2018 (5) TMI 578 - AT - Income Tax

TDS u/s 194C - Disallowance u/s 40(a)(ia) - non deduction of tds on payment to contractors - segregation of expenses - Held that - The assessee admitted that the assessee has not deducted TDS on the amount in question as per law and the same needs to be disallowed. The assessee filed statement of expenses payable. The assessee, therefore, offered a sum of ₹ 1,03,57,150/- to be disallowed in the computation of income, being inadvertently left out. The assessee also filed revised computation of income to the fact and also stated that the amount is offered for tax subject to no penal action. The AO in view of the admission of the assessee to pay tax on the impugned amount accepted the offer of the assessee and made the addition of the impugned amount on agreed basis. It is well-settled law that no appeal lies on agreed additions. Mere making entries in a different way would not absolve the assessee from deducting TDS on material so purchases from civil contractor for the purpose of business. These facts, therefore, show that there is no mistaken facts in making offer to surrender amount in question before the AO. In these circumstances, the assessee cannot resile from his statement and admission made before the AO. The facts and circumstances clearly justify the orders of the authorities below in making the addition. Since the assessee agreed for addition before the AO and there was no justification to withdraw from the offer of surrender, no interference is called for in the matter. Appeal of the assessee is not maintainable in the present form and has no merit as well. - Decided against assessee.

Summary

Issues:
Challenge against addition under section 40(a)(ia) of the Income Tax Act, 1961 for non-deduction of TDS.

Detailed Analysis:

1. Background and Facts:
The appellant, a company engaged in real estate business, filed a return of income declaring a loss. During assessment proceedings for AY 2012-13, the appellant revised its computation of income, disallowing an amount for non-deduction of TDS on payments to a contractor. The Assessing Officer (AO) disallowed the amount under section 40(a)(ia) of the Act, and penalty proceedings were initiated.

2. Assessee's Challenge before CIT(A):
The assessee contended before the Commissioner of Income Tax (Appeals) [CIT(A)] that the disallowed amount was not claimed as an expense but debited under 'work in progress' in the balance sheet. The CIT(A) upheld the addition, emphasizing that the expenditure was claimed as purchases enhancing closing stock, thus attracting section 40(a)(ia).

3. Appellant's Arguments and ITAT Decision:
The appellant argued before the Income Tax Appellate Tribunal (ITAT) that the amount was not claimed as an expense in the Profit & Loss Account. However, the ITAT noted that the expenditure was embedded in work in progress and held that the appellant's claim was not tenable. The ITAT relied on precedents to support its decision that the appellant's offer for tax on the impugned amount precluded an appeal.

4. Conclusion and Ruling:
The ITAT dismissed the appeal, emphasizing that the appellant's admission of non-deduction of TDS and offer for tax on the amount precluded challenging the addition. The Tribunal highlighted that the appellant's method of accounting did not absolve it from TDS obligations on business-related purchases. Therefore, the ITAT upheld the CIT(A)'s decision, ruling against the appellant.

In summary, the ITAT upheld the addition under section 40(a)(ia) against the appellant for non-deduction of TDS on payments to a contractor, emphasizing that the appellant's accounting treatment did not exempt it from TDS obligations. The Tribunal dismissed the appeal, citing the appellant's admission and offer for tax on the disputed amount as grounds for upholding the addition.