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2015 (2) TMI 1399 - AT - Income TaxTDS u/s 194J - addition u/s 40(a)(ia) - Non deduction of TDS - assessee has submitted that the assessee had not claimed these payments as expenditure, hence there was no question of disallowance of any expenditure - HELD THAT - We are in agreement with the above finding of the Tribunal. When there is no claim of expenditure there cannot be any disallowance of expenditure. Respectfully following the decision of the Tribunal in the immediate preceding assessment year in the own case of the assessee 2015 (3) TMI 185 - ITAT MUMBAI , this issue is decided in favour of the assessee and the disallowance made by the lower authorities under section 40(a)(ia) is hereby ordered to be deleted. Disallowance u/s 40(a)(ia) which has been correctly deleted by the CIT(A) on the basis of certificates furnished under section 197 of the Act by the payee hospitals Disallowance on account of unreconciled receipts - as agitated on behalf of the Revenue that the Ld. CIT(A) deleted the disallowance without properly appreciating the factual and legal matrix of the case - HELD THAT - A perusal of the impugned order reveals that the Ld. CIT(A), after going through the reconciliation statement, had accepted the contention of the assessee that the difference was on account of different method of accounting of Revenue. Assessee had shown income much more than as reflected in the ICS data. He agreed with the contentions of the assessee that the differential amount had been shown either in earlier or later years. We do not find any infirmity in the above findings of the CIT(A) in deleting the disallowance on account of differences in the reconciliation statement.
Issues: Disallowance under section 40(a)(ia) of the Income Tax Act on payments made to hospitals without deduction of TDS.
Analysis: 1. The appeal involved cross appeals by the Revenue and the assessee against the order of the Commissioner of Income Tax (Appeals). The primary issue was the disallowance under section 40(a)(ia) for non-deduction of TDS on payments made to hospitals. 2. The Assessing Officer had initially added a significant amount invoking section 40(a)(ia) for non-deduction of TDS. However, the CIT(A) restricted the addition substantially based on certificates submitted by the hospitals under section 197 of the Act, indicating exemption from income tax. 3. The assessee contended that since the payments were not claimed as expenditure, there should be no disallowance. The argument was supported by the fact that if TDS was not deducted, the liability would fall under section 201 & 201(1A) and not section 40(a)(ia) if no expenditure was claimed. 4. Referring to a previous Tribunal decision, the assessee highlighted that no disallowance should occur when no expenditure was claimed. The Tribunal agreed, emphasizing that without a claim of expenditure, there should be no disallowance under section 40(a)(ia). 5. Consequently, the Tribunal ruled in favor of the assessee, ordering the deletion of the disallowance made by the lower authorities under section 40(a)(ia). The appeal of the assessee was allowed. 6. The Revenue's appeal, which included grounds related to disallowance under section 40(a)(ia), was dismissed as the Tribunal had already held that no addition under this section was warranted in the case. The grounds taken by the Revenue were deemed infructuous and dismissed accordingly. 7. Additionally, the Revenue contested the deletion of disallowance on unreconciled receipts. However, the Tribunal upheld the CIT(A)'s decision, noting that the differences in the reconciliation statement were due to variations in accounting methods, and thus, the disallowance was unjustified. 8. In conclusion, the appeal of the assessee was allowed, and the Revenue's appeal was dismissed. The Tribunal pronounced the order on 13.02.2015.
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