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| The Tax Publishers2020 TaxPub(DT) 1771 (Kol-Trib) : (2020) 078 ITR (Trib) 0462 INCOME TAX ACT, 1961
Section 40(a)(ia)
Disallowance under section 40(a)(ia) does not apply in a case involving short deduction of tax at source. Hence, the disallowance made under section 40(a)(ia) in instant case being on account of short deduction of tax, would not be sustainable.
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Business disallowance under section 40(a)(ia) - Interest, commission etc. paid to resident without deduction of tax - Short deduction of tax at source - Disallowance of proportionate expenditure
AO noticed that assessee deducted tax at source under section 194C at a lower rate in respect of payments under various heads, which resulted in short deduction of tax. Accordingly, he made disallowance of proportionate expenditure by invoking section 40(a)(ia). Held: Disallowance under section 40(a)(ia) applies only in case of non-deduction of tax at source and does not apply in a case involving short deduction of tax. In instant case, it was sufficiently clear that there was no instance of non-deduction of TDS per se as the assessee had indeed deducted tax at source under section 194C albeit at a lower rate. Therefore, the disallowance made under section 40(a)(ia) would not be sustainable.
Relied:CIT v. S. K. Tekriwal (2014) 361 ITR 432 (Cal): 2013 TaxPub(DT) 0240 (Cal-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2009-10
IN THE ITAT, KOLKATA 'A' BENCH
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