TaxTMI 
TaxTMI 
2021 (5) TMI 891
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....ous in law and against the facts and circumstances of the case. 2. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in confirming the disallowance u/s 40(a)(ia) of the Act just because the appellant had deducted tax at source u/s 194C as against S.194J as held by the lower authorities. 3. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in holding that fees paid to M/s. VBHC Value Home Pvt Ltd is royalty attracting the provisions of S. 194J of the Act. 4. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in holding that the appellant is not entitled to the benefit of second proviso to S.40(a)(ia). Each of the above grounds is without prejudic....
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....e and marketing expenses. The Ld.AO noted that assessee has deducted TDS under section 194C at 2% in respect of payment towards branding fee. Assessee was asked to justify why the branding fee should not be treated as royalty payment to VBHC Value Homes Pvt. Ltd., and liable for deduction of TDs under section 194J of the Act. 5. The explanation of assessee was not accepted by the Ld.AO and he concluded that the provisions of section 194J of the Act were attracted and tax should have been deducted by assessee at 10% as branding fee payment was in the nature of royalty paid to VBHC. As the assessee failed to comply with provisions of section 194J of the Act, Ld.AO invoked provisions of section 40 (a) (ia) of the Act and disallowed 10% of the....
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....held that, as the form along with Annexure-A was not filed as per Rule 31ACB of Income tax Rules, necessary verification of the form could not be carried out. It was held by the Ld.CIT(A) that filing of form before Ld.AO does not fulfil the conditions laid down in Rule 31ACB of Income tax Rules, and therefore no cognizance of the same could taken by the Ld.AO. He thus upheld observations of Ld.AO and confirmed the disallowance made under section 40(a)(ia) of the Act. 10. Aggrieved by order of the Ld.CIT(A), assessee is in appeal before us now. 11. The Ld.AR submitted that provisions of section 40 (a) (ia) of the Act are not applicable to the present facts of the case for short deduction of TDS, due to difference of opinion, as to the taxa....
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....by Hon'ble Karnataka High Court by order dated 17/03/2016 passed in ITA No. 660/2015. 14. On the contrary, the Ld.Sr.DR placed reliance on orders passed by authorities below. 15. We have perused submissions advanced by both sides in light of records placed before us. 16. It has been submitted that in the facts before us, there is a shortfall in deduction of tax at source due to difference in opinion, as to the taxability of any payment or nature of the payment made under the TDS provisions. It is also submitted that for this reason no disallowance could be made by invoking provisions of section 40(a)(ia) of the Act. Hon'ble Calcutta High Court in case of S.K.Tekriwal (supra) on identical facts analysed identical argument. Their Lordships....
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....TT(Appea;) also argued that there is no word like failure used in section 40(a)(ia) of the Act and it referred to only non-deduction of fax and disallowance of such payments. According to him, it does not refer to genuineness of the payment or otherwise but addition under section 40(a)(ia) of the Act can be made even though payments 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 fax 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 ....