100% of Expenses incurred by Assessee without incurring the TDS cannot be disallowed rather restricted to the tune of 30%: ITAT [Read Order]
![100% of Expenses incurred by Assessee without incurring the TDS cannot be disallowed rather restricted to the tune of 30%: ITAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2022/01/Expenses-Assessee-TDS-ITAT-Expense-Tune-of-30-Taxscan.jpeg "100% of Expenses incurred by Assessee without incurring the TDS cannot be disallowed rather restricted to the tune of 30%: ITAT [Read Order]")
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has ruled that 100% of the expenses incurred by assessee without incurring the TDS cannot be disallowed, rather restricted to the tune of 30%. The assessee, Draipl Mskel is a joint-venture and engaged in the business of road development/construction. The assessee in the year under consideration has paid interest to...
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has ruled that 100% of the expenses incurred by assessee without incurring the TDS cannot be disallowed, rather restricted to the tune of 30%.
The assessee, Draipl Mskel is a joint-venture and engaged in the business of road development/construction. The assessee in the year under consideration has paid interest to SREI Infrastructure Private Ltd which was claimed as deduction in the profit and loss account. However, the assessee failed to deduct the TDS under the provisions of section 194A of the Act on the payment of such interest expenses. Therefore, the AO disallowed the same under the provisions of section 194A read with section 40(a)(ia) of the Act and added to the total income of the assessee.
The only issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by sustaining the addition of ₹ 15,44,543.00 on account of non-deduction of tax under section 194A read with section 40(a)(ia) of the Act.
The assessee contended that there was an amendment by the Finance Act (No.2) 2014 under the provisions of section 40(a)(ia) of the Act which restricted the disallowance to 30% only of the expenses in respect of which TDS was not deducted. Such an amendment was held to be retrospective. The assessee requested to restrict the disallowance of the impugned expenses to the tune of 30% only.
The coram headed by the Vice President, Rajpal Yadav and Accountant Member Waseem Ahmed held that provisions, the 100% of the expenses incurred by the assessee without incurring the TDS cannot be disallowed. Rather disallowance shall be restricted to the tune of 30% only of such expenses.
The tribunal directed the AO to restrict the disallowance to the tune of 30% of the interest expenses incurred by the assessee.
To Read the full text of the Order CLICK HERE
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