2014 (7) TMI 1276 - AT - Income Tax

Disallowance u/s 40(a)(ia) - expenditure on provision for commission and transportation on which the TDS was made in subsequent previous year - TDS paid on or before the due date of filing of return u/s. 139(1) - Held that - The first proviso to 40(a)(ia) is applicable when the payment is made before the due date specified u/s 139(1) - here all payments of TDS have been made after 31-03-2009, but the TDS has been deposited before the due date specified in section 139(1) - since TDS has been made after 31-03-2009, we are of the view that the finding of the learned Commissioner of Income-tax (Appeals) on this issue is erroneous and consequently, the same stands reversed and that of the AO restored - thus this appeal of revenue stands allowed. Disallowance u/s 40(a)(ia) on account of expenditure on interest on which no TDS was deducted - Held that - Form No. 15G/H has not been produced by the assessee before the learned Commissioner of Income-tax (Appeals) nor even before us - hence the appeal of revenue stand allowed.

Summary

Issues Involved:
Appeal against deletion of addition under section 40(a)(ia) for commission, transportation, and interest expenses due to non-deduction of TDS.

Analysis:

1. Issue 1: Deletion of addition under section 40(a)(ia) for commission and transportation expenses:
- The revenue appealed against the deletion of the addition under section 40(a)(ia) for commission and transportation expenses totaling Rs. 46,00,000 due to non-deduction of TDS in the previous year.
- The AO disallowed the expenditure as TDS was not deducted under sections 194H and 194C during the previous year. The CIT(A) allowed the claim stating TDS was paid before the due date of filing the return under section 139(1).
- The Tribunal observed that the first proviso of section 40(a)(ia) allows deduction if TDS is paid before the due date specified in section 139(1). However, in this case, TDS was made after 31-03-2009, not meeting the requirement. Thus, the Tribunal reversed the CIT(A)'s decision and upheld the AO's disallowance.

2. Issue 2: Deletion of addition under section 40(a)(ia) for interest expenses:
- The revenue contested the deletion of the addition under section 40(a)(ia) for interest expenses of Rs. 95,441 where no TDS was deducted.
- The CIT(A) deleted the addition based on the assumption that the appellant received Form No.15G for non-deduction of tax, but the form was not submitted to the appropriate authority.
- The Tribunal found that no Form No.15G was submitted by the assessee before the AO or the CIT(A). As a result, the Tribunal reversed the CIT(A)'s decision, stating that the appellant failed to prove the receipt of Form No.15G. Therefore, the addition was upheld.

3. Conclusion:
- The Tribunal allowed the revenue's appeal, reversing the CIT(A)'s decisions on both grounds related to the non-deduction of TDS on commission, transportation, and interest expenses. The Tribunal held that the TDS payments were not made before the due dates specified in the relevant provisions, leading to the disallowance of the claimed deductions.