M/S. MALHOTRA CABLES PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

Heard both the parties at length. Case file perused.

It emerges during the course of hearing that the assessee’s first and foremost substantive ground raised herein challenges correctness of both the learned lower authorities’ action invoking section 40(a)(ia) disallowance on account of non-deduction of TDS on various revenue expenditure payments made during the previous year 2008-09 herein. Learned Malhotra Cables Pvt. Ltd. 2 counsel vehemently submits that the impugned disallowance ought to be made only for the expenditure items which remained “payable” than those which stood “paid” as on 31.03.2009. We are afraid that the assessee’s instant first substantive ground hardly carried any merits once hon’ble apex court’s landmark decision in Palam Gas Service vs. CIT (2017) 81 taxmann.com 43 (SC) has already settled the issue in department’s favour that the impugned disallowance provision includes both paid as well as payable expenditure items during the relevant previous year. We thus reject the assessee’s instant first and foremost substantive ground in very terms.

Our attention is next invited to the assessee’s revised/additional ground(s) wherein it pleads that an expenditure of Rs.4,06,950/- never required to be subjected to any TDS deduction. Both the parties vehemently reiterate their respective stands. We do not find any clarity on the instant issue from the case records as to how the assessee was not liable to deduct any TDS on the impugned payments of Rs.4,06,950/- and therefore, both the learned authority’s action invoking section 40(a)(ia) disallowance is hereby affirmed.

Learned counsel’s third argument as per the assessee’s pleadings is that the latter had already deducted TDS in respect Malhotra Cables Pvt. Ltd. 3 of it’s expenditure claim amounting to Rs.59,438/- and therefore, the impugned disallowance to this effect deserves to be deleted. We are of the considered view that the instant issue more requires the learned Assessing Officer’s factual verification so as to ensure that there is no double disallowance/addition in very terms. The assessee’s instant additional/revised ground to this effect is restored back to the learned assessing authority subject to a rider that the taxpayer shall plead and prove all the relevant facts, in consequential proceedings, within three effective opportunities at it’s own risk and responsibility. This third/additional revised ground is accordingly accepted for statistical purposes.

Learned counsel’s last argument during the course of hearing is that in light of the statutory amendment u/s 40(a)(ia) by way of second proviso inserted by the Finance Act, 2012 w.e.f. 01.04.2013 that the impugned section 40(a)(ia) disallowance is not sustainable once the taxpayer herein does not happen to be the assessee is in default in light of section 201(1) 1st proviso. We are afraid that the assessee’s instant last ground also does not carry any merit since not satisfying the corresponding condition in sub-clauses (i) & (iii) wherein a certificate from an accountant representing the payee concerned is required to be submitted. We thus reject the assessee’s instant last ground as well in very terms. Malhotra Cables Pvt. Ltd. 4

1 No other ground or arguments has been pressed before us during the course of hearing.

This assessee’s appeal is partly allowed in above terms. Order Pronounced in the Open Court on 21/01/2025. (S. Rifaur Rahman) (Satbeer Singh Godara) Accountant Member Judicial Member