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2017 (5) TMI 1565 - AT - Income TaxTDS u/s 194C - non deduction of tds on hire charges - whether addition restricted to 30% of the total addition as per amendment in section 40(a)(ia) - scope of amendment - Held that - As per the amended provisions of section 40(a)(ia) and in view of the order in case of SHRI RAJENDRA YADAV VERSUS THE INCOME TAX OFFICER, WARD 1 (3) , AJMER 2016 (3) TMI 358 - ITAT JAIPUR AND Smt. Sonu Khandelwal vs. ITO 2016 (5) TMI 1369 we set aside and modify the orders of the authorities below and direct the Assessing Officer to restrict the addition to 30% of the total addition made on account of deduction of TDS u/s 40(a)(ia) - Appeal of assessee is partly allowed.
Issues involved:
Disallowance of TDS under section 40(a)(ia) of the Income Tax Act for assessment year 2012-13. Detailed Analysis: Issue 1: Disallowance of TDS under section 40(a)(ia) The appeal was against the disallowance of ?49,81,831 on account of non-deduction of TDS under section 40(a)(ia) of the Income Tax Act for the assessment year 2012-13. The Assessing Officer disallowed the amount as the assessee had not deducted tax at source on payments made for hiring buses. The CIT(A) upheld the disallowance due to the failure of the assessee to deduct TDS on the expenditure. Analysis: The issue revolved around the non-deduction of TDS by the assessee on the hire charges paid for buses. The CIT(A) affirmed the disallowance as the assessee did not comply with the TDS provisions. The argument presented by the assessee was based on the amendment in section 40(a)(ia) of the Act, seeking to restrict the addition to 30% of the total addition. The ITAT Jaipur Bench's decisions in similar cases were cited to support this contention. Issue 2: Application of ITAT Jaipur Bench's decisions The ITAT considered the decisions of the ITAT Jaipur Bench in cases involving Shri Rajendra Yadav and Smt. Sonu Khandelwal, where it was held that the disallowance under section 40(a)(ia) should be restricted to 30% of the addition. These decisions were based on the amended provisions of the Act and were applicable to the assessment years 2007-08 and 2008-09. The ITAT found the facts of the present case to be identical to those in the Jaipur Bench decisions and accordingly set aside the orders of the lower authorities, directing the Assessing Officer to limit the addition to 30% of the total disallowance. Analysis: The ITAT's decision was influenced by the consistent rulings of the Jaipur Bench in similar cases, where the restriction of disallowance to 30% of the addition was deemed appropriate. The ITAT found the facts of the present case to align with those in the Jaipur Bench decisions, leading to the modification of the lower authorities' orders in favor of the assessee. In conclusion, the ITAT partially allowed the appeal, restricting the disallowance of TDS under section 40(a)(ia) to 30% of the total addition, in line with the decisions of the ITAT Jaipur Bench in similar cases.
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