PELICAN ESTATES AND DEVELOPERS,CHENNAI vs. ACIT, CHENNAI
What did the Tribunal hold?
The Tribunal found that the matter required verification by the Assessing Officer to ascertain if the recipient had paid taxes on the amount. Accordingly, the disallowance was set aside and remitted back for reconsideration.
What were the facts?
The assessee's appeal concerns the disallowance of ₹8,00,000/- under Section 40(a)(ia) of the Income-tax Act for non-deduction of tax at source. The assessee contended that the recipient had already paid the tax on the amount received.
What were the issues?
Whether disallowance under Section 40(a)(ia) is warranted when the recipient has already paid tax on the income, and the need for verification of such payment by the Assessing Officer.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S. SUNDER SINGH
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 2, Chennai, dated 31.03.2016 and pertains to assessment year 2012-13.
Sh. B. Ramakrishnan, the Ld. representative for the assessee, submitted that the only issue arises for consideration is disallowance of ₹8,00,000/- under Section 40(a)(ia) of the Income- tax Act, 1961 (in short 'the Act'). According to the Ld. representative, the recipient has already paid the tax, therefore, there cannot be any disallowance. The Ld. representative further submitted that the matter may be remitted back to the file of the Assessing Officer to verify whether the recipient has paid the tax on the amount paid by the assessee.
We have heard Shri Murali Mohan, the Ld. Departmental Representative also. The Ld. D.R. submitted that whether the recipient paid taxes or not need to be verified, therefore, the matter may be remitted back to the file of the Assessing Officer.
We have considered the submissions on either side and perused the relevant material available on record. The Assessing Officer disallowed ₹8,00,000/- under Section 40(a)(ia) of the Act for non-deduction of tax at source. The assessee now claims that the recipient has already paid taxes on the amount paid by the assessee, therefore, there cannot be any disallowance. However, the matter needs to be verified by the Assessing Officer. Accordingly, the orders of lower authorities are set aside and the disallowance of ₹8,00,000/- under Section 40(a)(ia) of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall reconsider the issue and verify whether the tax was paid by the recipient on the amount received from the assessee and thereafter decide the issue, in accordance with law, after giving a reasonable opportunity to the assessee.
Order pronounced on 27th December, 2016 at Chennai.
More judgments on Section 40(a)(ia)
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- Cdg Petchem Limited, Hyderabad vs ITO, Ward - 1(1), HyderabadITA 1900/HYD/2025[2018-2019]Status: Disposed16 Oct 2026AY 2018-2019
- M/S. Shree Laminators Ltd., Kolkata vs DCIT, Circle 4(4), KolkataITA 1534/KOL/2026[2011-2012]Status: Disposed15 Oct 2026AY 2011-2012
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1493/KOL/2026[2015-2016]Status: Disposed15 Oct 2026AY 2015-2016
- J.D. Marketing, Kolkata vs ITO, Ward 37(1), KolkataITA 1492/KOL/2026[2013-2014]Status: Disposed15 Oct 2026AY 2013-2014
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