DCIT vs M/s. S K Tekriwal S. 40(a)(ia) can not be invoked 4 non-deduction of tax but not for lesser deduction of tax. S. 40(a)(ia) of the Act refers only to the duty to deduct tax and pay to government account. If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various TDS provisions, the assessee can be declared to be an assessee in default u/s. 201 of the Act and no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act. In this provision it is provided that where in respect of any sum, as referred in this section, tax has not been deducted or after deduction has not been paid on or before the due date specified in sub-section (1) of section 139 of the Act, such sum shall be disallowed as a deduction while computing the income of the assessee for the previous year relevant to AY under consideration. But in the present case before us, the assessee has deducted tax, although u/s. 194C(2) of the Act and it is not a case of non-deduction of tax or no deduction of tax as is the import of section 40(a)(ia) of the Act. Even otherwise if it is considered that this particular sum falls under section 194I of the Act, it may be considered as tax deducted at a lower rate and it cannot be considered a case of non-deduction or no deduction.

DCIT vs M/s. S K Tekriwal 

S. 40(a)(ia) of the Act can be invoked only in the event of non-deduction of tax but not for lesser

deduction of tax.

S. 40(a)(ia) of the Act refers only to the duty to deduct tax and pay to government account. If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various TDS provisions, the assessee can be declared to be an assessee in default u/s. 201 of the Act and no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act.

In this provision it is provided that where in respect of any sum, as referred in this section, tax has not been deducted or after deduction has not been paid on or before the due date specified in sub-section (1) of section 139 of the Act, such sum shall be disallowed as a deduction while computing the income of the assessee for the previous year relevant to AY under consideration. But in the present case before us, the assessee has deducted tax, although u/s. 194C(2) of the Act and it is not a case of non-deduction of tax or no deduction of tax as is the import of section 40(a)(ia) of the Act. Even otherwise if it is considered that this particular sum falls under section 194I of the Act, it may be considered as tax deducted at a lower rate and it cannot be considered a case of non-deduction or no deduction.

Disallowance u/s 40(a)(iii) cannot be made in respect of salary paid to non

IT : Disallowance u/s 40(a)(iii) cannot be made in respect of salary paid to non-residents for services rendered abroad

Income-tax : Since the salary paid to non-residents for services rendered in Netherland is not chargeable to tax in India, provisions of section 40(a)(iii) will not be applicable and accordingly disallowance under section 40(a)(iii) cannot be made in respect of salary paid to non-residents for the services rendered abroad [Section 40(a)(iii) of the Income-tax Act, 1961 - Business disallowance - Salary payable outside India] - [2011] 10 taxmann 131 (Delhi - ITAT)

Direct Tax Laws Sept 2011

Where assessees filed an application for restoration of a writ petition after a delay of more than 30 years without providing satisfactory explanation for said delay writ petition could not be restored - [2011] 13 taxmann 135 (Calcutta)

Having regard section 158BB(1) as amended with effect from 1-7-2002, addition made on basis of statement of manager of assessee-firm recorded prior to date of search, was to be upheld - [2011] 13 taxmann 134 (Madras)

Where in return of income, assessee had not declared any additional amount of income surrendered during course of survey and later agreed to pay income-tax thereon along with interest under section 234B, Assessing Officer was justified in levying penalty under section 271(1)(c) - [2011] 13 taxmann 133 (Punjab & Haryana)

Reassessment is not justified where AO just changes& his opinion regarding assessee's system of accounting appropriate, it was a case of mere change of opinion on basis of which reassessment could not be made - [2011] 13 taxmann 132 (Rajasthan)

Once assessee had explained source of investment in shares and debentures by stating that they belonged to some other person and his explanation had been accepted, then if further investigation was required in case of said other person, that aspect could not be considered while considering assessment of assessee - [2011] 13 taxmann 131 (Delhi)

Designated authority under provisions of Kar Vivad Samadhan Scheme has no power to condone delay in making payment of amount of tax as required under section 90(2) - [2011] 13 taxmann 130 (Madhya Pradesh)

Payment made outside India for services rendered outside India is not taxable in India and, consequently, no disallowance could be made invoking section 40(a)(i) - [2011] 13 taxmann 137 (Mumbai - Trib.)

