2015 (11) TMI 1638 - HC - Income Tax

TDS u/s 194J - non deduction of TDS - Held that - The Assessee has filed necessary confirmation from the payee that they have paid the amount received from the Assessee. The confirmation filed by the Assessee was enclosed in the paper book filed before the CIT(A) thus as long as the corresponding income was brought to tax in the hands of the payee it was not intended to disallow the expenditure in the hands of the payer due to non deduction of tax at source. - Decided in favour of the Assessee.

Summary

Issues:
1. Disallowance of Lab Test Expense under Section 40(a)(ia) of the Income Tax Act.
2. Interpretation of the second proviso to Section 40(a)(ia) by the ITAT.
3. Confirmation of payment by the payee to the Assessee.
4. Comparison with similar judgments like CIT v. Ansal Landmark Township (P.) Ltd.

Analysis:

1. The primary issue in this case revolves around the disallowance of the Lab Test Expense under Section 40(a)(ia) of the Income Tax Act. The Assessee, a Doctor, incurred an expense of &8377; 56,21,675/- without deducting tax at source, leading to the AO disallowing the expense and adding it back to the Assessee's income.

2. The interpretation of the second proviso to Section 40(a)(ia) was crucial in this judgment. The ITAT referred to the Agra Bench's decision in Rajiv Kumar Aggarwal v. CIT and this Court's decision in CIT v. Rajinder Kumar to establish that the second proviso is declaratory and curative. It clarified that if the corresponding income was taxed in the hands of the payee, disallowing the expenditure in the hands of the payer was not intended.

3. The confirmation of payment by the payee to the Assessee played a significant role in the decision. The ITAT noted that the Assessee provided necessary confirmation from the payee, M/s SRL Ranbaxy Ltd., stating that they received the amount. This confirmation, submitted before the CIT(A), supported the Assessee's case.

4. Drawing parallels with similar judgments, the Court highlighted the decision in CIT v. Ansal Landmark Township (P.) Ltd., where a similar issue was decided in favor of the Assessee. This comparison with previous rulings further strengthened the Assessee's position.

In conclusion, the High Court dismissed the Revenue's appeal, ruling in favor of the Assessee based on the interpretation of the second proviso to Section 40(a)(ia), the confirmation of payment by the payee, and consistent application of legal principles from previous judgments.