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2020 (9) TMI 1151 - AT - Income TaxDisallowance u/s 40(a)(ia) of short deduction of tax at source - Disallowance u/s.40(a)(ia) - TDS u/s 194C OR 194J - HELD THAT - As relying on M/S. TV18 HOME SHOPPING NETWORK LTD 2020 (2) TMI 1397 - ITAT MUMBAI when there is a short fall in deduction of TDS there cannot be any disallowance u/s.40(a)(ia) of the Act - we uphold the order of the Ld.CIT(A) and reject the ground raised by the revenue.
Issues:
- Disallowance under section 40(a)(ia) of the Act for short deduction of tax at source. Analysis: The judgment involves two appeals filed by the assessee against orders of the Commissioner of Income Tax (Appeals) sustaining disallowance under section 40(a)(ia) of the Act for the assessment years 2012-13 and 2013-14. The assessee contended that the disallowance was made due to short deduction of TDS, not non-deduction, and cited precedents to support this argument. The Assessing Officer disallowed entire salary payments due to short deduction of TDS, a decision upheld by the Commissioner. However, the Coordinate Benches of the Tribunal have consistently held that section 40(a)(ia) does not apply in cases of short deduction of TDS. The judgment refers to various cases where the Tribunal ruled in favor of the assessee when there was a shortfall in TDS deduction. In one case, the Tribunal held that disallowance under section 40(a)(ia) was not justified for short deduction of TDS, emphasizing that the provisions do not apply in such instances. The Tribunal also cited another case where disallowance was deleted based on the argument that the expenses did not fall under the definition of royalty, hence not requiring TDS at a higher rate. The Tribunal reiterated that in cases of short deduction of TDS, disallowance under section 40(a)(ia) should not be made. The judgment concludes by upholding the order of the Commissioner of Income Tax (Appeals) and dismissing the revenue's appeals. The disallowance under section 40(a)(ia) was deleted as the shortfall in TDS deduction was considered a case of short deduction, not non-deduction. The appeals of the assessee were partly allowed, and certain grounds were dismissed as not pressed. The decision was pronounced on 17.09.2020 as per ITAT Rules.
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