TDS QUERY ?

[CABIJENDERKUMAR BANSAL]

X is a sole proprietor. F.y 09-10= Turnover 45 lakh F.y 08-09= Turnover 39 Lakh F.y 07-08= Turnover 50 lakh He has paid a royalty of Rs 35,000/- to a company on march 25, 2009 without deducted TDS. Disallowance U/s 40(a)(ia) is applicable in the case or not?

AI Summary

Sole proprietor faces disallowance under Section 40(a)(ia) for failing to deduct TDS on royalty payment. A sole proprietor, referred to as X, paid a royalty of Rs 35,000 to a company on March 25, 2009, without deducting TDS. The discussion revolves around whether the disallowance under Section 40(a)(ia) applies. The consensus among participants is that X should have deducted TDS because the turnover in the financial year 2007-08 exceeded Rs 40 lakh, making X liable for TDS in the financial year 2008-09. The application of Section 194J and the second proviso, which considers the turnover of the preceding year, supports this requirement. Failure to deduct TDS would attract disallowance under Section 40(a)(ia).