2023 (2) TMI 23 - AT - Income Tax

Disallowance u/s 40(a)(ia) - non-deduction of tax at source - CIT-A deleted the addition - HELD THAT -Though the assessee had failed to deduct TDS on the impugned amount, the payee on other hand had paid taxes on the same and the assessee had filed the stipulated certificate as per Rule 31ACB of the Income Tax Rules certifying the fact of taxes have been paid by the payee (India Infoline Investment Services Ltd. in the present case) on the impugned payment. CIT(A) in the case of CIT Vs. Ansal Landmark Township Ltd. 2015 (9) TMI 79 - DELHI HIGH COURT has held that in such circumstances, where taxes are shown to have been paid by the payee, no disallowance under section 40(a)(ia) of the Act was called for in the hands of the payer for default in taxes deduction at source. DR was unable to convert this factual finding of the ld.CIT(A) that the payer in the impugned case had paid taxes on the impugned sum involved and the certificate, as per Rule 31ACB of IT Rules 1962,certifying the aforesaid fact, had been filed to the AO. He was also unable to controvert or distinguish the decision relied upon by the ld.CIT(A) in the case of Ansal Landmark Township Ltd. (supra). No reason to interfere in the order of the ld.CIT(A) deleting disallowance by invoking provisions of section 40(a)(ia) of the Act. The ground raised by the Revenue is dismissed.

Summary

Issues: Disallowance under section 40(a)(ia) of the Income Tax Act, 1961

Issue Analysis:
1. The appeal was filed by the Revenue against the order passed by the ld. Commissioner of Income Tax (Appeals) for the Asst. Year 2013-14 under section 250(6) of the Income Tax Act, 1961.
2. The Tribunal had earlier dismissed the Revenue's appeal due to low tax effect, but the Revenue filed a Misc. Application stating that the case fell under exceptions in a CBDT Circular, leading to the recall of the order.
3. Despite notice, no one appeared on behalf of the assessee, prompting the Tribunal to proceed ex parte.
4. The sole ground raised by the Revenue was the deletion of disallowance of Rs.1,97,194/- under section 40(a)(ia) of the Act by the ld. CIT(A).
5. The ld. CIT(A) deleted the disallowance after considering the submission of the appellant, noting that the payee had paid taxes on the income, and the appellant had submitted the required certificate.
6. The ld. CIT(A) relied on various judgments, including the Hon'ble Delhi High Court's decision, to support the deletion of the disallowance.
7. The Tribunal found no reason to interfere with the ld. CIT(A)'s order, as the payer had paid taxes on the income in question, leading to the dismissal of the Revenue's appeal.
8. Consequently, the appeal of the Revenue was dismissed, and the order was pronounced in the Court on 23rd December 2022 at Ahmedabad.