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Income Tax Appellate Tribunal, DELHI BENCH - ‘D’ NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI B.P. JAIN
This appeal by the assessee has been directed against the order of Ld. CIT(A)-1, Gurgaon dated 30th November, 2016 for assessment.
Year 2012-13 challenging the disallowance of Rs. 49,81,831/- on account of non deduction of TDS u/s 40 (a) (ia) of the I.T. Act.
The Assessing Officer noted the during the year assessee is running propriety business named as M/s. Yadav Travels had hired buses and paid hire charges amounting to Rs. 49,81,831/- without deducting tax at source. The entire amount was therefore disallowed.
Ld. CIT(A) dismissed the appeal of assessee because assessee has failed to deduct any TDS on this expenditure.
We have heard Ld. Representatives of both the parties and perused the material on record.
Ld. Counsel for assessee though raised several grounds of appeal, has restricted his argument to one point only that addition may be restricted to 30% of the total addition as per amendment in section 40(a)(ia) of the Act. In support of its contention he has relied upon order of the ITAT, Jaipur bench in the case of Shri Rajendra Yadav vs. ITO in assessment year 2007-08 dated 29th January, 2016 in which in para 6.1 and 7, the appeal of the assessee has been partly allowed on this issue. The same paras are reproduced as under :-
“6.1 Recently in the matter of P.M.S. Diesels 2015 59 taxmann.com 100 (Punjab & Haryana), Hon'ble Punjab & Haryana High Court had elaborately discussed the judgment passed by the Hon'ble Calcutta High Court and Hon'ble Gujarat High Court, Hon'ble Allahabad High Court and other judgments as available and thereafter has come to the conclusion that the provisions of section 40(a)(ia) are mandatory in nature and non compliance / non deduction of tax attracts disallowance of the entire amount . Having said so, we will be failing in our duty if we do not discuss the amendment brought in by the Finance (No.2) Act 2014 with effect from 1.4.2015 by virtue of which proviso to section 40(a)(ia) has been inserted, which provides that if any such sum taxed has been deducted in any subsequent year or has been deducted during the previous year but paid after the due date specified in sub- Page 2 of 4 section (1) of section 139, such sum shall be allowed as a deduction in computing the income of previous year, such sum shall be allowed as a deduction in computing the income of previous year, and further, section 40(a)(ia) has been substituted wherein the 30% of any sum payable to a resident has been substituted. In the present case, the authorities below has added the entire sum of Rs. 7,51,322/- by disallowing the whole of the amount. Though the substitution in section 40 has been made effective with effect from 1.4.2015, in our view the benefit of the amendment should be given to the assessee either by directing the Assessing Officer to confirm from the contractors, namely, M/s. Garvit Stonex, M/s. Chanda Marbles and M/s. Nidhi Granites as to whether the said parties have deposited the tax or not and further or restrict the addition to 30% of Rs. 7,51,322/-. In our view, it will be tied of justice if the disallowance is only restricted to 30% of Rs. 7,51,322/-. Accordingly, the appeal of the assessee is partly allowed in the above said manner.
In the result, appeal of the assessee is partly allowed.”
He has further submitted that said order has been followed by ITAT Jaipur Bench in the case of Smt. Sonu Khandelwal vs. ITO in dated 13th May, 2016. He has therefore submitted that disallowance may be restricted to 30% of the total disallowance. On the other hand Ld. DR relied upon orders of the authorities below.