As per Income Tax Act ; TDS is to be deducted when the payment is made or when the amount is credited in the Books, whichever is earlier.
So, The TDS Provisions are very clear that if any amount of Expense is charged to Profit & Loss account which attracts TDS deduction, TDS has to be deducted and paid otherwise Expenses so charged shall be liable to disallowed as per Section 40a(ia).
Telephone Expense Dr 2500
To Expenses Payable 2500
In such type of cases even though an entry is passed in books, we are not required to Deduct TDS as the amount is not ascertainable.
TDS shall be made only if the payee was identified and quantum of payment was also ascertainable on the last day of the FY. Following are the relevant judgements :-
(1.) Industrial Development Bank of India Vs. ITO  104 TTJ 230 (Mum)
(2.) Dishnet Wireless Ltd. Vs. Dy. CIT  123 DTR (Trib) 153 (Chennai)
Key Takeaway’s –
> TDS on provisions is not required to be made when name of the party or amount involved is not ascertainable.
> Subsequently the assessee had to deduct TDS when payee is known and amount payable is determined.
> However it is advisable to take the advice of your financial consultant and auditor before coming to a conclusion.
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AUTHOR : ANIL KUMAR (CLICK HERE TO VIEW PROFILE)