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2014 (2) TMI 1355 - AT - Income TaxShort deduction of tax at source - TDS u/s 194C OR 194J - addition u/s 40(a)(ia) - HELD THAT - As decided in assessee's own case 2012 (7) TMI 614 - ITAT MUMBAI wherein a similar disallowance made u/s 40(a)(ia) of the Act for short deduction of tax at source by the assessee u/s 194-C instead of section 194-J of the Act was held to be unsustainable by the Tribunal holding that the provisions of section 40(a)(ia) of the Act are applicable only when there is no deduction of tax at source and not where there is only short of deduction of tax at source. Respectfully following above we uphold the impugned order of the ld. CIT(A) deleting the disallowance made by the A.O. u/s 40(a)(ia) - Decided against revenue
Issues:
Disallowance under section 40(a)(ia) of the Income Tax Act for short deduction of tax at source. Analysis: Issue 1: Disallowance under section 40(a)(ia) for short deduction of tax at source The case involved an appeal by the Revenue against the order of the ld. CIT(A) regarding the disallowance of &8377; 27.22 crores made by the A.O. under section 40(a)(ia) of the Income Tax Act. The A.O. disallowed the expense due to short deduction of tax at source by the assessee, claiming that tax at a higher rate should have been deducted under section 194-J instead of section 194-C for certain professional services. The ld. CIT(A) deleted the disallowance, citing a previous Tribunal decision that disallowance under section 40(a)(ia) is not applicable in cases of short deduction of tax at source. The Tribunal upheld the decision of the ld. CIT(A) based on the precedent set by its own previous rulings in the assessee's case for assessment years 2005-06, 2006-07, and 2007-08. The Tribunal clarified that section 40(a)(ia) applies only when there is a complete non-deduction of tax at source, not in cases of short deduction. Therefore, the appeal by the Revenue was dismissed, and the order of the ld. CIT(A) deleting the disallowance was upheld. This detailed analysis of the judgment highlights the key issues and the reasoning behind the decision, focusing on the interpretation of section 40(a)(ia) regarding the disallowance for short deduction of tax at source.
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