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2018 (12) TMI 1550 - AT - Income TaxLate deposit of TDS u/s 40(a)(ia) - whether TDS was deposited before the due date of filing of income tax return as specified u/s 139 - Held that - It is settled law that no disallowance can be made on account of non-deduction of TDS u/s 40(a)(ia) of the Act if the same is deposited on or before the due date of the filing of income tax return. In this regard, we find guidance and support from the judgment of High Court of Gujarat in the case of CIT vs. BMS Products Pvt. Ltd. 2014 (4) TMI 242 - GUJARAT HIGH COURT . The assessee has made sufficient compliance by depositing the amount of TDS within the due date of filing income tax return as specified u/s 139(1) of the Act. - Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Disallowance of expenses due to late deposit of TDS under Section 40(a)(ia) of the Income Tax Act. Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The first issue raised by the assessee is the CIT(A)'s refusal to condone the delay in filing the appeal. The assessee, a construction firm, was required to file the appeal by January 27, 2011, but filed it on April 15, 2013, resulting in a delay of 2 years and 75 days. The delay was attributed to continuous medical issues faced by the partners and their family members. The assessee provided an affidavit detailing these medical issues, including treatment periods and supporting medical reports. However, the CIT(A) dismissed the condonation petition, noting: - The assessment proceedings were attended by a representative, indicating no direct involvement of the partners. - The assessee managed to attend penalty proceedings and file related appeals on time during the same period. - The medical issues cited did not align with the timeline for filing the appeal. The Tribunal, upon review, found the CIT(A)'s conclusions incorrect. It noted: - The representative's involvement did not negate the partners' necessary participation in providing information. - Medical reports were valid and not disputed. - The timely filing of other appeals supported the assessee's claim of inadvertent delay due to medical issues. The Tribunal emphasized a pragmatic approach to condonation, citing the Supreme Court's judgment in N. Balakrishnan vs. Krishnamurthy, which supports condoning delays absent mala fide intent. The Tribunal concluded there was no deliberate delay and condoned the delay, allowing the appeal to proceed. 2. Disallowance of Expenses Due to Late Deposit of TDS: The second issue involved the CIT(A)'s confirmation of the AO's disallowance of expenses amounting to ?11,02,023/-, ?50,000/-, and ?14,45,460/- due to late deposit of TDS under Section 40(a)(ia) of the Act. The assessee argued that the TDS was deposited before the due date for filing the income tax return under Section 139(1). The CIT(A) upheld the AO's decision, noting: - ?11,02,023/- was disallowed as TDS was not paid within the specified time. - ?50,000/- was disallowed because TDS was deducted and paid late. - ?14,45,460/- was disallowed due to TDS being deducted on the last day of the accounting year despite earlier payments. The Tribunal reviewed the case and referenced the Gujarat High Court's judgment in CIT vs. BMS Products Pvt. Ltd., which held that no disallowance under Section 40(a)(ia) is warranted if TDS is deposited before the due date for filing the return. The Tribunal found that the assessee had complied with this requirement and thus reversed the lower authorities' orders, allowing the expenses. Conclusion: The Tribunal allowed the appeal, condoning the delay in filing and reversing the disallowance of expenses due to late deposit of TDS, based on compliance with the due date for filing the income tax return. The judgment emphasized a pragmatic approach to condonation and adherence to judicial precedents regarding TDS compliance.
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