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

TDS short deduction: Whether disallowance under section 40(a)(ia) applies amid conflicting precedents.
The central issue is whether short deduction of tax at source is captured by the proviso to section 40(a)(ia), which refers to failure to deduct "the whole or any part of the tax" under Chapter XVII-B and thus may encompass short deduction; jurisprudence is split, with some high courts holding disallowance does not apply to short deduction and another holding that disallowance is attracted for short deduction.