Where it is a case of short deduction of payment as against non‐deduction of TDS, disallowance u/s 40(a)(ia) could not be made. Though S. 40(a)(ia) provides for a disallowance if amounts towards rent, etc have been paid without deducting tax at source. It does not apply to a case of shortdeduction of tax at source. As the assessee had deducted u/s 194C, it was not a case of “nondeduction” of TDS. If there is a shortfall due to difference of opinion as to which TDS provision would apply, the assessee may be treated as a defaulter u/s 201 but no disallowance can be made u/s 40(a)(ia).
Tuesday 20 December 2011
DCIT v S. K. Tekriwal - ITAT Kolkata
Where it is a case of short deduction of payment as against non‐deduction of TDS, disallowance u/s 40(a)(ia) could not be made. Though S. 40(a)(ia) provides for a disallowance if amounts towards rent, etc have been paid without deducting tax at source. It does not apply to a case of shortdeduction of tax at source. As the assessee had deducted u/s 194C, it was not a case of “nondeduction” of TDS. If there is a shortfall due to difference of opinion as to which TDS provision would apply, the assessee may be treated as a defaulter u/s 201 but no disallowance can be made u/s 40(a)(ia).
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