2012 (4) TMI 824 - AT - Income Tax

Summary

Issues involved:
The issues involved in the judgment are the disallowance under section 40(a)(ia) of the Income Tax Act and the applicability of section 194A to the facts of the case.

Issue 1: Disallowance under section 40(a)(ia) of the Act

The appellant, a company engaged in manufacturing, had shown work payment to a contractor. The Assessing Officer disallowed the job-work payment due to a default in crediting the amount by the last day of the year. The first appellate authority affirmed this view but excluded the amount where TDS was deducted in March and deposited before filing the return. The appellant contested that the payment for job-work was made and credited on the same day, supported by a decision of the Calcutta High Court. The Gujarat High Court and ITAT Ahmedabad also supported the view that as long as the deduction was made before March 31 and deposited before the last date of filing the return, the law's requirements were fulfilled. Following these precedents, the Tribunal allowed the appellant's ground, stating that no disallowance should be made under section 40(a)(ia) for payments where TDS was deposited before the due date of filing the return.

Issue 2: Applicability of section 194A

The appellant argued that the provisions of section 194A were not applicable to the facts of the case. The Tribunal's decision on the first issue indirectly addresses this point by allowing the appellant's ground related to the disallowance under section 40(a)(ia). As a result, the Tribunal did not specifically address the applicability of section 194A in the judgment.

In conclusion, the Tribunal partly allowed the appeal of the Assessee, specifically addressing the issue of disallowance under section 40(a)(ia) of the Income Tax Act based on the timing of TDS deduction and deposit before the due date of filing the return. The Tribunal's decision was supported by various legal precedents and interpretations of the relevant provisions.