The Income Tax Appellate Tribunal (ITAT), Delhi Bench allowed the deduction to Deloitte Haskins & Sells for expenditure representing TDS deducted.
The assessee, Deloitte Haskins & Sells is a Chartered Accountant Firm. For Assessment Year 2011-12, the return of income was filed declaring an income of Rs.10,44,95,714. The assessee’s case was selected for scrutiny and the assessment was completed at an income of Rs.15,11,45,380 after making the various disallowances or additions.
The Assessing Officer did not allow deduction of expenditure of Rs.44,09,937 representing tax deducted at source for Financial Year 2010-11 but paid in Financial Year 2011-12. The Assessing Officer also did not grant the assessee’s claim of TDS amounting to Rs.8,59,85,393.
The assessee raised the issue in respect of TDS payment Rs.44,09,937 and contended that CIT(A) ought to have directed the Assessing Officer to allow deduction for expenditure of Rs.44,09,937 representing TDS deducted in the Financial Year 2010-11 but paid in the Financial Year 2011-12.
The coram consisting of Prashant Maharishi and Sudhanshu Shrivastava clarified that the assessee has made cash payment to the various parties after duly deducting tax at source. The portion of the amount paid to them has already been allowed to the assessee as a deductible expenditure.
The ITAT said that the moment the assessee deducts the tax at source from the sums paid to the other person it becomes the liability of the assessee who can be held to be an assessee in default for the above sum as well as liable to pay interest and penalty also. The amount of TDS is to be considered as the sum paid by the assessee on behalf of the recipient of the income.
Therefore, the ITAT directed that the impugned amount of TDS be granted as a deduction in assessment year 2011-12.
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