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2014 (1) TMI 76 - AT - Income TaxDeletion of Payments made to subcontractors Non-desposition of TDS u/s 40(a)(ia) of the Act Held that - The DR has not disputed the point that the assessee has made required deduction of TDS on the payments made to the sub-contractor on or before 31.3.2008 and the same was deposited to the exchequer on 10.04.2008 - TDS has been deducted on the last day i.e. 31.3.2008 by the assessee on the payment made to the sub-contractor and subsequently, it was deposited to the exchequer on 10th April, 2008 - the Commissioner of Income Tax(A) rightly held that the Assessing Officer was not justified in making disallowance u/s 40(a)(ia) of the Act as the appellant had deducted the TDS on 31.03.2008 and deposited the same on 10.04.2008 i.e. within time there was no reason to see any perversity or any other valid reason to interfere with the order Decided against Revenue.
Issues:
1. Disallowance of payments made to subcontractors for non-deposition of TDS within the specified time frame under section 40(a)(ia) of the Income Tax Act, 1961. Analysis: 1. The appeal was filed by the revenue against the order of the Commissioner of Income Tax(A)-XXVIII, New Delhi, concerning the disallowance of payments made to subcontractors for non-deposition of TDS within the required timeframe. The Assessing Officer had made an addition on this account under section 40(a)(ia) of the Act. The primary contention was whether the TDS was deposited on time as per the provisions of the Act. 2. The Assessing Officer contended that the TDS should have been deposited during the same financial year in which the payments were made to subcontractors. However, the appellant argued that the TDS was deducted on 31.03.2008 and deposited on 10.04.2008, meeting the statutory requirements. The Commissioner of Income Tax(A) allowed the appeal, stating that the disallowance was not justified as the TDS was deposited within the stipulated time frame. 3. Upon hearing both parties and examining the facts, it was observed that the TDS was indeed deducted on time and deposited within the specified period. The key issue was whether the delay in TDS deposition warranted disallowance under section 40(a)(ia) of the Act. The Tribunal noted that the Assessing Officer did not dispute the timely deduction and deposit of TDS by the assessee. 4. Section 40(a)(ia) of the Act specifies that if TDS is deducted during the last month of the previous year, it should be deposited on or before the due date specified in section 139(1) of the Act. In this case, the TDS was deducted on 31.03.2008 and deposited on 10.04.2008, satisfying the statutory requirements. Therefore, the Tribunal upheld the Commissioner's decision to delete the addition made by the Assessing Officer, as the TDS was deposited within the prescribed timeline. 5. The Tribunal found no valid reason to interfere with the Commissioner's order, as the appellant had complied with the TDS deduction and deposit obligations within the stipulated time frame. Consequently, the appeal of the revenue was dismissed, affirming the decision of the lower authorities. This judgment clarifies the importance of adhering to statutory timelines for TDS deduction and deposit to avoid disallowances under section 40(a)(ia) of the Income Tax Act, 1961.
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