TaxTMI 
TaxTMI 
2016 (1) TMI 1448
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....n deleting the disallowance of Rs. 67,84,807/- u/s 40(a)(ia) of the IT Act. 2. Any other ground that the revenue may raise before or during the proceeding before the Hon'ble ITAT. 3. On the facts of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 4. It is, therefore, prayed that the order of the CIT(A) may be set aside and that of the AO be restored to the above extent." 2. To adjudicate on this appeal, only a few material and undisputed facts need to be taken note of. During the assessment proceedings, the Assessing Officer noted that the assessee has deducted tax under section 194C from the payment aggregating to Rs. 67,84,807/- to the Customs House Agents whereas according to the Assessing Officer, t....
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....ised representative has cited the judgement of Hon'ble High Court of Calcutta in the case of CIT vs. S.K. Tekriwal 260 CTR 0073, wherein it has been held that "Expenses are not liable to be disallowed u/s 40(a)(ia) on account of short deduction of tax at source". The relevant paragraph of the judgement is reproduced hereunder for the sake of brevity: "We are of the view that the provisions of section 40(a)(ia) of the Act has two limbs one is where, inter alia, assessee has to deduct tax and the second where after deducting tax, inter alia, the assessee has to pay into Government Account. There is nothing in the said section to treat, inter alia, the assessee as defaulter where there is a shortfall in deduction. With regard to the shortfal....
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....tfully following the above judgement, I am also of the view that in a case like this, where the appellant has deducted tax at source in respect of the payments made to CHAs @ 2% under section 194C, when it is required to be made @10% u/s. 194J of the IT Act, 1961, the provisions of section 40(a)(ia) of the IT Act, 1961 cannot be made applicable. As held by the Hon'ble High Court of Calcutta in the above referred case that if there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payment falling under various TDS provisions, the assessee can be declared to be an assessee in default u/s. 201 of the Act and no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act.....