2013 (8) TMI 1035 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the issue of deletion of addition made by the Assessing Officer under section 40(a)(ia) of the Income Tax Act, 1961 due to non-deduction of tax at source by the assessee company on certain payments.

Comprehensive Details:

Issue 1: Deletion of Addition u/s 40(a)(ia) by CIT(A)
The case involved an appeal by the Revenue against the order of the CIT(A) for the assessment year 2008-09 regarding the addition of Rs. 2,17,38,024 made by the Assessing Officer under section 40(a)(ia) of the Act. The CIT(A) allowed the appeal of the assessee after considering the submissions. The Revenue challenged this decision before the Tribunal.

Issue 2: Arguments Presented
During the hearing, the Departmental Representative supported the AO's order, contending that the CIT(A) was unjustified in deleting the addition. On the other hand, the counsel for the assessee cited a decision of the Calcutta High Court to support the case, arguing that the provisions of section 40(a)(ia) should not be invoked if tax has been deducted, even if under a wrong provision.

Issue 3: Tribunal's Analysis and Decision
The Tribunal examined the facts and submissions. The AO disallowed the amount under section 40(a)(ia) as consultancy services were covered under section 194J, and tax was not deducted by the assessee. However, the CIT(A) found that certain payments were for manpower supply and transport, not technical consultancy, and tax was correctly deducted under section 194C and 194J for different payments. The Tribunal noted that the CIT(A)'s findings were not challenged by the Revenue. Citing the Calcutta High Court's decision, the Tribunal upheld the CIT(A)'s order, stating that if tax has been deducted, even under a mistaken belief, the provisions of section 40(a)(ia) cannot be applied.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order to delete the addition made by the AO under section 40(a)(ia). The decision was based on the principle that if tax has been deducted by the assessee, the provisions of section 40(a)(ia) cannot be invoked, as established by the Calcutta High Court's ruling in a similar case.

Judgment Highlight:
Separate judgment was not delivered by the judges.