The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has recently held that deduction should not be disallowed under Section 40(a)(ia) of Income Tax Act, 1961 on ground of Tax Deduction at Source (TDS) not deducted, if receipient include income from receipts of assessee.
Assessee Ravi Lochan Singh filed the appeal against the order of Commissioner of Income Tax (Appeals), passed for Assessment Years 2012-13 and 2013-14.
In the assessment year 2012-13 AO disallowed certain expenses incurred by the assessee on the ground that he failed to deduct TDS under Section 194H of the Income Tax Act.
These payments are consultancy fees, payment made to Ravi Lochan Singh HUF, commission payment made to Monisha Rao Saraswati, Ankita Saikia and Surya Narayan Mishra.
In the assessment year 2013-14 AO found that the assessee made payment to his nine agents and claimed under the head of commission . This payment has been disallowed to on the ground that the assessee failed to deduct the TDS under Section 194H of the Income Tax Act, 1961.
Aggrieved by the assessment order, assesee filed an appeal before the CIT(A). The CIT(A) upheld the disallowance made by the AO. Thereafter the assessee filed a second appeal before the tribunal.
Before the bench Alok Kumar Shahi, counsel for the assessee submitted that “recipient has included the receipts from an assessee in its income, then in the hands of the payer, the deduction would not be disallowed under Section 40(a)(ia) on the ground that TDS was not deducted”.
It was also argued that in the year 2012-13 copy of the return of Ravi Lochanm Singh, HUF showed the rental income received from the assessee.
Rupesh Agrawal, counsel for the revenue, supported the decision of the lower authorities.
Thereafter, the two member bench of Rajpal Yadav, (Vice-President) and Girish Agrawal, (Accountant Member) observed that recipients had shown these receipts as their income.
Further Assessing Officer did not dispute about the nature of expenses and their incurrence for the purpose of their business, his only grievance was that the assessee has not deducted the TDS while making the payments.
Thus the bench considering the decision in the case of Hindustan Coca Cola –vs.- CIT, allowed the appeal filed by the assessee.
Keywords:Deduction, Section 40(a)(ia) of Income Tax Act, Tax Deduction at Source, Income from receipts, Commissioner of Income Tax (Appeals), Assessment Years
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
