Disallowance on account of TDS payable not sustained When Assessee has Shown Expenditure in his Accounts: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) New Delhi has held that disallowance on account of TDS payable is not sustained when the assessee has shown the expenditure in his account.

The assessee, Anand and Anandchallenged the order dated 21.02.2019 passed by Commissioner of Income Tax (Appeals)-20, New Delhi. The assessee is a firm of Legal Professionals who filed their income return declaring income of Rs. 23,01,41,110/- and the case was selected under compulsory Manual Scrutiny.

Apart from the disallowance of Rs. 69,76,701/- shown in the balance sheet as a statutory liability on account of TDS payable certain other additions by way of disallowances of expenditure were made by AO and in appeal, the CIT(A) has sustained the disallowance of Rs. 69,76,701/-.

It was observed that AO decided by the fact that the assesseewas following the cash system of accounting, the TDS being one part of expenses debited in the P&L Account, to the extent of TDS the expenses being not incurred and paid in the relevant financial year, have to be disallowed.

The Bench observed that the opinion of Tax Authorities below is not sustainable because the assessee has shown the expenditure as a whole in his accounts having been paid and what remains in the hands of the assessee is not on account of any payment due to such persons but the tax deducted at source need to be deposited to the Government by the relevant provisions.

The amount has been shown in the form of provision, not as ‘payable’ on any account to any creditor or a contingency but held merely to be ‘deposited’ in due course for accounting purposes.

A Coram comprising of Sh. N K Billaiya, accountant member and Sh. Anubhav Sharma, a judicial member observed thatthe amount of TDS is to be considered as the sum paid by the assessee on behalf of the recipient of the income and directed that the impugned amount of TDS be granted as a deduction. The appeal was allowed.

The assessee was represented by Sh. B K Anand, CA and the revenue was represented by Shri Kanv Bali.

Support our journalism by subscribing to TaxscanPremium. Follow us on Telegram for quick updates.