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TMI Blog2021 (5) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax at source on payment made to sub-contractors. Hon ble Calcutta High Court held that if there is any short fall in deduction of tax due to difference in opinion on understanding of taxability of any item or nature of payment falling under various TDS provisions, no disallowance can be made by invoking provisions of section 40(a)(ia) of the Act. Admittedly, the present facts is not the case of no deduction of TDS and that assessee under a bona fide belief, deducted TDS at 2% under section 194C. It is also apparent from the agreement that it was a bundle of services that was rendered by VBHC to assessee against which a consolidated payment has been made. Respectfully following the above decision, we are of the view that no disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in law and on facts in holding that the appellant is not entitled to the benefit of second proviso to S.40(a)(ia). Each of the above grounds is without prejudice to one another and the appellant craves leave of the Hon'ble Income Tax Appellate Tribunal to add, delete, amend or otherwise modify one or more of the above grounds either before or at the time of hearing of this appeal. Brief facts of the case are as under: 2. The assessee is an LLP, and filed original return of income on 17/10/2016. Subsequently, return was revised on 29/10/2017 declaring a loss of ₹ 6,12,18,818/-. The Ld.AO noted that assessee is involved in real estate development. The case was picked up for limited scrutiny for following reasons: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of royalty paid to VBHC. As the assessee failed to comply with provisions of section 194J of the Act, Ld.AO invoked provisions of section 40 (a) (ia) of the Act and disallowed 10% of the branding fee paid to VBHC. The Ld.AO thus made an addition of ₹ 1,30,40,810/- 6. Aggrieved by the order passed by the Ld. AO, assessee preferred appeal before Ld. CIT (A). 7. During the appellate proceedings assessee submitted that the services provided by VBHC was in the nature of works contract and that assessee used the logo by its house logo and not the trademark registered by VBHC. It was also submitted that assessee had obtained certificate in Form 26A from the Chartered Accountant and the same was produced before the Ld.AO after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us now. 11. The Ld.AR submitted that provisions of section 40 (a) (ia) of the Act are not applicable to the present facts of the case for short deduction of TDS, due to difference of opinion, as to the taxability of any income in the nature of payments falling under TDS provisions. He placed reliance on the decision of Hon ble ITAT Kolkata bench in case of DCIT vs S.K.Tekriwal reported in (2011) 15 Taxmann.com 289. It was submitted that Hon ble ITAT Kolkata held that no disallowance can be made by invoking section 40(a)(ia) of the Act if there is any short fall in deduction of tax due to difference of opinion as to the taxability of any expenditure or nature of payment falling under various TDS provisions. It was submitted that the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this reason no disallowance could be made by invoking provisions of section 40(a)(ia) of the Act. Hon ble Calcutta High Court in case of S.K.Tekriwal (supra) on identical facts analysed identical argument. Their Lordships considered the very same issue of applicability of provisions of section 40(a)(ia) of the Act, in a case where there was short deduction of tax at source on payment made to sub-contractors. Hon ble Calcutta High Court held that if there is any short fall in deduction of tax due to difference in opinion on understanding of taxability of any item or nature of payment falling under various TDS provisions, no disallowance can be made by invoking provisions of section 40(a)(ia) of the Act. Hon ble court held as under: 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is that fax is deductible at source and such tax has not been deducted If both the conditions are satisfied then such payment can be disallowed under section 40(a)(ia) of the Act but where tax is deducted by the assessee, even under bonafide wrong impression, under wrong pro visions of TDS, the provisions of section 40(a)(ia) of the Act cannot be invoked. Here in the present case before us, the assessee has deducted tax under Section 194C(2) of the Act and not under Section 1941 of the Act and there is no allegation that this TDS is not deposited with the Government account. We are of the view that the pro visions of section 40(a)(ia) of the Act has two limbs one is where, inter alia, assessee has to deduct tax and the second where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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