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[ Section-40a] : Expenses Expressly Disallowed In the Case of any ‘Assessee’

 

Section 40 deals with such expenses which are totally disallowed in the computation of profit and gain of business or profession and so no deduction is allowed in respect of these expenses.

(i) Deduction of tax at source

Any interest, commission or brokerage, fees for professional services or fees for technical services payable

(a) outside India;

(b) in India to a non-resident not being a company; or

(c) to a foreign company.

on which tax is deductible at source but has not been deducted or, after deduction, has not been paid to the Government before the expiry of the time prescribed under sub-section (1) of section 200 and in accordance with the other provisions, it shall not be allowed to be debited.

Where in respect of any such sum, tax has been deducted and paid in any subsequeht year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. [Section 40 (a)(i)]

(ii) Any interest, commission or brokerage, fees for professional services or fee 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 carrying out any work) on which tax is deductible at source but has not been deducted or, after deduction, has not been paid to the Government before the expiry of the time prescribed under sub-section (1) of section 200 and in accordance with the other provisions, it shall not be allowed to be debited.

Where in respect of any such sum, tax has been deducted and paid in any subsequent year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. [Section 40(ia)]

(iii) Expenditure on Fringe Benefit Tax. Any sum paid on account of fringe benefit tax under section 1 15WB, shall not be allowed to be debited u/s 40(ic).

(iv) Any other tax. Any firm paid on account of any rate of tax levied on the profits or gain of any business or profession or assessed at a proportion of, or otherwise on the business of any such profits or gains is not allowed. [Section 40(a)(ii)]

(v) Wealth-tax levied on Business Assets. Wealth-tax which is levied on the assets of the business according to the Wealth-tax Act, 1957, will be allowed. [Section 40(a)(i)(a)j

(vi) Salary Payable outside India. The payment of salary which is taxable under the head ‘salaries’ and is payable outside India the tax on this should be deducted at source or paid according to the law and if no tax is deducted, then the payment of salary will not be allowed as deduction while computing profit under business or profession. [Section 40(a)(iii)j

(vii) Payment to a Provident Fund or other Employee-Benefit Fund. Any payment made to a provident fund or any other fund established for the benefit of its employees if the assessee has not made effective arrangement for tax to be deducted at source from any payment made from the fund which are taxable under the head salaries for the recipient employee. [Section 40(a)(iv)j.

(viii) Disallowability of royalty, licence fee, service fee etc. levied by State Government on State Government undertakings [Sec 40(a) (iia)] [w.e.f. A.Y. 2014-15]. Any amount paid by way of royalty, licence fee, service fee, privilege fee, service charge or any other charge by whatever name called, levied exclusively on or which is appropriated directly or indirectly from a State undertaking by the State Government shall not be allowed as deduction in computing the income chargeable under the head “profits and gains of business or profession”.

(ix) Tax an Non-Monetary Perquisites to the Employee. Any tax paid on non-monetary perquisites to an employee by an employer on behalf of such employee shall not be allowed as deduction to employer. [Section 40(a)(v)].

 
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Speculation Business [Explanation to Section 28]
Profit Earned from an Illegal Business
Transfer of certain Assets Specified u/s 35AD in certain circumstances [Section 28(vii)]
Certain Incomes relating to business but not taxable under the head ‘Profits Gains of Business or Profession .
Computation of Income of Business or Profession - General Important Points
General Principles - for Deductions Allowed from Gross Income of Business and Professions
Deductions from Gross Income of Business or Profession [ Section 30 to 44DB]
Expressly Admissible Deductions from Gross Income from Business or Profession [Section 30-36]
Expenditure Incurred in the Field of Scientific Research [Section 35]
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Expenditure for obtaining License to operate Telecommunication Services [Section 35 ABB]
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