2022 (7) TMI 748

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....eal has been filed challenging the order dated 10th May, 2021 passed by the Income Tax Appellate Tribunal ('the ITAT') in ITA No.3838/Del./2017 for the Assessment Year 2009-10. 2. Learned counsel for the Appellant states that the ITAT has erred in deleting disallowance under Section 40a(ia) of the Income Tax Act, 1961 ('the Act') as assessee had done short deduction of tax in violation of Section 197(1) of the Act. 3. He also states that the ITAT has erred in deleting the addition of Rs.1,03,53,150/- made by the assessing officer under Section 40A(2) of the Act in spite of the fact that assessee, during the course of assessment proceedings, failed to justify the service being rendered by the director Shri Sunil Baijal to the company f....

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.... hire charges falling under the head 'rent' and the previous provisions of section 194I of the Act are applicable. According to revenue, the assessee has deducted tax @ 1% u/s. 194C(2) of the Act as against the actual deduction to be made at 10% u/s. 194I of the Act, thereby lesser deduction of tax. The revenue has made out a case of lesser deduction of tax and that also under different head and accordingly disallowed the payments proportionately by invoking the provisions of section 40(a)(ia) of the Act. The Ld. CIT, DR 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 tax and disallowance of such payments. According to him, it does not refer to genuineness of the p....

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....specified in sub-section (1) of section 139'. This section 40(a)(ia) of the Act refers only to the duty to deduct tax and pay to government account. If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments 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." (emphasis supplied) 6. Also, both the CIT (A) and ITAT have given concurrent findings on facts in favour of the assessee on the issue of remuneration paid to the director Shri Sunil Baijal by observing that higher salary paid to the said director was accepted as remun....