To treat a person as an agent of non-resident, it is to be proved that such person has business connection with non-resident and from or through such a person, non-resident is in receipt of income, whether directly or indirectly - [2011] 13 taxmann 136 (Mumbai - Trib.)

Depletion claimed by assessee on account of reduction in value of capital expenditure incurred on account of exploration and development of oil and gas is to be treated as depreciation for purpose of computation of book profits under section 115JB - [2011] 13 taxmann 129 (Chennai - Trib.)

An order can be revised only if twin conditions of 'error in order' and, 'prejudice caused to revenue' co-exist - [2011] 13 taxmann 127 (Chennai - Trib.)

There could be a cold chain facility for storage only without involving transportation of agricultural produce; various attendant facilities provided along with storage complete cold chain facility insofar as storage is concerned - [2011] 13 taxmann 126 (Agra - Trib.)

.......

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Dear Friends : The emails are schedule to be posted in the blog (itronline.blogspot.com)and will sent to the group on various dates and time fixed. Instead of sending it on one day.

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At a Glance: Important Orders on S. 40(a)(ia) since Jan 2011 – August 2011

At a Glance: Important Orders on S. 40(a)(ia) since Jan 2011 – August 2011 reported by TaxCorp


1. S K SAIFUDDIN vs ITO
Dated : 17 February 2011
S. 40(a)(ia), 194C(2) - Whether when assessee makes payments to leader of workers working on jobwork basis, such payments are subject to tax deduction at source u/s 194C(2).
(2011) 005 TaxCorp (A.T.) 24638 (KOLKATA)



2. HCC L & T PURULIA JOINT VENTURE vs JCIT
Dated : 24 June 2011
S. 40(a)(ia), 194C – Whether the assessee, a sub contractor, is required to deduct tax at source for the payment made by it to its sub contractor though as per Explanation 1 for the purpose of sub-section (2) of Sec 194C the expression 'contractor' shall include a contractor.
Reported in (2011) 005 TaxCorp (A.T.) 25177



3. Addl. CIT vs M/s INDIA INDEX SERVICES AND PRODUCTS LTD
Dated : 16 March 2011
S. 40(a)(ia), 192, 194C, 194J - Whether payments made to the parent company on account of reimbursement of salaries in relation to services rendered by the personnel on deputation to the JV attract the liability of TDS.
(2011) 005 TaxCorp (A.T.) 24761 (MUMBAI)



4. CIT vs D RATHINAM
Date of decision - 01 February 2011
S. 40(a)(ia), 194C, 194I - Whether when Sec 194I came into being only from 2007, putting TDS liability on hiring of machinery, Revenue is right in insisting on tax deduction at source on miller and road roller charges for the prior period.
Reported in (2011) 005 TaxCorp (DT) 48347 (MADRAS)



5. SHRI J PRASHANTH HEGDE vs ADD. CIT
Dated : 21 January 2011
S. 40(a)(ia), 133(6), 194C – Whether when assessee randomly hires vehicles, and payments made are less than Rs 20,000 except one case, provisions of section 194C are applicable where there was no contract by the assessee with the vehicle owners.
(2011) 005 TaxCorp (A.T.) 24578 (BANGALORE)



6. ITO vs THE ANKLESHWAR TALUKA ONGC
Dated : 20 May 2011
S. 40(a)(ia), 43B, 143(3), 194C – Whether when the assessee-society acts as an intermediate between the company and the members of the society, and the fact that there is no relationship between the assessee and its members as contractor and contractee, section 194C.
(2011) 005 TaxCorp (A.T.) 25163 (AHMEDABAD)



