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Facts
The assessee appealed against the CIT(A)'s order concerning proceedings under section 147 read with section 144B. The primary issue was the disallowance of salary expenses.
Held
The Tribunal found merit in the assessee's ground that the lower authorities erred in disallowing salary expenses. It was held that TDS is attracted where salary has accrued followed by actual payment, and disallowance was unjustified as TDS was only liable on actual payment.
Key Issues
Whether salary expenses are disallowable if TDS is deducted on the actual amount paid, despite the disallowance being made on a higher notional amount.
Sections Cited
147, 144B, 40A(ia), 192
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI
ORDER This assesseee’s appeal for assessment year 2020-21, arises against the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order No. ITBA/NFAC/S/250/2025-26/1083012489(1), dated 26.11.2025 involving proceedings under section 147 read with section 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
Learned counsel representing the assessee properly its sole substantive ground that both the lower authorities have erred in law and on facts in disallowing the impugned salary expenses of Rs. 65,24,654/- @ 30%; coming to Rs. 19,57,456/- despite the fact that it was liable to deduct TDS to the extent of the actual salary paid amounting to Rs. 21,39,840/- only.
That being the case, the Revenue could hardly dispute that the assessee had not actual paid the impugned salary over and above Rs. 21,39,840/- so as to deduct TDS going by CIT vs. Tej Quebecor Printing Ltd. (2006) 181 ITR 170 ( Delhi), wherein their lordships has settled the issue that section 192 of the Act gets attracted where the salary has accrued followed by actual act of payment. I thus find merit in the assessee’s install sole substantive ground to delete the impugned section 40A(ia) disallowance herein is very terms. No other ground or argument has been pressed.