LAMBENT ENGINEERING PVT LTD.,DELHI vs. ITO WARD 15(1), DELHI

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ITA 311/DEL/2026Status: DisposedITAT Delhi11 February 2026AY 2020-213 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's sole substantive ground had merit. It found that the lower authorities had erred in disallowing the impugned salary expenses. The Tribunal reasoned that the applicability of section 192 of the Act is triggered when salary has accrued and has been actually paid. The assessee had correctly pointed out that the TDS was liable to be deducted only on the actual salary paid, which amounted to Rs. 21,39,840/-. Therefore, the disallowance made under section 40A(ia) was deleted. The ratio decidendi is that the disallowance under section 40A(ia) for non-deduction of TDS on salary should be limited to the amount on which TDS was actually deductible based on payment, not on the entire amount claimed as salary if actual payment is lower. The appeal was allowed in terms of this finding.

What were the facts?

The assessee, Lambent Engineering Pvt. Ltd., is in appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 26.11.2025. This order pertains to assessment year 2020-21 and involves proceedings under section 147 read with section 144B of the Income-tax Act, 1961. The core of the dispute revolves around the disallowance of salary expenses amounting to Rs. 65,24,654/- by 30%, resulting in a disallowance of Rs. 19,57,456/-. The assessee contends that the Tax Deducted at Source (TDS) was liable to be deducted only on the actual salary paid, which was Rs. 21,39,840/-.

What were the issues?

1. Whether the lower authorities erred in law and on facts in disallowing salary expenses of Rs. 65,24,654/- by 30% (Rs. 19,57,456/-) under section 40A(ia) of the Act, when the TDS was only deductible on the actual salary paid amounting to Rs. 21,39,840/-? Assessee's Contentions: The assessee argued that the disallowance of salary expenses by 30% was incorrect. They contended that TDS liability under section 192 of the Act is attracted only where salary has accrued followed by actual payment. Since the actual salary paid was Rs. 21,39,840/-, the TDS should have been calculated and deducted on this amount only. They relied on the decision in CIT vs. Tej Quebecor Printing Ltd. (2006) 181 ITR 170 (Delhi). Revenue's Contentions: The judgment does not record any specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 40A(ia),Section 192

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI

For Respondent: DR (Through
Hearing: 11.02.2026Pronounced: 11.02.2026

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.

2.

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.

3.

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.

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