7. ITO vs M/s VIJAY BHARAT ROADLINES PVT LTD
Dated : 23 June 2011
S. 40(a)(ia), 194C, Rule 46A – Whether the payments made to lorry/truck owners who merely placed the vehicles at the disposal of the assessee and never involved themselves in the work to be carried out by the assessee, would not attract provisions of section 194C.
Reported in (2011) 005 TaxCorp (A.T.) 25172 (DELHI)



8. M/s INDUSTRIAL PACKAGING PRODUCTS vs ADDL CIT
Dated : 20 April 2011
S. 37(1), 40(a)(ia), 80IB – Whether where due to the amendment brought into Act by the Finance Act, 2008 in section 40(a)(ia) with retrospective effect from 1/4/2005, the assessee would be entitled to claim deduction for the amount on which TDS was deducted late but before the due.
Reported in (2011) 005 TaxCorp (A.T.) 25038 (MUMBAI)



9. ITO vs M/s ELKA COSMETIC PVT LTD
Dated : 13 April 2011
S. 40(a)(ia), 35D – Whether, if assessee engaged in the business of cosmetics, incures certain expenses on 'Testers', generally used by customers before purchase, such product promotional expenses are to be treated as capital in nature merely because it also promotes goodwill.
Reported in (2011) 005 TaxCorp (A.T.) 25052 (DELHI)



10. HCC PATI JOINT VENTURE vs ACIT
Dated : 31 March 2011
S. 40(a)(ia), 194C, 195, CBDT Circular No 285 of 1980 – Whether, if assessee ends up making excess deposit of TDS in the previous year, it is entitled to make suo moto adjustment of the same against liability arising in next financial year - Whether such excess payment of tax.
Reported in (2011) 005 TaxCorp (A.T.) 24884 (MUMBAI)



11. Mr HEMANT MANGALDAS BHANUSHALI vs ITO
Dated : 15 June 2011
S. 40(a)(ia), 263 – Whether when the CIT observes that the AO has not applied his mind while passing the order and did not call for the required details for completing the assessment, initiation of proceedings u/s 263 in such circumstances is valid.
Reported in (2011) 005 TaxCorp (A.T.) 25407 (MUMBAI)



12. PENFORD ISRAEL LTD vs DCIT, MUMBAI
Dated : 30 March 2011
S. 32, 37, 40(a)(ia), 142(1), 143(1) & (2), Rule 27 – Whether, merely because non-resident assessee writes to RBI seeking permission to close down its branch office in India, AO is justified in making the presumption that the assessee had discontinued its trading activity in India.
Reported in (2011) 005 TaxCorp (A.T.) 24875 (MUMBAI)



13. NATIONAL PROJECTS CONSTRUCTION CORPORATION LTD vs DCIT
Dated : 11 March 2011
S. 40(a)(ia), 194(a), 197 - Whether no TDS is liable to be deducted when a payment is made to a corporation owned by the Govt.
Reported in (2011) 005 TaxCorp (A.T.) 24845 (DELHI)



14. M/s INDUSTRIAL THERMOPLASTICS vs ITO
Dated : 18 February 2011
S. 36(1)(iii), 40A(2)(b), 69C, 40(a)(ia) – Whether the disallowance is warranted u/s 40(a)(ia) for non-deduction of tax on interest payment by the assessee to a concern covered u/s 40A(2) though the assessee has explained that there is no taxable income of the corporation.
Reported in (2011) 005 TaxCorp (A.T.) 25150 (MUMBAI)



15. M/s DECCAN ROADWAYS vs ADD. CIT
Dated : 07 January 2011
Section 40(a)(ia), 194C – Whether section 40(a)(ia) applies for non-deduction of tax at source on payments made to various truck operators / drivers when there is no contract with them and they are randomly taken on hire as per the requirement.
Reported in (2011) 005 TaxCorp (A.T.) 24591 (BANGALORE)



