2026 (1) TMI 1562

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.... "1. That on the facts and circumstances of the case and in law, CIT(A)/CPC have erred in not appreciating that the impugned provisional expenses amounting to INR 16,57,106 has been suo moto disallowed under section 40(a)(ia) by the Appellant and therefore, further addition of the said amount is erroneous and bad in law as the same results in double disallowance. 1.1 That on the facts and circumstances of the case and in law, CPC erred in making addition on account of non-deduction of tax deducted at source ("TDS") under section 40(a)(i) of the Act without appreciating that such payments were made to Indian parties and CIT(A) further erred in confirming the same partially. 1.2 Without prejudice that disallowance made ....

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....unal. 5. At the time of hearing, ld. AR of the assessee submitted that assessee has created provision for various expenses related to professional fees and other expenses on 31.03.2021. The assessee follows the principle of booking the provision at year end for which actual invoices are to be received in the subsequent year. Further the TDS on the same is deducted at the time of payment of actual invoices. The above said professional expenses related to Indian parties, the tax auditor has duly verified the provisions made by the assessee during tax audit during the year under consideration. The assessee has not deducted TDS on the abovesaid professional expenses till the time filing of tax audit report and accordingly assessee has disall....

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....rom the above said details, it is clear that all the parties are resident of India. Accordingly, he prayed that the issue relates to TDS deduction u/s 40(a)(ia) versus 40(a)(i), therefore, he pleaded that the addition proposed by the lower authorities may be deleted. 8. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 9. Considered the rival submissions and material placed on record. We observed that assessee has declared the details of payments on which assessee has not deducted TDS and as per the provisions of section 40(a)(ia) of the Act, assessee has suo motu disallowed 30% of the said payment relating to the provisions of expenses for which assessee has not received any proper bill. Howeve....