DEPOSIT INSURANCE & CREDIT GUARANEEE CORPORATION ( DICGC),MUMBAI vs. ADDL CIT LTU, MUMBAI

At the time of hearing, the ld. Counsel appearing for the assessee did not press grounds numbered as 1,2 and 3 and hence, they are dismissed as not pressed. The remaining grounds relate to the Rs.13,58,086/- made under section 40(a)(ia) of the Income Tax Act, 1961.

The ld. Counsel submitted that the assessee has duly deducted tax at source from the impugned payment, being transaction charges, and has also duly remitted the same within the due date prescribed under the Act. However, while filing explanation before the AO, the assessee wrongly filed a letter relating to assessment year 2006-07, wherein the assessee had taken a stand that the amount paid as transaction charges to Clearing Corporation of India Limited (CCIL) is not liable for deduction of tax at source. The AO accordingly made disallowance u/s 40(a)(ia) of the Act by following the orders passed by him in the earlier years. However, the AO failed to note that the assessee had deducted and remitted the TDS on transaction charges paid to CCIL during the instant year. The ld. CIT(A) also confirmed the disallowance by placing reliance on the letter relating to AY 2006-07 filed by the assessee during the course of assessment proceedings. He submitted that the facts remain that the assessee has actually deduced tax at source from the amount of transaction charges paid to CCIL and hence, the disallowance made u/s 40(a)(ia) of the Act is liable to be deleted.

The ld. DR submitted that the submissions made by the ld.AR require verification at the end of the AO.

Having heard the rival submissions, we are of the view that this issue requires fresh examination at the end of the AO, since the assessee has claimed that it has duly deducted tax at source from the amount of transaction charges paid to CCIL and also remitted the same. We notice that this fact has escaped the attention of the tax authorities and the assessee has also failed to bring the same on record during the course of assessment proceedings. Accordingly, we set aside the order of the ld. CIT(A) on this issue and restore the same to the file of the AO with a direction to examine this issue afresh by duly considering the evidences with regard to the deduction and remittance of tax at source/ explanations that may be furnished by the assessee and take appropriate decision in accordance with law.

In the result, appeal of the assessee is treated as allowed for statistical purposes.