section 40(a)(ia)

Digital Technology (DigiTech) & E-commerce Taxation

Income Tax - Digital Technology (DigiTech) & E-commerce Taxation Indian e-commerce and DigiTech industry have been grown to a new height in the past decade. We have seen exponential rise in the way people look at business and the modus operandi of managing a business. From high investments in space and layouts, people have diverted to high investm...

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TDS on Expense Provision for which no invoice been received

Income Tax - One of the most disputed arguments between assessee and income tax department is that whether payments made towards specified expenditure attracts disqualification u/s 40(a) (ia) and applicability of this section to provisions made at the year end and its implications. Following are the views expressed by the author in this respect. The ...

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Interest, Penalty, Prosecution & Other Consequences of TDS Defaults

Income Tax - 1. Prosecution etc. : U/s. 276B If a person deducts tax at source etc. but fails to pay the same to the credit of Central Government as prescribed, he can be sentenced to rigorous imprisonment for a term not less than 3 months and extendable upon 7 years with fine as well. Moreover, u/s 276BB, similar punishment is provided for a person ...

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S. 40(a)(ia) Disallowance for Non Deduction & Short Deduction of TDS

Income Tax - Under section 40(a)(ia) of the Act, in case of payments made to resident, the deductor is allowed to claim deduction for payments as expenditure in the previous year of payment, if tax is deducted during the previous year and the same is paid on or before the due date specified for filing of return of income under section 139(1) of the Ac...

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Income Tax treatment of amount paid towards Software Purchase

Income Tax - The question as to whether the expenditure incurred towards purchase of computer software should be treated as revenue or capital in nature. Law has been well settled since 2012, still there different treatments in industry to treat the same as revenue or capital. So through this Article, I am trying to conclude whether the amount [&helli...

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Section 40(a)(ia): Disallowance of expenditure for non-deduction of tax at source on payment made to resident

Income Tax - Section 40(a)(ia) is amended via Finance (No. 2) Act, 2014 to restrict the amount of disallowance for non-deduction of tax to 30% of expenditure. The proviso is also amended to the effect that 30% of such sum shall be allowed as a deduction in computing the income of the previous year in which tax has been paid....

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Change in provisions related to disallowance of expenditure on account of non-compliance with TDS provisions : Budget 2010-11

Income Tax - The existing provisions of section 40(a)(ia) of Income-tax Act provide for the disallowance of expenditure like interest, commission, brokerage, professional fees, etc. if tax on such expenditure was not deducted, or after deduction was not paid during the previous year....

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No TDS on payments to NRI for Purchase of Raw Materials

Honda Cars India Ltd Vs DCIT (ITAT Delhi) - The issue under consideration is whether the provisions of deduction of tax at source (TDS) would be applicable in case of payments made to non-resident Indian for the purchase of raw materials?...

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No TDS on ocean freight paid to non-resident shipping companies

Shri Suresh Khatri Vs ITO (ITAT Lucknow) - Shri Suresh Khatri Vs ITO (ITAT Lucknow) Ground Nos. 1 to 3 of the appeal relate to the disallowance of Rs.6,42,437/- for non deduction of tax at source u/s 40(a)(ia) of the Act on payment of ocean freight, made to non-resident shipping companies. The assessee is a proprietary concern and engaged in...

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Amendment in Section 40(a)(ia) vide Finance Act, 2010 are retrospective

A.Y. Garment International Private Ltd. Vs DCIT (Karnatka High Court) - A.Y. Garment International Private Ltd. Vs DCIT (Karnatka High Court) Whether the Tribunal was justified in law in holding that the amendment made by Finance Act, 2010 in the provisions of Section 40(a)(ia) of the Income-tax Act, 1961 is not retrospective in operation on the facts and circumstances ...

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No liability on assessee to deduct merely based on provisions

AT& T Communication Services India Pvt Ltd Vs DCIT (ITAT Delhi) -  The fact that provision made at the end was reversed in the beginning of next accounting year showed that there was no income accrued. Mere entries in books of account did not establish accrual of income in the hands of payee and hence there was no liability on assessee-company to deduct merely on...

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Payment of Foreign Agency Commission not liable for TDS in India

M/s. Divya Creations Vs ACIT (ITAT Delhi) - The issue under consideration is whether the TDS will be applicable on payment of Foreign Agency Commission?...

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Disallowance for failure to withhold tax- Sec.195 rw Sec. 40(a)(i)

Circular No. 3/2015-Income Tax - (12/02/2015) - Circular No. 3/2015 Section 40(a)(i) of the Act stipulates that in computing the income chargeable under the head "Profits or gains of business or profession", any interest, royalty, fees for technical services or other sum chargeable under this Act either payable in India to a non-resident (not bei...

