The Income Tax Appellate Tribunal (ITAT), Ahmedabad held that disallowance under Section 40(a)(ia) cannot be made when established that payee has offered income on interest payment made by appellant.
The assessee, Shri Yagnesh Dayabhai Vyas had made interest payment to Citi Finance for Rs. 7,96,995/- and Rs. 27,54,253/- to Gruh Finance, on which no TDS was deducted by the appellant as the case made out by the Revenue. So far as the disallowance under Section 40(a)(ia) with respect to Gruh Finance, the appellant had submitted a chart in order to explain that TDS has been deducted and paid during the relevant assessment year. Further that the appellant submitted Form 16A which contains quarter-wise TDS deducted by the appellant along with the copy of challans of TDS payment which reconciles with Form 16A submitted by the appellant. Both were on record before the Commissioner of Income Tax (CIT) and even before the Assessing Officer (AO).
Waseem Ahmed, Accountant Member and Madhumita Roy, Judicial Member observed that” TDS has been duly deducted and same has been paid to Government account before due date of filing of return which is apparent from TDS challans as well as Form 16A, disallowance under Section 40(a)(ia) of the Act is not sustainable. Finding of the AO that no TDS has been deducted on interest payment to Gruh Finance is wrong and deletion of such disallowance made by the CIT is found to be justified.
The finding of the CIT that disallowance under Section 40(a)(ia) in this regard cannot be made when it has been established that the payee has offered income on interest payment made by the appellant is found to be justified. No infirmity is found in the order passed by the Ld. CIT(A) in deleting the impugned addition so as to warrant interference.”
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