Consequential relief for deductor under Vivad se Vishwas supports deletion of TDS disallowance on settled income.

Disallowance under section 40(a)(i) for non-deduction of tax at source on computer licence fee and recruitment expenses was deleted because the deductee had settled the related tax liability under the Direct Taxes Vivad se Vishwas Scheme, 2024, and CBDT Circular No. 19/2024, including FAQ No. 58, clarifies that consequential relief is available to the deductor. The Revenue accepted this position. The transfer pricing ground had already been withdrawn after resolution under the Mutual Agreement Procedure, and the late-payment provident fund contribution ground under section 36(1)(va) was not pressed.

---

---

Issues: Whether the disallowance under section 40(a)(i) of the Income-tax Act, 1961 for non-deduction of tax at source on computer licence fee and recruitment expenses could survive when the corresponding income had been settled by the deductee under the Direct Taxes Vivad se Vishwas Scheme, 2024 and consequential relief was claimed by the deductor.

Analysis: The transfer pricing ground was withdrawn as it did not survive after resolution under the Mutual Agreement Procedure. The ground relating to late payment of provident fund contribution under section 36(1)(va) was not pressed. For the surviving disallowance under section 40(a)(i), the assessee relied on the CBDT Circular No. 19/2024 dated 16.12.2024, including FAQ No. 58, which clarifies that where the deductee has settled the tax liability under the scheme, corresponding consequential relief should also be available to the deductor. The Revenue accepted this position.

Conclusion: The disallowance under section 40(a)(i) was directed to be deleted and the ground was allowed in favour of the assessee.

---