Non-Deduction of TDS u/s 40(a)(ia) of Income Tax Act: ITAT confirms Addition of Rs 10.8 Lakhs [Read Order]

The addition of Rs. 10, 84,787/- was made due to the non-deduction of TDS under section 40(a)(ia) of the Income Tax Act, 1961.

In a recent ruling the Delhi bench of the Income Tax Appellate Tribunal confirmed the addition of Rs. 10.8 lakhs due to non-deduction of Tax Deducted at Source ( TDS ) under section 40(a)(ia) of the Income Tax Act, 1961.

The assessee was a private limited Company engaged in third-party logistics specialist serving the automotive sector in India. Incorporated in 2012, the company is a joint venture of two of the brands in international supply chain management and automotive logistics: APL Logistics and VASCOR. The Company serves some of the major OEMs like Maruti, Honda etc. It claims to have collaboration with key stakeholders, the Indian Railway and transporters, to build up a reliable logistic system for transportation of finished vehicles like passenger cars. Essentially it is a rail-based service provider for Automotive OEMs in India for the domestic transportation of finished vehicles. The assessee Company filed its return under section 139(1) of the Income Tax Act declaring a loss of INR 15,47,16,019/-.

Mr. Akshay Ringasia representing the assessee submitted that the assessee had disallowed 30% of the total expenses on which TDS was reported to be short deducted or not deposited. These figures are consistent in clauses 21(b) and 34(a) of Form 3CD. However, the AO has confused these figures, assuming them to be different.

According to Section 40(a)(ia) of the Income Tax Act, 1961 provides for the disallowance of certain expenses if the tax is not deducted at source ( TDS ) or if it is deducted but not paid to the government account. This section applies to payments made to a resident, including salary, interest, commission, brokerage, rent, royalty, fees for professional or technical services, etc.

Read More: Claim of Deduction u/s 40(a)(ia) of Income Tax Act rejected on ground of Non-Deduction of TDS: ITAT Dismisses Appeal of Assessee

The bench, consisting of G.S. Pannu (Vice President) and Anubhav Sharma (Judicial Member), examined the case arising from the addition of Rs. 10,84,787/- due to the non-deduction of TDS under section 40(a)(ia) of the Income Tax Act.

Also Read: Disallowance made by AO u/s 40(a)(ia) for non-deduction of TDS and recovery of rent from assessee by holding company are not sustainable: ITAT

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