TDS deduction under the wrong provision does not trigger section 40(a)(ia) disallowance where tax was otherwise deducted.

Section 40(a)(ia) disallowance is triggered only when tax deductible at source is not deducted, or after deduction is not paid; it does not extend to a bona fide deduction made under the wrong TDS provision. On these facts, the tax had in fact been deducted, so the statutory condition for disallowance was not met. The article also notes that any consequence, if at all, would lie under the default provision governing an assessee in default, not under section 40(a)(ia). The Revenue's appeal was therefore rejected at the threshold and the lower allowance was left undisturbed.

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Issues: Whether disallowance under section 40(a)(ia) of the Income-tax Act, 1961 can be made where tax was deducted at source under one provision but, according to the Revenue, should have been deducted under another provision, and whether any substantial question of law arose.

Analysis: The payment in question had suffered deduction of tax, though under a provision different from the one invoked by the Revenue. The governing requirement of section 40(a)(ia) is the non-deduction of tax or failure to deposit tax after deduction. A mere shortfall or deduction under a bona fide wrong provision does not satisfy the statutory condition for disallowance under that section, though the matter may have consequences under the default provision relating to an assessee in default.

Conclusion: Disallowance under section 40(a)(ia) was not justified on these facts, and no substantial question of law arose for admission of the appeal.

Final Conclusion: The assessee's claim as allowed below was left undisturbed and the Revenue's appeal was rejected at the threshold.

Ratio Decidendi: Section 40(a)(ia) applies only where tax deductible at source has not been deducted or, after deduction, has not been paid; it does not extend to cases of bona fide short deduction or deduction under the wrong TDS provision.

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