TaxTMI 
TaxTMI 
2016 (3) TMI 445
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.... the rate of tax deducted at source @ 2% instead of 10% u/s 194J of the act under the head professional and Technical Services as Royalty of Rs. 54,27,239/-. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred n allowing TDS @ 2% u/s 194C deduction instead of @ 10% u/s 194J and not allowing the addition made by AO of Rs. 54,27,239/- u/s 40(a)(ia) as assessee failed to deduct tax as per Act which his mandatory and binding on the assessee". 2. The facts in brief are that, the assessee is an individual deriving income from business as capital gains and other sources. In the course of the assessment proceedings the assessee has debited a sum of Rs. 54,27,239/- towards royalty and connection charges on whi....
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.... the Tribunal. Thus, rule of consistency should be followed. In any case, now, there are various High Court decisions that, if the assessee has deducted tax under wrong provisions resulting into shortdeduction of tax, then no disallowance can be made applicable under section 40(a)(ia). Such a proposition has been upheld by the Hon'ble Calcutta High Court in the case of CIT vs S K Tekriwal, reported in [2014] 361 ITR 432. Following the said decision, the Tribunal in the case of Punit Securities Pvt Ltd. in ITA No. 1212/Mum/2013, has held that if the assessee has deducted tax under TDS under section 194C instead of 194J no disallowance under section 40(1)(ia) should be made on account of short deduction of tax at source. However, the Ld. Coun....
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....e and, therefore, should have be given retrospective effect. 6. On the other hand, Ld. DR relied upon the order of the AO and also the decision of the Kerala High Court, as referred by the Ld. Counsel. On the issue of alternative argument, he submitted that the aspect of payee showing the said income in the return of income can be verified. 7. We have considered the rival contentions and perused the relevant finding given in the impugned orders and also the decisions relied upon by the parties. The assessee has made payment towards connection charges to M/s Hathway Cable and Datacom Ltd. On which the assessee has deducted TDS under section 194C. The AO's case is that, such payment is on account of "royalty" covered within the ambit of sec....
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....on the amount paid or payable which is deductible at source under chapter XVII B and such a tax, has not been deducted or after deduction has not been paid on or before the due date specified in 139(1). In other words, there are only twin conditions for disallowance u/s 40(a)(ia), firstly, tax which was deductable has not been deducted and secondly, after deduction has not been paid. If both the conditions are satisfied then only disallowance u/s 40(a)(ia) can be made. The section does not envisages that, if the assessee has deduced the tax under wrong provisions of the act or there is a short deduction of tax then also, it entails disallowance under section 40(a)(ia). There is nothing in the section to treat the assessee as defaulter for c....