CBDT TDS dispute exception does not cover section 40(a)(ia) disallowance in regular assessment, leading to dismissal.

The CBDT monetary-limit exception for TDS/TCS disputes applies to proceedings under sections 201 and 201(1A) concerning deduction and recovery of tax, and not to a regular assessment disallowance under section 40(a)(ia). On that basis, a revenue appeal against such a disallowance was treated as outside the exception and not maintainable, leading to dismissal. The connected cross-objection did not survive once the appeal was dismissed and was disposed of as academic.

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Issues: Whether the revenue's appeal arising from a disallowance under section 40(a)(ia) of the Income-tax Act, 1961 was covered by the monetary-limit exception in the CBDT circular relating to TDS/TCS disputes, and whether the cross-objection survived after dismissal of the appeal.

Analysis: The appeal was filed against an assessment order under section 143(3) read with section 147, and the disallowance in question arose from section 40(a)(ia) for non-deduction of tax at source. The governing circular was read as carving out an exception only for litigation arising from orders under sections 201 and 201(1A) concerning the obligation to deduct tax at source and recovery of the unpaid tax. On that understanding, a regular assessment disallowance under section 40(a)(ia) was held not to fall within the exception, and the reasoning of the Bombay High Court in a similar matter was followed.

Conclusion: The revenue's appeal was held to be not maintainable and was dismissed.

Final Conclusion: The connected cross-objection did not survive after dismissal of the revenue's appeal and was dismissed as academic.

Ratio Decidendi: The CBDT exception for TDS/TCS disputes applies to proceedings under sections 201 and 201(1A) and does not extend to disallowances made in a regular assessment under section 40(a)(ia).

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