MANU BATRA,NOIDA vs. INCOME TAX OFFICER WARD 3, SAHARANPUR

That the learned CIT (A) NFAC failed to appreciate that the appellant had duly deducted and deposited tax at source during the current previous year; and therefore, in accordance with the proviso to section 40(a) (ia) of the Income tax act 1961, the said expenditure is mandatorily allowable in the year in which TDS is deducted and paid.

The learned CIT (A) NFAC erred in confirming an addition made purely on technical and procedural grounds, ignoring the fact that the expenditure is genuine, incurred wholly and exclusively for business purposes, and that tax has been duly deducted and deposited.

That the action Of the learned CITYA) NFAC in sustaining the disallowance has resulted in double taxation / double disallowance of the same expenditure, which is impermissible under law and contrary to the legislative intent of section 4Oa)ia): That the learned CIT(A)

NFAC judicial precedents, erred in settled not ecpensecdisallowedereidet has following that been held consistently year are allowable e uhderesection 4Ol)astendn earlier the of TDS: year payment of deduction and That the 8. order passed by the learned arbitrary, unsustainable in law CIT(A) NFAC is and liable to be quashed. bad therefore in facts, and Without prejudice, the learned 9 CIT(A) the Assessing Officer to NFAC erred in not directing allow the deduction in the current year after verification of TDS compliance; denying substantive relief on mere procedural thereby grounds. During proceedings before us the Ld. Counsel of the assessee 2 filed a synopsis which is reproduced as under has 1 Expenditure was disallowed in earlier year (AY 2023-2024) under section 4O(a)(ia) due to non- deduction of TDS: 2. Invoices of such expenses received in relevant year under appeal.

TDS was subsequently deducted and deposited during the relevant previous year (2024-2025).

In terms of the proviso to section 4O(a)ia), deduction becomes mandatorily allowable in the year of TDS payment disallowed the claim while 5. CPC wrongly processing return under section 143(1), despiteethe detailed factual and legal issue requiring examination. in double 6, The impugned adjustment results expenditure and defeats disallowance of the same legislative intent of section scheme and the very 40(a)(ia). is fully covered in favour of the 7. The issue by judicial precedents including: appellant CIT u. Calcutta Export Company CIT v. Virgin Creations 8. Accordingly; the impugned disallowance deserves to be deleted in entirety: 3 Per contra the Ld. DR relied on the order of the authorities below. 4 We have considered the findings given by the Ld. CIT(A) in his order and we have also considered the brief synopsis as well as argument of the Ld. DR on the issues We find that in this case since tax was not deducted during the relevant previous year. Accordingly, expenditure was disallowed in the earlier assessment year i.e.2023- 24 u/s. 4O(a)(ia) of the Act: Subsequently, during the previous year to the assessment year under appeal 2024-25, the appellant duly deducted TDS and deposited with the Central Government and claimed the deduction of the said expenditure in the year in which TDS was actually deducted and deposited: However while processing the return u/s. 143 (1) of the Act the CPC Bangalore disallowed the claim: In appeal the Ld. CIT(A) also confirmed to the order of the CPC Bangalore. We find that the expenditure on which TDS was claimed u/s. 4Oa(ia) of the Act was already disallowed by revenue in the assessment year 2023-24 but in the A.Y. 2024-25 the assessee deducted TDS deposited when it with the Central the action was disallowed. Government Thus, it has become a case double disallowance of the same expenditure once in 2023-24 and of Year 2024-25. It financial cannot be done twice as the same expenditure can be disallowed only once_ Keeping in view this principle in mind we are of this view that the action of the CPC Bangalore and the Ld. CIT(A) cannot be accepted. Assessee's appeal on this issue is allowed: 5 . In the result, the appeal filed by the assessee is allowed. Order pronounced in the court on 9 4.09.2026. Gc (- S8l - [SATBEER SINGH GODARA] JUDICIAL MEMBER Dated: 94.09.2026 Neha, Sr. PS