment of interest, royalty, fees for technical services or any other sum which is payable outside India, or in India to a non-resident or to a foreign company or failure to make payment to the account of the Central Government, attracts dis allowance of such payments in the hands of the payer. Deduction of such sum is, however, allowed in the computation of income if tax is deducted, or after deduction, paid in any subsequent year in computing the income of that year.
With a view to augment compliance of TDS provisions, it is proposed to extend the provisions of section 40(a)(/) to payments of interest, commission or brokerage, fees for professional services or fees for technical services to residents, and payments to a resident contractor or sub-contractor for carrying out any work (including supply of labor for carrying out any work), on which tax has not been deducted or after deduction, has not been paid before the expiry of the time prescribed under sub-section (1) of section 200 and in accordance with the other provisions of Chapter XVII-B. It is also proposed to provide that where in respect of payment of any sum, tax has been deducted under Chapter XVII-B or paid in any subsequent year, the sum of payment shall be allowed in computing the income of the previous year in which such tax has been paid.
The proposed amendment will take effect from 1st day of April, 2005 and will, accordingly, apply in relation to the assessment year 2005-2006 and subsequent years. [Clause 11]
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