K.SELVARAGHAVAN,CHENNAI vs. ITO NON CORPORATE WARD-20(5), CHENNAI

The only issue in this appeal of assessee is as regards to the order of CIT(A) in confirming the disallowance made by A.O of Rs. 18,02,305/- being amount on which TDS was remitted during the year under consideration and claimed to have been allowed under the first proviso to Sec.40(a)(ia) of the Act.

I have heard the rival contentions and gone through the facts and circumstances of the case. Brief facts of the case are that the assessee is a Film Producer, Distributor and Director. The assessee has claimed expenditure of Rs. 91,31,357/- during A.Y 2010-11, on which no TDS was deducted by the assessee and hence, in that year disallowed the same. Out of the above, disallowance made by A.O for want to TDS u/s. 40(a)(ia) of the Act, a sum of Rs. 18,02,305/- being professional fee/contract amount, on which the assessee now paid TDS in A.Y 2012-13 i.e., the relevant Assessment Year and claimed in the revised return of income filed on 30.03.2013 i.e., within the time limit prescribed u/s. 139(5) of the Act. The A.O disallowed the claim for the reason that the original return was filed belatedly and hence, revised return cannot be accepted. Aggrieved, the assessee preferred appeal before CIT(A). The CIT(A) also confirmed the action of the A.O.

I noted the facts that the assessee initially claimed an expenditure of Rs. 91,31,357/-, which was disallowed u/s. 40(a)(ia) of the Act in A.Y 2010-11 for non deduction of TDS. Out of the above, the assessee paid a sum of Rs. 18,02,305/- being professional fee and contract work. On which, the assessee paid TDS in this year and claimed this expenditure because it was disallowed in A.Y 2010-11. Now, in view of the second proviso to Sec.40(a)(ia) of the Act, the amount has to be allowed in which year the assessee has actually remitted the amount of TDS. Hence, I find that the assessee has genuine case and even during assessment proceedings this information was available with the A.O because the assessee filed revised return and in revised return he has filed all the details before completion of assessment. Even though, the A.O claimed that original return filed was not in time, without considering the revised return, the A.O while completing assessment could have taken this information on record and could have allowed the claim of deduction. In view of the above, I direct the A.O to delete the addition and allow the appeal claimed by the assessee. :- 4 -:

In the result, the appeal of the assessee is allowed.