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TMI Blog2023 (3) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... both exist in order that a deduction at source may be made. No deduction at source is contemplated under Section 192 in cases where a payment towards salary has accrued but is not made - AO was not justified in making addition u/s 40(a)(ia) - The ground of assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... of the grounds of appeal before the disposal of the appeal." 5. Before us, at the outset, Learned AR submitted that though the assessee has raised various grounds but the sole controversy which requires adjudication is the addition made u/s 40(a)(ia) of the Act. 6. During the course of assessment proceedings and on perusing the Employee Benefit Expenses, AO noticed that assessee had claimed expenditure on account of Director's Remuneration at Rs.64,03,670/- and though the assessee had deducted TDS only Rs.6,00,000/- and not on Rs.64,03,670/-. The assessee was asked to show-cause as to why 30% of Rs.58,03,670/- not be disallowed u/s 40(a)(ia) of the Act. In response to the aforesaid query, assessee inter alia submitted that as per provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that Rs.34,03,670/- represents the provision made for salary but the same was not paid to the director during the year under consideration. He pointed to page 57 of the Ledger account of the subsequent year wherein the TDS has been deducted at the time of making the payment. Learned AR thereafter submitted that as per the provision of Section 192 of the Act, assessee was liable to deduct TDS on salary only on payment basis and not on accrual basis. In support of its contention, Learned AR placed reliance on the decision of Hon'ble Delhi High Court in the case of CIT vs. Tej Quebecor Printing Ltd. reported in 281 ITR 170 (Delhi) and decision of Hon'ble Bombay High Court in the case of PCIT vs. Indofil Industries Ltd. in ITA No.2027 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Rs.34,03,670/- there is no dispute about the quantum. The only dispute is whether the assessee is liable to deduct TDS u/s 192 of the Act on salary provision made during the year but not paid during the year under consideration. We find that Hon'ble Delhi High Court in the case of CIT vs. Taj Quebecor Printing Ltd. (supra) has held that the person making the salary payment is required to make a deduction towards tax at source only at the time of making such payment. The accrual of the payment and the actual act of making the payment must both exist in order that a deduction at source may be made. It has further held that no deduction at source is contemplated under Section 192 in cases where a payment towards salary has accrued but is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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