2024 (7) TMI 883

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.... assessment was framed by the Deputy Commissioner of Income Tax, Company Circle 1(1), Chennai for the assessment year 2010-11 u/s. 143(3) r.w.s. 144C of the Income Tax Act, 1961 (hereinafter the 'Act') vide order dated 16.02.2016. The impugned giving effect to the order of the Tribunal was framed by the DCIT, Corporate Circle 1(1), Chennai vide order dated 22.08.2017. 2. The only issue in this appeal of assessee is against the order of CIT(A)-NFAC confirming the action of the AO in disallowing expenses paid to various non-resident parties for non-deduction of TDS by invoking the provisions of section 40(a)(i) of the Act amounting to Rs. 2,26,73,426/-. This is the only limited issue on merits but assessee has raised various other issues o....

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....ce with the provisions of Chapter XVII B as long as the payee or resident has filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, the assessee would not be treated as a person in default. Hence, in our opinion, if the recipient of the payment has disclosed the impugned receipt as their income, then the assessee cannot be considered as the assessee in default in terms of sec.201(1) of the Act so as to invoke the provisions of the section 40(a)(i) of the Act. Accordingly, we remit this issue to the file of AO to examine the applicability of the said proviso to Sec.40(a)(i) of the Act and decide accordingly. Therefore, the issue is remitted to the ....

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....r it has been intimated that pursuant thereto, the PCIT, Chennai-1 has certified full and final payment of Rs. NIL as taxes in terms of Form No.5, and has issued VSV order u/s 5(2) dated 20.04.2021. 3. In view of the above, the appeal is treated as infructuous in terms of Vivad Se Viswas Act, 2020. 3.2 Aggrieved, assessee preferred appeal before the Tribunal again and the Tribunal in ITA No.441/CHNY/2022 vide order dated 21.07.2022 remanded the matter back to the file of the CIT(A) with direction to adjudicate the issue on merits by observing in para 3 as under:- "3. Upon perusal of impugned order, it could be seen that the assessee's appeal has been dismissed as infructuous on the ground that the assessee has opted for....

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.... from consequence of disallowance under section 40(a)(ia) of the IT Act. 5.5 In view of the facts and circumstances of the case and keeping in view the judicial views on the subject, it is held that the disallowance made by the AO is in order." Aggrieved, now assessee is in appeal before the Tribunal. 4. We have heard rival contentions and gone through facts and circumstances of the case. Admitted facts are that the assessee is engaged in the business of shipping contract services. For that purpose, the assessee has made payments to non-residents and as per original assessment order, the total payment disallowed u/s. 40(a)(i) of the Act is Rs. 2,26,73,426/-. Admittedly, assessee has not deducted the taxes i.e., TDS u/s. 195 o....