16. M/s VODAFONE ESSAR LTD vs ADDL CIT
Dated : 07 April 2011
S. 14A, 40(a)(ia), 80IA, 115JB, 143(3), 144C(13), 194C, 195, 220(6), 226(3) - Whether when Sec 80IA benefits are debatable, the Tribunal is right in granting conditional stay of high-pitch demand raised - Whether, to do justice to the cause of Revenue.
Reported in (2011) 005 TaxCorp (A.T.) 25137 (CHANDIGARH)



17. ACIT vs SMT KEYA SETH
Dated : 11 March 2011
S. 194C, 40(a)(ia) – Whether provisions of section 194C as introduced by Finance Act 2007 are retrospective.
Reported in (2011) 005 TaxCorp (A.T.) 24847 (KOLKATA)



18. M/s MUKESH TRAVELS CO vs ITO
Dated : 25 February 2011
S. 40(a)(ia), 194C – Whether section 194C is applicable to payments made to various vehicle owners from whom the assessee hired the vehicles alongwith the drivers which were further given by the assessee on hire to its clients – Whether the tax is to be deducted u/s 194I.
Reported in (2011) 005 TaxCorp (A.T.) 24927 (AHMEDABAD)



19. ACIT vs M/s PRESCO MEC AUTOCOMP
Dated : 18 February 2011
S. 37, 40(a)(ia), 40A(2)(b), 133(6), 194C – Whether disallowance is warranted for the freight and cartage expenses incurred in cash without rejecting the books of account only on the basis of surmises and presumptions – Whether the assessee is required to deduct TDS u/s 194C.
Reported in (2011) 005 TaxCorp (A.T.) 25068 (DELHI)



20. M/s NAGESH CONSTRUCTION (P) LTD vs ITO
Dated : 29 April 2011
S. 40(a)(ia), 144 – Whether TDS provisions are applicable where the outside job work charges are incurred on account of wages and site expenses.
Reported in (2011) 005 TaxCorp (A.T.) 25054 (DELHI)



21. NAYAK AND CO vs ACIT
Dated : 28 January 2011
S. 40(a)(ia), 194C – Whether TDS liability arises even if there is no contract between the assessee and the transporters which were arranged by consignors - Whether TDS u/s 194I is to be deducted on cold storage rental charges or u/s 194C.
Reported in (2011) 005 TaxCorp (A.T.) 24879 (KOLKATA)



22. CIT vs D RATHINAM
Dated : 01 February 2011
S. 40(a)(ia), 194C, 194I - Whether when Sec 194I came into being only from 2007, putting TDS liability on hiring of machinery, Revenue is right in insisting on tax deduction at source on miller and road roller charges for the prior period.
Reported in (2011) 005 TaxCorp (DT) 48347 (MADRAS)



23. M/s MATRIX GLASS AND STRUCTURES PVT LIMITED vs ITO
Dated : 28 January 2011
Section 40(a)(ia), 40A(3), 43A, 194C - Whether provisions of section 194C apply in cases where payments have been made to the truck owners for carrying goods - Whether provisions of section 40(a)(ia) are applicable only when amounts of expenses stand paid and not payable.
Reported in (2011) 005 TaxCorp (A.T.) 24629 (KOLKATA)


24. DCIT vs M/s INDRAPRASTHA POWER GENERATION CO LTD
Dated : 18 April 2011
S. 40(a)(ia), 139(1), 143(3), 271(1)(c) – Whether tax deducted at source from payments in March, but not deposited within the specified date would attract penalty or fall within the ambit of the retrospective amendment of 40(a)(ia)
Reported in (2011) 005 TaxCorp (A.T.) 25040 (DELHI)


25. Raja & Co. v. Commissioner of Income-tax (Central)
S. 40(a)(ia), r.w.s 263 - Interest, commission, etc., paid without deduction of tax at source - Assessment years 2005-06 and 2006-07. Whether since assessee had not deducted any tax at source while making payments to transport contractors, impugned order of Commissioner issued under section 263 for considering disallowance under section 40(a)(ia)
Reported in (2011) 005 TaxCorp (DT) 48858 (KERALA)