Disallowance of expenses where TDS has not been deducted u/s 40(a)(ia)

[RAMESH MANSHARAMANI]

one of my client who is proprietor of his firm and his case was selected for scrutiny for the asst. year 2007-2008 and ITO concludes that no tds deducted on respective expenses so whole expenditure, which direcly relates to the product of the business, disallowed u/s. 40(a)(ia) of the Income Tax Act now i filed appeal before CIT in which mentioned that assessee has carried out work from various labourer who has having specialised skilled and assessee has not deducted TDS on paid amount which cross the specified limit of no deduction during the year I need your guidence particularly to narrate relevant case law in my submission which is to be submitted before CIT (A) CA RAMESH K M [email protected]

[DEV KUMAR KOTHARI]

Make out case for - a.no tax was deductible by assessee as such and on respective payments as well, there is no scn or advice from ITO TDS or any other quarters. b. The amount paid is allowable u/s 28 rws 145(e.g. in case of creation or purchase of stock-in-trade) and not under s. 30-38 so s.40 is not applicable. c. the payees have declared that there income was not taxable and in case of need shall produce certification for no TDS/ assessment orders in their case or other relevan document. d. any other ground which may be appropirate in given case.

AI Summary

Failure to deduct tax at source: argue payments were not TDS-eligible and are allowable as business income. Defend against disallowance under 40(a)(ia) by showing tax was not deductible on the specific payments, that payments are allowable as business income treatment for stock-in-trade (s.28 read with s.145) rather than falling under deductions restricted by ss.30-38, that no departmental show-cause or advice to deduct TDS was issued, and by producing payee declarations or certificates demonstrating non-taxability.