ITAT directs AO to verify payments, cites Special Bench decision on TDS. Appeal allowed for statistical purposes.

The ITAT directed the matter back to the AO for verification following the assessee's claims and legal references. The AO was instructed to verify sub-contract and interest payments, following the Special Bench decision on TDS for professional fees. Ultimately, the ITAT allowed the appeal for statistical purposes, restoring the matter to the AO for further verification.

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Issues:
1. Disallowance under section 40(a)(ia) for non-deduction of TDS.
2. Disallowance of expenses for non-payment of TDS in time.
3. Applicability of provisions under section 40(a)(ia).
4. Grounds of appeal modification.
5. Disallowance of expenses under section 40(a)(ia) for outstanding payable amounts.
6. Disallowance of expenses under section 40(a)(ia) in light of the 2nd proviso.

Analysis:

1. The Assessing Officer (AO) disallowed an amount of &8377; 2.68 crores on account of non-payment of TDS in time by the assessee. The AO observed that TDS was paid beyond the due date prescribed by the Act, leading to the disallowance under section 40(a)(ia) for sub-contract, interest, and professional charges. The AO invoked the provisions of section 40(a)(ia) to disallow the mentioned amounts.

2. The First Appellate Authority (FAA) upheld the AO's decision, stating that the assessee had not disputed the facts regarding the payments made and the non-deduction of TDS within the prescribed time. The FAA confirmed the disallowance made by the AO under section 40(a)(ia) for sub-contract charges, interest, and professional fees, as the assessee's submissions were found to be unacceptable.

3. During the appeal before the ITAT, the Authorized Representative argued that payments were made before the due date of filing the return of income. The assessee claimed to be entitled to commission on the contracts and cited various legal precedents in support of their case. The Departmental Representative supported the FAA's decision.

4. The ITAT directed the matter to be sent back to the AO for verification purposes, considering the claims made by the assessee and the legal references provided. The AO was instructed to verify the assertions made by the assessee regarding sub-contract payments and interest payments. Regarding TDS on professional fees, the AO was to follow the decision of the Special Bench in the case of Merlyn Shipping and Transport.

5. Ultimately, the ITAT allowed the effective Ground of Appeal for statistical purposes, restoring the matter to the AO for further verification. The appeal filed by the assessee was allowed for statistical purposes.

This detailed analysis of the legal judgment highlights the issues raised by the assessee, the decisions of the AO and FAA, arguments presented before the ITAT, and the final directive given by the ITAT for verification by the AO, leading to the allowance of the appeal for statistical purposes.

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