2022 (12) TMI 649 - AT - Income Tax

Disallowance of lower deduction of tax at source u/s 40(ia) - Default u/s 201(1) - HELD THAT - We do not find any infirmity or error in the above findings and conclusion of the CIT (A). Moreover, the assessee has failed to give any reason for not fulfilling the conditions envisaged by Section 201(1) - The assessee has failed to deduct the TDS and also fail to fulfill the conditions as per Section 201 on the payment made to three entities. We are fully agree with the observation of the Ld.CIT (A) that the said expenses on account of payment made to three entities are not allowable as per provisions of Section 40(a) (ia) - Thus, we do not find any error in the action of the CIT(A) in upholding the disallowance made by the A.O. Accordingly, the grounds of appeal of the assessee are dismissed.

Summary

Issues:
Assessment year 2014-15 - Disallowance of expenses - Lower deduction of tax at source u/s 40(ia) of the I. T. Act, 1961.

Analysis:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2014-15. The substantive grounds of appeal raised by the assessee included challenging the order as arbitrary and against the law and facts of the case, particularly contesting the disallowance of Rs. 1,06,17,768/- made on account of lower deduction of tax at source u/s 40(ia) of the Income Tax Act, 1961. The assessee, engaged in providing digital cable services, had its return of income initially declared at Rs. 8,58,741/-. The assessment proceedings resulted in various disallowances, including commissions paid to working Directors, payments to India Cast Media Distribution Pvt. Ltd., Media Pro Enterprises (P.) Ltd., and an addition u/s 40(1)(ia) of the Act.

The appeal before the CIT(A) partially succeeded, with the disallowance of Rs. 1,06,17,768/- on account of lower deduction of tax at source being confirmed. Subsequently, the assessee appealed against this order. However, during the proceedings, the assessee did not appear, leading to the decision being made based on the material on record and the arguments presented by the Ld. DR. The Ld. CIT(A) upheld the disallowance by the Assessing Officer, emphasizing that the expenses claimed beyond the permissible limit for TDS were not allowable under section 40(a)(ia) of the Act.

The Ld. CIT(A) noted that the appellant failed to fulfill the conditions as per Section 201(1) of the Act regarding TDS deductions on payments made to various entities, leading to the conclusion that the expenses were not allowable as per the provisions of Section 40(a)(ia) of the Act. The Tribunal concurred with the CIT(A)'s findings, stating that there was no error in the decision to uphold the disallowance. Consequently, the appeal filed by the assessee was dismissed, and the disallowance of Rs. 1,06,17,768/- was upheld.