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S. 195 AOs to tax taxable part of sum paid to NR for TDS default

Instruction No. 02/2014 - (26/02/2014) - Sub: Deduction of tax at source under Section 195 read with Sections 201 of the Income-tax Act, 1961 relating to payment made to a non-resident-reg. Section 195 of the Income-tax Act (hereafter referred to as 'the Act') provides that any person, responsible for paying to a non-resident not being ...

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CBDT circular on Section 40(a)(ia)-TDS Disallowance

Circular No. 10/DV/2013-Income Tax - (16/12/2013) - Circular No. 10/DV/2013-Income Tax It has been brought to the notice of the Board that there are conflicting interpretations by judicial authorities regarding the applicability of the provisions of section 40(a)(ia) of the Income-tax Act,...

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Recent Posts in "section 40(a)(ia)"

No TDS on payments to NRI for Purchase of Raw Materials

Honda Cars India Ltd Vs DCIT (ITAT Delhi)

The issue under consideration is whether the provisions of deduction of tax at source (TDS) would be applicable in case of payments made to non-resident Indian for the purchase of raw materials?...

Read More

No TDS on ocean freight paid to non-resident shipping companies

Shri Suresh Khatri Vs ITO (ITAT Lucknow)

Shri Suresh Khatri Vs ITO (ITAT Lucknow) Ground Nos. 1 to 3 of the appeal relate to the disallowance of Rs.6,42,437/- for non deduction of tax at source u/s 40(a)(ia) of the Act on payment of ocean freight, made to non-resident shipping companies. The assessee is a proprietary concern and engaged in the business of […]...

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Digital Technology (DigiTech) & E-commerce Taxation

Digital Technology (DigiTech) & E-commerce Taxation Indian e-commerce and DigiTech industry have been grown to a new height in the past decade. We have seen exponential rise in the way people look at business and the modus operandi of managing a business. From high investments in space and layouts, people have diverted to high investm...

Read More
Posted Under: Income Tax |

Amendment in Section 40(a)(ia) vide Finance Act, 2010 are retrospective

A.Y. Garment International Private Ltd. Vs DCIT (Karnatka High Court)

A.Y. Garment International Private Ltd. Vs DCIT (Karnatka High Court) Whether the Tribunal was justified in law in holding that the amendment made by Finance Act, 2010 in the provisions of Section 40(a)(ia) of the Income-tax Act, 1961 is not retrospective in operation on the facts and circumstances of the case? The issue whether the [&hel...

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No liability on assessee to deduct merely based on provisions

AT& T Communication Services India Pvt Ltd Vs DCIT (ITAT Delhi)

 The fact that provision made at the end was reversed in the beginning of next accounting year showed that there was no income accrued. Mere entries in books of account did not establish accrual of income in the hands of payee and hence there was no liability on assessee-company to deduct merely on the provisions made at year end....

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Payment of Foreign Agency Commission not liable for TDS in India

M/s. Divya Creations Vs ACIT (ITAT Delhi)

The issue under consideration is whether the TDS will be applicable on payment of Foreign Agency Commission?...

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Reopening of assessment merely on Internal Audit Objection Not Justified

Lionbridge Technologies P. Ltd. Vs ACIT (ITAT Mumbai)

Whether the re-opening of assessment u/s 147 initiated by AO is justified in law? Re-opening of assessment on basis of Internal Audit Objection Not Justified....

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Section 195 TDS applicable only when amount is chargeable to tax in the hands of recipient

C.U.Inspections (I) Pvt. Ltd Vs DCIT (ITAT Mumbai)

C.U.Inspections (I) Pvt. Ltd Vs DCIT (ITAT Mumbai) Mere fact that the payment in question is not reimbursement of expenses to the holding company would not per se expose the expenditure to disallowance u/s 40(a)(ia) of the Act. It has been noticed supra that the disallowance u/s 40(a)(ia) is activated when there is failure on […]...

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Amendment to Section 40(a)(ia) restricting disallowance to 30% is retrospective

Muradul Haque Vs ITO (ITAT Delhi)

Muradul Haque Vs ITO (ITAT Delhi) Finance (No.2) Act has made amendment to section 40(a)(ia) of the Act w.e.f. 01.04.2015. Various benches of the Tribunals including the Delhi Benches of the Tribunal, have held the amendment made by Finance (No 2) Act to be curative in nature. We further finds the coordinate bench of the […]...

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No TDS on harvesting charges paid on behalf of farmers as agent

Parry Sugar Industries Limited Vs DCIT (ITAT Bangalore)

The issue under consideration is whether the disallowance made u/s 40(a)(ia) of the Act for non-deduction of tax at source from the payment made towards Harvesting charges is justified in law?...

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