TDS timing under section 40(a)(ia): deposit within the statutory due date prevented disallowance in this case.

For assessment year 2008-09, disallowance under section 40(a)(ia) was not attracted where tax deducted at source in the last month of the previous year was deposited on or before the due date prescribed under section 139(1). The assessee had deducted TDS on 31 March 2008 and paid it on 10 April 2008, which fell within the statutory time allowed for that situation. On those facts, the deletion of the addition was sustained.

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Issues: Whether disallowance under section 40(a)(ia) could be sustained where tax was deducted at source on 31.03.2008 and deposited on 10.04.2008.

Analysis: For assessment year 2008-09, section 40(a)(ia) provided that where tax deductible on payments to a resident contractor or sub-contractor was deducted during the last month of the previous year, the tax was required to be paid on or before the due date specified under section 139(1). The undisputed facts showed that the assessee deducted TDS on the last day of the previous year and deposited it in the next financial year within the statutory time allowed for that situation. In those circumstances, the statutory condition for disallowance was not attracted.

Conclusion: The disallowance under section 40(a)(ia) was not justified and the deletion of the addition was sustained.

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