TaxTMI 
TaxTMI 
2016 (4) TMI 430
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....is not proper by relying upon the decision which is not applicable to facts of the present case and when the ingredients of Section 194H and 40(a) (ia) are satisfied in the instant case? 2. We have heard Mr.Arvind, learned counsel appearing for appellant-Revenue. 3. The relevant discussion in the impugned order of the Tribunal on the aforesaid aspect is at paragraphs 5.3 to 5.3.3 which read as under: "5.3.1 We have heard the rival contentions on the ground at S.No.5 and perused and carefully considered the material on record; including the judicial pronouncements cited and placed reliance upon. It is not in dispute that the assessee had made short deduction of tax at source @ 1% instead of 2% on certain payments and failed to remit....
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....sion of the Hon'ble High Court of Calcutta in the case of S.K. Tekriwal (supra), wherein their Lordships had considered the very same issue of the applicability of the provisions of Section 40(a)(ia) of the Act in a case where there was short deduction of tax at source on payments made to sub-contractors and find that the facts of that case are similar to those of the case on hand. In the cited case, the Hon'ble Calcutta High Court has held that if there is any shortfall in deduction of tax due to difference in opinion or understanding as to the taxability of any item or nature of payments falling under various TDS provisions, no disallowance can be made by invoking the provisions of Section 40(a)(ia) of the Act. We are of the consi....
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....ayments are genuine but tax is not deducted as required under section 40(a)(ia) of the Act. We are of the view that the conditions laid down under section 40(a)(ia) of the Act for making addition is that tax is deductible at source and such tax has not been deducted. If both the conditions are satisfied then such payment can be disallowed under section 40(a)(ia) of the Act but where tax is deducted by the assessee, even under bonafide wrong impression, under wrong provisions of TDS, the provisions of section 40(a)(ia) of the Act cannot be invoked. Here in the present case before us, the assessee has deducted tax under Section 194C(2) of the Act and not under Section 194I of the Act and there is no allegation that this TDS is not deposite....
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....3.3 Respectfully following the decision of the Hon'ble High Court of Calcutta in the case of S.K. Tekriwal (supra), which is factually similar to the case on hand, we hold that no disallowance can be made by invoking the provisions of Section 40(a)(ia) of the Act if there was any shortfall in deduction of tax at source due to any difference of understanding or opinion as to the taxability of any item or the nature of payments falling under various TDS provisions and therefore reverse the findings of the authorities below and allow the assessee's appeal in respect of Ground No.5." The aforesaid shows that the Tribunal has gone by the decision taken by the High Court of Calcutta and has found that it was not a case of no deduction of TDS w....
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....bsence of deduction. Further, in case of bona fide wrong impression, if the deduction is at a lesser rate, the same cannot be a ground for disallowance by invoking the provisions of Section 40(a)(ia). 7. Examining the matter, we find that there are two angles to the matter: The first is, whether it was a case of `no deduction' or not in the present case. The answer would be in the negative because, the deduction was already made at the rate of 1%. The second angle would be as to whether it was under a bona fide wrong impression that only 1% was deducted instead of 2%. The contention of the assessee was that, having realized that deduction was 2% instead of 1%, the amount of TDS has been paid with interest. It is also a matter of fact tha....