NO TDS DONE ON CAPITAL EXPENDITURE: WHETHER PROPORTIONATE DEPRECIATION IS DISALLOWABLE?

NO TDS DONE ON CAPITAL EXPENDITURE: WHETHER PROPORTIONATE DEPRECIATION IS DISALLOWABLE?

 2,521 total views

CAPITAL EXPENDITURE

Query 1]

Sir, I along with my brother purchased plot at Nagpur; But, due to some financial complications it is register in brother’s name only. Now I wish to take its half portion back by way of Gift. What will be Tax implications to both of us? We both are in 30% slab of IT. [kshirish1968@rediffmail.com]

Opinion:

Gift in between the “Relatives” is not at all taxable, neither in the hands of the donor nor in the hands of Donee.

Query 2]

Sir, our factory construction work was in completed in the Financial year 2008-09 & the commercial production was commenced from February-2009. Certain payment were do without TDS to the contractors  for Sheds works, Ducting works etc. The expenses were debited to the concerned capital assets & not to the profit & loss A/c. Depreciation was charged on those assets at the year end & depreciation was debited to the Profit & Loss A/c.  Our queries are whether the non deduction of TDS would result in disallowance of proportionate amount of depreciation debited to the profit & loss account? Please elaborate & enlighten. [LPPL]

Opinion:

A very interesting query Indeed. Though, prima-facie it appears that the proportionate amount of depreciation will be disallowable but in fact it will not be so.

Section 40 starts with

“Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deduct 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, being resident, for carrying out any work (including supply of labour for carryout any work), on which tax is deductible at source under chapter XVII – B and such tax has not been deduct or, after deduction, has not been pay before the specify date mention in the said sub-section.

A non-obstante clause is usually use in a provision to indicate that the provision should prevail despite anything to the contrary in the provision mention in such non obstante clause.

Further a perusal of the above provision show that it is only when a deduction is claim in computing the income chargeable under the head “ Profits and gains of business or profession” that the above provision is attract.

The deduction claimed should be of interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services, Contractors / Subcontractors Payment. The claim for depreciation made by the assessee does not fall within any of the categories mentioned in the aforesaid provision. Therefore, we are of the strong opinion that it is not possible to make disallowance of depreciation by resorting to the provisions of section 40(ia) of the Act. One may further refer ITA No. 1497/Mum/2010 Dt. March 9, 2011.

Furthermore, in SMC demaag (P) Ltd. vs. DCIT [132 TTJ 498], the Delhi Tribunal has held that depreciation cannot be disallowed on the ground that at the time of remittance no tax was deducted at source. Provisions of section 40(a)(i) are not applicable for claim of deduction under section 32.

Query 3]

I have worked with ordnance factory, Chanda in the year 2007-08. I was leaving in the quarter provided by the factory. Quarter allotment letter was on my name. To get PAN card, I used this address and got the PAN card. I have left the job and have been leaving in the Nagpur in a rented house, since 2008. My queries are:

  1. Is there any need to change the address in the PAN card ?
  2. If yes, can I use address of my landlord for change of address? What is the procedure? Kindly guide me. [vimal_sontake44@rediffmail.com]

Opinion:

  1. It is always advisable to change the PAN data wherever there is a change in the address.
  2. By attaching the new address proof document, you can apply for

For this, you have to make an application in “Request for New PAN Card or/and Changes or Correction in PAN data” . The form can be downloaded from the websites of UTI Technology Services Ltd (UTITSL), National Securities Depository Ltd (NSDL), or the I-T department [www.utitsl.co.in, www.tin-nsdl.com or www.incometaxindia.gov.in]. You can tick in tick in the address box on the left margin of the form. You have to attach color stamp-sized photograph on the form.

  1. The form can be submit at PAN application centers of UTITSL and NSDL, the addresses of which are available at the above mention website.

CAPITAL EXPENDITURE


[button color=”” size=”” type=”round” target=”” link=”https://thetaxtalk.com/”]home[/button]  [button color=”” size=”” type=”round” target=”” link=”https://thetaxtalk.com/submit-article-publish-your-articles-here/”]Submit Article [/button]  [button color=”” size=”” type=”round” target=”” link=”https://thetaxtalk.com/discussion-on-tax-problem/”]Discussion[/button]

Leave a Comment

Your email address will not be published.