Provision for Expenses - Allowable expenditure

We have to make provision for various expenses based on the estimates at the year end as we are following the accrual system of accounting. But the income tax department was disallowing the same on the ground that same being contingent in nature and hence not allowable. Here are some of the

How to Know how much demand is pending before TDS department

In the last year, we all had received number of show cause notices and also demand notices from TDS department in respect of errors committed while filing the E -TDS department.  At that time TDS department are providing the details of errors in the pen-drive.

Now the same details are available in the tin.nsdl website at the default option. please login into there and at the default option you will find the details of all the demands pending with TDS department. file the revise E TDS return and after somedays passed you will find the updated position.

In case you still have any doubts, please give your comment.

TDS on Provision for Expenses

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.

UNDERSTANDING DEEMED DIVIDEND WITH LATEST CASE LAWS:

ow a days, in a modern organization , there will exist a complicate business structure of holding & subsidiary companies along with closely held companies. There will be routine flow of funds between these companies. It is very important to have the knowledge of provisions of deemed dividend under section 2(22)(e) of the Income tax act, 1961 before making any transaction with the closely held companies. 

UNDERSTANDING TAX DEDUCTED AT SOURCE WITH LATEST CASE LAWS: PART - II

In the part I of the article Understanding TDS with case laws published on February 2011 now we should move ahead and should discuss the latest judicial development in the area of TDS. 

<!--[if !supportLists]-->·         <!--[endif]-->Trade Discount :  In the case of S.D. Pharmacy Pvt. Ltd. ITA Nos. 948/Coch/2008, A.Y. 2005-06, dt. 5-5- 2009. It was held that trade discount are not in the nature of commission and hence no TDS is required to be deducted u/s 194H of the act. This was again confirmed in the case of Add CIT v Pearl Bottling (P)  Limited.

Correction in Challans Paid

Summary :

Earlier correction was not possible in challans  while making errors at the time of payment. Same is now possible from bank, but you should contact the bank within 7 days.

Challan Correction Mechanism

Under OLTAS (On Line Tax Accounting System), the physical challans of all Direct Tax payments received from the deductors / taxpayers are digitized on daily basis by the collecting banks and the data transmitted to TIN (Tax Information Network) through link cell. At present, the banks are permitted to correct data relating to three fields only i.e. amount, major head code and name. The other errors can be corrected only by the assessing officers.

New Procedure of challan correction by banks (for physical challans):

To remedy this situation, a new Challan Correction Mechanism for physical challans has been put in place. Under this mechanism, for income tax payments made on or after 1.9.2011, the following fields can be got corrected through the concerned bank branch:

_ Assessment Year

_ Major Head Code

_ Minor Head Code

_ TAN/PAN

_ Total Amount

_ Nature of payment (TDS Codes)

The time window for the correction request by tax payer is as follows :

S.No Correction required in Field name

Period of Correction Request (from Challan Deposit Date)

1 TAN/PAN 7 days

2 Assessment Year 7 days

3 Amount 7 days

4 Other fields (Major

head, Minor head,

Nature of payment)

Within 3 months

The time window for correction by the bank is 7 days from the date of receipt of Correction request from the tax-payer.

Conditions:

The changes can be made by the banks, subject to following conditions:

i. Correction in Name is not permitted.

ii. Any combination of correction of Minor Head and Assessment Year together is not allowed.

iii. PAN/TAN correction will be allowed only when the name in the challan matches with the name as per the new PAN/TAN.

iv. The change of amount will be permitted only on the condition that the amount so corrected is not different from the amount actually received by the bank and credited to Govt. Account.

v. For a single challan, correction is allowed only once. However, where 1^st correction request is made only for amount, a 2nd correction request will be allowed for correction in other fields.

vi. There will be no partial acceptance of change correction request, i.e. either all the requested changes will be allowed, if they pass the validation, or no change will be allowed, if any one of the requested changes fails the validation test.

Procedure:

i. The tax-payer has to submit the request form for correction (in duplicate) to the concerned bank branch.

ii. The tax-payer has to attach copy of original challan counterfoil.

iii. In case of correction desired for challans in Form 280, 282, 283, the copy of PAN card is required to be attached.

iv. In case of correction desired for payments made by a tax-payer (other than an individual), the original authorization with seal of the non-individual taxpayer is required to be attached with the request form.

v. A separate request form is to be submitted for each challan.

Procedure of challan correction by Assessing Officers (both physical and e-payment challans)

After the window period available to banks for challan correction, the assessee can make a request for correction to his or her assessing officer, who is authorized under the departmental OLTAS application to make such correction in challan data in bonafide cases, to enable credit of the taxes paid, to the concerned assessee.

Format of application to bank for challan correction to be requested by the taxpayer

To

The Branch Manager,

--------------------------- (Address of Branch)

Taxpayer Details :

Taxpayer Name :

Taxpayer Address :

Taxpayer TAN/PAN :

Name of Authorized Signatory :

(in case of non-individual taxpayer)

Sub : Request for Correction in Challan No: 280/281/282/283 [Strike out which ever is not

applicable]

Sir/Madam,

I request you to make corrections in the challan data as per following details :

Challan Details:

BSR Code Challan Tender Date (Cash/Cheque Deposit Date) Challan Sl. No.

Sl. No. Fields in which correction required Please Tick Original Details Modified Details

1. TAN/PAN (10 digit)

2. Assessment Year (YYYY)

3. Major Head code (4 digit)

4. Minor Head code (3 digit)

5. Nature of Payment (3 digit)

6. Total Amount (13 digit)

Note: Please tick against the relevant fields where changes are required.

Tax payer/Authorized Signatory

Date

Note:

1. Attach copy of original challan counterfoil.

2. In case of correction to challan 280, 282, 283 attach copy of PAN card.

3. In case of a non-individual tax payer, attach the original authorization with seal of the

non-individual tax-payer.

4. The request form for correction is to be submitted in duplicate to the bank branch.

5. A separate request form is to be submitted for each challan.

How to get FVU files offline required for revised E-TDS return

In this regard, you are requested to send the letter containing the following detail when requesting for consolidated FVU file offline:-

a)      Letter should be on companies letter head

b)     Letter should be signed by authorized signatory

c)      Name as well as the designation of authorized signatory should be mentioned in the letter

d)     TAN registration number (12 digit number)

e)      TAN of organization

f)       Token number of original statement only (15 digit number)

g)     Form No. and Quarter

h)     Financial Year

i)       Reason for not able to provide KYC

Aforesaid letter should be addressed to:

Senior Vice President,

TIN Operation II,

National Securities Depository Limited,

Times Tower 1^st floor, Kamala Mills Compound,

S. B. Marg, Lower Parel (West)

Mumbai – 400013.

On the receipt of the letter and verifying the details, the requested files will be sent on email id provided at the time of TAN registration.

For any query related to the above, you may contact TIN Call centre at

 

      Tel: 91-20-2721 8080.

      Fax: 91-20-2721 8081.

      Email ID: tin_returns@nsdl.co.in.