Question ID :
Disallowance u/s 43B and 40(a)(ia) Simultaneously
In case of an assessee who has not Paid Interest due to the NBFCs (covered under 43B(da) from AY 2020-21) and at the same time has not deducted TDS on the said Interest dues; How will be the disallowance made u/s 43B and 40(a)(ia)?
For example, a company has not paid interest liability of Rs. 10 Lakhs to Non-Banking Finance Company and at the same time has not deducted TDS u/s 194A on the same amount. Thus under 40(a)(ia) 30% of expense i.e. 3 Lakhs shall be disallowed for non-deduction of TDS and under section 43B 100% of expense i.e. Rs. 10 Lakhs shall be disallowed for non-payment of liability.
If the amount is disallowed under both the sections then there will be disallowance of 130% of actual expense incurred by the company.
Thus, what shall be the correct course of action in the above case: -
Whether disallowance shall be made under both the sections? i.e. 100% under 43B and 30% under 40(a)(ia)? (Total 130% Disallowance)
30% shall be first disallowed u/s 40(a)(ia) and then only 70% shall be disallowed u/s 43B?
Any other course of action
Oct 3 2020 12:00AM