Appeal dismissed: TDS non-deduction not disallowed under IT Act.

The ITAT dismissed the revenue's appeal, affirming the CIT(A)'s order to delete the addition of Rs. 6,00,000 for non-deduction of TDS u/s 40a(i)(ia) of the I.T. Act, 1961. The ITAT upheld the decision, stating that since no revenue expenditure was claimed and TDS was deducted in the subsequent year, the amount cannot be disallowed under section 40a(ia).

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Issues involved: Revenue's appeal against the order of CIT(A)-XVII, New Delhi dated 15-6-2010 relating to A.Y. 2007-08.

Issue 1: Addition of Rs. 6,00,000/- for non-deduction of TDS u/s 40a(i)(ia) of the I.T. Act, 1961
The appellant argued that the amount in question was paid to M/s Panjwani Architects and capitalized in work-in-progress A/c, with TDS deducted on 30-11-2009. The CIT(A) deleted the addition, stating that while the payment without TDS was a violation of section 40a(ia), it should not be added as income but rather reduce the expenses debited to profit and loss account by Rs. 6,00,000/-. The ITAT upheld this decision, noting that since no revenue expenditure was claimed and TDS was deducted in the subsequent year, the amount cannot be disallowed u/s 40a(ia).

Issue 2: Interpretation of section 40a(i)(ia)
The appellant contended that the CIT(A) wrongly applied the ratio of a judgment in another case. However, the ITAT found no infirmity in the CIT(A)'s order, as the assessee had not claimed any revenue expenditure in that year, and the TDS was deducted in the following financial year. Therefore, the ITAT upheld the CIT(A)'s decision to delete the addition of Rs. 6,00,000/-.

Conclusion
The ITAT dismissed the revenue's appeal, affirming the CIT(A)'s order. The ITAT found no grounds to overturn the decision, as the appellant had not claimed any revenue expenditure in the relevant year, and the TDS was deducted in the subsequent financial year.

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