My client has paid lease deposit  of Rs 5,50,000/- in cash. Lease agreement is for two years. Lease deposit is not refundable, so he is not supposed to pay any monthly lease rentals. 

From my point of view, lease deposit of Rs 5,50,000/- should be accounted proportionately to lease period, as it is paid in cash, it should be disallowed u/s 40A(3).

And also TDS should be deducted u/s 194I.

Am I correct?

Posted 1 year, 2 months ago by Ankit Sharma

Dear Ankit 

Yes TDS is deductible in your case since the payment for the year exceeds the statutory limit of Rs. 1,80,000 p.a & second as the lease rent is paid for 2 year so here you will show 2,25,000 in profit and loss as expenses for current year and balance will be shown as prepaid exp, but here the payment for the same has been made in one go.

Therefore as and when you claim lease rent as expense the same will be dis-allowed by I.T Dept


CA Bhuwan Sharma


Posted 7 months, 1 week ago by NRO0263978 BHUWAN CHAND SHARMA

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