TaxTMI 
TaxTMI 
2010 (6) TMI 513
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....bsp;In the alternative and without prejudice to the above the learned CIT(A) erred in rejecting the contention of the appellant that the entire tax was deductible in March i.e. the last month of the previous year in respect of the entire sum of Rs.2,83,43,188 and thus the proviso squarely applied in respect of that sum. 4. The ld. CIT(A) erred in not appreciating that the method of accounting of crediting income on 31st March, from which tax was deducted was consistently followed by the assessee, explained to the assessing officer and accepted by him." 3. From the grounds of appeal, the only issue arises for our consideration and adjudication is whether in the facts and circumstances of case, the CIT(A) is justified in confirming the disallowance made by the AO u/s 40(a)(ia) in respect of the payment against which the TDS was deduced in the month of March 2005 and deposited before the due date of filing of the return. 4. The relevant fact emerging from the record are as under: 4.1 The assessee is carrying on the agency work of various corporate and transporting the petroleum to various locations. During the year, the assessee paid Rs.2,....
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....ed order. 7. Before us, the learned AR of the assessee has submitted that the provision of section 194C are relevant only to the extent of ascertaining the deductibility of the tax on certain payment and not the actual deduction and deposit of the tax. The condition for actual deduction and deposits are prescribed u/s 40(a)(ia) for disallowing the expenditure. He has referred the sub-clause A and B of clause (ia) of sub-section (a) of section 40 and submitted that when the tax was deducted during the last month of previous year the same was required to be paid on or before the due date as per sub-section (1) of section 139. The assessee has deducted the tax only on 31.03.2005, and duly deposited the tax on 21.09.2005 which is before the due date of filing of the return as per the provisions of section 139(1). He has further referred the proviso to section 40(a)(ia) and submitted that in the cases where the tax is deducted in the subsequent year then such sum is allowable as deduction in the previous year in which such tax has been paid and similarly, when the tax has been deducted during he last month of the previous year but pa....
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.... to ensure timely deposits of TDS in the government treasury. As far as the time of payment of deposit of the tax, the same is relaxed under the provisions of section 40(a)(ia) but deductibility and time of deduction is provided under the provisions of section 194C and other provisions of Chapter -XVII of the Act. Therefore, when the assessee in the case in hand has not deduced the tax in time and thereafter also not deposited in time from the date when it was to be deducted the provisions of section 40(a)(ia) are attracted and the expenditure so made without compliance of Chapter -XVII are to be disallowed. He has relied upon the orders of the lower authorities. He has also relied upon the decision of the Hon. Supreme Court in the case of Madurai Mils and Co. Ltd. reported in 89 ITR 445 and submitted that the proviso can not enlarge the scope of the main provision when the said can be fairly and properly construed without attributing to it with effect. The learned DR has submitted that the assessee has relied upon the proviso to section 40(a)(ia) in support of its claim but when the proviso can not enlarges the scope of the main provision/enactment the....
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...., after deduction, [has not been paid,- (A) in a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in sub-section (1) of section 139; or (B) in any other case, on or before the last day of the previous year:] [Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted- (A) during the last month of the previous year but paid after the said due date; or (B) during any other month of the previous year but paid after the end of the said previous year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.] Explanation.-For the purposes of this sub-clause,- (i) "commission or brokerage" shall have the same meaning as in clause (i) of the Explanation to section 194H; (ii) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; (iii) "professional services" shall have the same meaning as in clause (a) of the Explanation to section 194J; (iv) "work" shall have ....