R.K. Associates v. ITO [I.T.A. No. 681/Bang/2020,
dt. 11-2-2021] : 2021 TaxPub(DT) 740 (Bang-Trib)
Disallowance under section 40(a)(ia) on expenditure
incurred in earning capital gains
Facts:
Assessee firm had capital gains on which commission was
paid which was claimed as an expenditure in relation to such
"transfer" of immovable property. On this commission it was noticed
that TDS was done under section 194H only on part of the amount. On the balance
commission on which TDS was not deducted the assessing officer invoked section
40(a)(ia) which was upheld holding assessee in default under section 201. On
further appeal --
Held in favour of the assessee that section 40(a)(ia) can
be invoked only on income from business and it can no way be invoked under capital
gains.
Applied: CIT v.
Sushila Mallick (2013) 36 taxmann.com 537 (All) : 2013 TaxPub(DT) 2660 (All-HC)
Editorial Note:
Section 40(a)(ia) can be invoked for only for income from profit and gains of
business or profession as the wording of the said section confirms. This case
is a classic example of what happens if there is a default of TDS in case of
other income heads. Unfortunately, no similar section like section 40(a)(ia)
exists under other income heads.