TDS Liability--Conversion of Partnership to Proprietorship

Hi Mr Agrawal,

No; the proprietary concern wasn't liable to deduct tax at source for the F Y 2007-08. But it ought to apply for the TAN and comply with other TDS obligations with effect from 1st April 2008. The fact that the proprietary concern spun off from the partnership firm and the business presently being carried on by the Individual has been taken over from a partnership firm with probably one of the partners becoming the proprietor does not change the legal position that the firm and the Individual are two distinct entities, each possessing a separate PAN of its own. TDS sections clearly say that an Individual/HUF would be required to make TDS only if the turnover of THAT INDIVIDUAL/HUF exceeded Rs 40 lacs in the preceding year. And since in your case, the turnover didn't cross that figure in the F Y 2006-07, the proprietary concern can breathe easy at least till 31st March 2008.

Thanks,

CA Sanjeev Bedi

--- In ICAI_CIRC_MEERUT_ CA@yahoogroups. com, Kaushal&Agrawal sunil wrote:>> > > > Respected Members,> Partnership firm converted in to proprietory concern on 01.04.07. Firm was liable for audit u/s 44AB and also turnover of the proprietory concern is over Rs.40.00 lacs. Query: wheather prop. concern is liable for deduction of TDS on Intt., Comm. etc. paid during the year as the first year of T.O. over Rs.40.00 lacs in the name of Prop.> [194A:Any person65, not being an individual or a Hindu undivided family, who is responsible for paying65 to a resident any income by way of interest other than income 66[by way of interest on securities], shall, at the time of credit of such income to the account of the payee67 or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :> > [Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section] > > Please guide.> Thanks in advance.> > CA Sunil Agrawal > > >