2015 (10) TMI 794 - AT - Income Tax

Addition u/s 40(a)(ia) - non deduction of TDS on sundry creditors - Held that - We find that assessee is correct in submitting that sundry creditors of ₹ 1,21,33,00 cannot be disallowed u/s 40(a)(ia) of the Act without bringing on record that the said amount represents current year expenditure which is payable. It is clear that the said amount represented sundry creditors and did not represent expenditure related to current year. Hence the ld. CIT(A) s order for disallowance of ₹ 1,21,33,003 is set aside. Short deduction of TDS - Held that - Assessee has made out a case that AO has given a finding that there was short deduction of tax and he has not given a clear finding that there is no deduction of tax. If the case was of short deduction then as per the decision of the Tribunal in the case of SK Tekriwal which was approved by the Jurisdictional High Court 2012 (12) TMI 873 - CALCUTTA HIGH COURT no disallowance u/s 40(a)(ia) of the Act can be made. Hence this issue that there was only a case of short deduction needs to be verified by the AO. Hence we remit the issue to the file of the AO to examine as to whether there was a case of short deduction or non deduction of tax Non deduction of TDS on amount paid to truck owners as hire charges - Held that - Assessee submitted that there was some error on the part of the counsel who represented the assessee before the authorities below. In this regard the ld. Counsel of the assessee has given a chart regarding the payment of the hire charges payable. As regards serial no. 1 and 2 in the chart payment of TDS was made upto the date of filing of the return and the same has to be allowed. Hence we remit this issue to the file of the AO to verify the date of deposit of the TDS in this case and delete the disallowance if the deposit of TDS has been done upto the filing of the return. Late deposit of tds - claimed to have been deposited after 30.09.2009. - Held that - In this regard also we agree with the submission of the ld. Counsel of the assessee and give direction that it should be allowed as per the provision of section 40(a)(ia) of the Act.

Summary

Issues:
1. Disallowance under section 40(a)(ia) of the Act for non-deduction of TDS.
2. Disallowance of expenses payable under section 40(a)(ia) versus disallowance of amounts actually paid.
3. Verification of short deduction versus non-deduction of tax.
4. Allowance of TDS payments made within due date under section 40(a)(ia) of the Act.
5. Retrospective application of amended section 40(a)(ia) by the Finance Act 2012.

Detailed Analysis:
1. The judgment involves cross-appeals by the assessee and the Revenue regarding disallowance under section 40(a)(ia) of the Act for non-deduction of TDS. The AO disallowed an amount paid to truck owners as hire charges due to non-compliance with TDS provisions. The CIT(A) deleted the addition based on a Special Bench decision, emphasizing disallowance only for expenses payable, not amounts paid. The CIT(A) then disallowed another amount for non-deduction of TDS on the payable amount, enhancing the income of the assessee.

2. The assessee argued that disallowance of sundry creditors without evidence of current year expenditure was incorrect. The Tribunal agreed, setting aside the disallowance. The issue of short deduction versus non-deduction of tax was raised, and the Tribunal remitted the matter to verify this distinction. The Tribunal also directed verification of TDS payments made within the due date, allowing such payments, and further allowed a payment made after the due date as per section 40(a)(ia) of the Act.

3. The Tribunal considered the alternate submissions regarding TDS payments and directed the AO to verify the dates of TDS deposit and delete the disallowance if deposits were made before the return filing date. The Tribunal also agreed to allow a payment made after a specific date as per the provisions of section 40(a)(ia) of the Act. The judgment emphasized the need for proper verification and adherence to legal provisions in determining disallowances under section 40(a)(ia) of the Act.

4. The judgment highlighted the importance of distinguishing between expenses payable and amounts paid, as well as the significance of verifying TDS deductions and deposits within the specified timelines. It also addressed the retrospective application of amended provisions, emphasizing compliance with legal requirements and proper examination of factual circumstances to determine disallowances accurately under section 40(a)(ia) of the Act.

5. Ultimately, the Tribunal allowed the appeal filed by the assessee and the Revenue's appeal for statistical purposes, emphasizing the need for thorough examination and verification of TDS-related issues to ensure accurate application of section 40(a)(ia) of the Act. The judgment provided detailed analysis and directions to address the various issues raised in the appeals, ensuring a comprehensive and legally sound resolution.