Does Section 40(a)(ia) cover cases of short deduction of TDS?

[Ramanathan Seshan]

Dear Experts,

Since the proviso states that disallowance applies where 'an assessee fails to deduct the whole or any part of the tax' under Chapter XVII-B, can short deduction be considered a failure to deduct, thereby attracting disallowance under this section?

Regards,

S Ram

AI Summary

Section 40(a)(ia) disallowance applies to short TDS deduction cases per Kerala High Court despite conflicting rulings A tax practitioner inquired whether Section 40(a)(ia) covers cases of short deduction of TDS, questioning if partial deduction failures attract disallowance under the provision's language about failing to deduct 'whole or any part' of tax under Chapter XVII-B. A respondent noted conflicting High Court decisions: Calcutta and Delhi High Courts ruled disallowance doesn't apply to short-deduction cases, while Kerala High Court held that disallowance applies to short-deduction since the section references tax deductible under appropriate Chapter XVII-B provisions. The original querist acknowledged the response but noted courts haven't thoroughly examined the provisos, suggesting the main section typically prevails over provisos in interpretation.