The ITAT held that although the assessee failed to deduct and...

The ITAT held that although the assessee failed to deduct and deposit TDS on interest paid to the recipient, the recipient had declared the income and paid tax accordingly. Under the second proviso to section 40(a)(ia), if the assessee is not deemed a defaulter under section 201(1), and submits a certificate confirming tax payment by the recipient, no disallowance is warranted. The tribunal set aside the lower authorities' orders and remanded the matter to the AO for verification of the submitted certificate and to decide the issue in accordance with law. The assessee's appeal was partly allowed.