SMT. ASHA CHAWLA,NEW DELHI vs. ACIT, NEW DELHI

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ITA 3220/DEL/2015Status: DisposedITAT Delhi10 August 2016AY 2010-113 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 disallowance under Section 40(a)(ia) could not be made as there was no amount payable by the assessee towards audit fee and professional charges as on the relevant date, relying on High Court and Tribunal Special Bench decisions.

What were the facts?

The assessee appealed an order regarding disallowance of legal expenses for non-deduction of TDS. The Revenue did not appear for the hearing, leading to an ex parte decision.

What were the issues?

Whether disallowance under Section 40(a)(ia) is justified when no amount was payable as on the balance sheet date for expenses on which TDS was not deducted.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-3’, NEW DELHI

This is an appeal filed by the assessee directed against the order of Ld.CIT(Appeals)-XX, New Delhi dated 23.2.2015 pertaining to the Assessment Year (A.Y.) 2010-11.

2.

No person is present in the Court on behalf of the Revenue. The Revenue has filed an application for adjournment of all the cases which are on board today on the ground that “Sr.D.R. is not available”. I am informed that, for the entire week, the department would be seeking adjournments in all the cases posted before this SMC Bench on the same ground. Under the circumstances, as the Bench cannot be allowed to collapse, I reject some of these applications filed by the Revenue for adjournments and dispose of the case ex parte qua the Revenue on merits.

3.

Heard Shri Somil Aggarwal, Ld.Counsel for the assessee.

4.

There are in all 5 grounds raised in this appeal. The Ld.Counsel for the assessee argued ground no.2 only which reads as follows.

2. That having regard to the facts and circumstances of the case, Ld.CIT(A) has erred in law and on facts in not deleting the disallowance of Rs.6,02,500/- fully as made by AO u/s 40(a) (ia) of the Income Tax Act, 1961 (the Act) on the ground TDS has not been deducted on payment of legal expenses and has further erred in sustaining the same to the extent of Rs.5,75,000/-.

5.

After hearing the ld.Counsel for the assessee I hold that the disallowance cannot be made in view of the decision of Hon’ble Allahabad High Court in the case of CIT vs. Vector Shipping 357 ITR 642 (All) and the decision of the Vizag Special Bench of the Tribunal in the case of Merilyn Shipping and Transport vs. ACIT (2012) 16 ITR (Tribunal)/ 146 TTJ 1 (SB) (Vizag) as there is no amount payable by the assessee towards audit fee and professional charges as on 31st March, 2010.

6.

In the result ground no.2 of the assessee is allowed.

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