Tribunal upholds disallowance for ISO audit expenses, directs exclusion to prevent double taxation.

The Tribunal upheld the disallowance of a provision for ISO audit expenses due to failure to deduct TDS under section 40(a)(i), determining the exact amount paid without TDS at Rs.1,55,551. The Tribunal directed the AO to exclude Rs.1,05,989 from disallowance to avoid double taxation. Regarding the excess provision amount, the Tribunal directed the AO to verify and exclude Rs.1,05,989 from disallowance, ensuring it was taxed in the subsequent year. The appeal was partly allowed for statistical purposes, providing relief to the assessee to prevent double taxation.

---

---

Issues:
1. Disallowance of provision made for expenses towards ISO audit for failure to deduct TDS.
2. Disallowance of excess provision amount and the contention regarding the amount payable.

Analysis:
1. The assessee appealed against the order disallowing a provision made for expenses related to ISO audit due to failure in deducting TDS. The AO disallowed the claim stating that the amount was payable to a third party for services rendered, and income was embedded in the provision. The assessee argued that TDS was not required as it was a reimbursement of expenses. The Tribunal referred to previous cases and held that TDS should have been deducted as per Section 195, disregarding the assessee's belief of reimbursement without TDS. The disallowance under section 40(a)(i) was upheld, and the exact amount paid without TDS was determined at Rs.1,55,551. The Tribunal directed the AO to exclude the amount of Rs.1,05,989 from disallowance to prevent double taxation.

2. The assessee also contended that an amount of Rs.1,05,989 was written back as income and offered for taxation, thus only Rs.1,55,551 should be disallowed. The AO did not provide reasons for rejecting this plea. The Tribunal acknowledged the issue of potential double taxation and directed the AO to verify and exclude the amount of Rs.1,05,989 from disallowance, ensuring it was taxed in the subsequent year. The appeal was partly allowed for statistical purposes, providing relief to the assessee regarding the excess provision amount to prevent double taxation.

---