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Question ID : 40853

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) Or 30% shall be first disallowed u/s 40(a)(ia) and then only 70% shall be disallowed u/s 43B? Or Any other course of action

Posted by RONAK MOTA on Oct 03, 2020

Filed Under Profits & Gains of Business & Profession