Criminal Trident Pack: IPC, CrPC and IEA by Sr. Adv. G.S Shukla and Adv. Raghav Arora
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Income tax non deduction of tds

(Querist) 10 June 2014 This query is : Resolved 
i HAVE GOT TWO FIRMS ONE IS PROPRIETORSHIP WHICH IS A MANUFACTURING/ PROCESSING COMPANY AND ANOTHER ONE IS PARTNERSHIP FIRM WHICH DEALS IN TRADING, WHEREIN iAM A PARTNER. bOTH THE FIRMS WERE COMES UNDER 44AB AUDIT. FOR AY 2008-09 WE HAVE MADE A PAYMENT/CREDITED RS. 40 LAKHS AS MANUFACTURING CHARGES TO PROPRIETRSHIP FIMR WITHOUT DEDUCTING THE TDS ON rS. 40 LAKHS AS THE PROPRIETORSHIP FIRM HAS GOT ACCUMULATION LOSS AND THE INCOME IS BELOW TAXABLE LIMIT.
WHETHER THIS 40 LAKHS WILL BE DISALLOED IF DISALLOWED HOW TO TAKE SHELTER AGAINT DISALLOWANCE.

PLEASE CLARIFY
Sankaranarayanan (Expert) 10 June 2014
You said both are under 4sAB. Then what the auditor pointed out this. What they furnished in 3CD and 3CB
Rajendra K Goyal (Expert) 10 June 2014
Consult your tax consultant.
rathish (Querist) 10 June 2014
this laps was not noticed by my auditors and not reported anywhere in the report
Sankaranarayanan (Expert) 10 June 2014
Really wonder how they certified the 44AB. How you accounted in the other side of book
Sankaranarayanan (Expert) 10 June 2014
Is your file taken for scrutiny ? How the second company taken the account
rathish (Querist) 10 June 2014
yes, Can I depend for non deduction of tds. plese help me
Sankaranarayanan (Expert) 11 June 2014
tell the exact problem. need more clarity on your issue
rathish (Querist) 11 June 2014
I am running two firms one is partnership firm (unit A) in which I am a partner and another one is proprietorship (unit B) in which I am a proprietor.
Partnership firm (unit A) deals with trading only whereas proprietship unit (unit B) is doing manufacturing/ processing works. All the processing work of my partnership firm will be done by the proprietorship unit.
For AY 2008-09 from partnership firm we have credited around 40 lakhs towards processing charges without deduction of tds on this processing charges to proprietorship unit (unit B) on the presumption that proprietorship unit (Unit B) has accumulation loss and also its income for the ay 2008-09 is below taxable limit and this is well known to me as I am the proprietor of that unit.
Both the units comes under 44Ab and both the units were filed their returns in time u/s 139(1) and my ca was also not noted this in his audit report. Now under scrutiny assessment of my partnership firm assessing officer has issued a notice regarding non-deduction of tds on manufacturing and processing charges which was paid by us to unit B and propose to disallow the expenditure of this processing charges of 40.00 lakhs in my firm.

Please clarry whether we have got any shelter to protect us from disallowance.

Sankaranarayanan (Expert) 13 June 2014
If a person fails to deduct the whole or any part of TDS as required under any of the provisions of sections 192 to 196D then: (a) The person responsible for deduction is treated as ‘assessee in default’ (b) He shall be liable to pay by way of penalty a sum equal to the amount which he failed to deduct. (c) He shall be liable to pay simple interest @ 1% p.a. on amount of tax liable to be deducted.

T. Kalaiselvan, Advocate (Expert) 14 June 2014
Well addressed by expert Mr. Sankar Narayanan, nothing more to add.
Raj Kumar Makkad (Expert) 18 June 2014
I do agree with the experts.


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