“short deduction of TDS”
The decision most relied on for short deduction of TDS is CIT v. Ansal Landmark Township (P.) Ltd. (61 Taxmann.com 45), cited in 177 judgments on BharatTax.
Leading authorities on short deduction of TDS
Disallowance under section 40(a)(ia) cannot be made when the assessee has deducted tax at a lesser rate, as opposed to no deduction. The second proviso to section 40(a)(ia) is applicable retrospectively, mitigating disallowance where tax is deposited by the recipient.
The deduction of tax at source under section 192 is not to be considered short if the employer makes a bona fide estimate of the taxable salary income of the employee.
Section 40(a)(ia) of the Income Tax Act does not apply to disallow expenses when there is a short deduction of tax at source. This includes situations where TDS is deducted at a lower rate than required or under an incorrect section.
Interest under Section 234B is generally not leviable on non-residents whose income is subject to tax deduction at source under Section 195, provided the non-resident assessee did not induce short or non-deduction of TDS by the payer.
Interest levied for delayed payment or short deduction of TDS is not an allowable business expenditure.
An assessee is required to deduct tax at source on reimbursements, even if the assessee acted under a bona fide belief that such reimbursements were exempt.
Section 40(a)(ia) is not applicable where tax has been deducted at source, even if at a lower rate than required, due to a difference in opinion regarding the nature of the payment.
Disallowance under Section 40(a)(ia) of the Income Tax Act for short deduction of TDS is not permissible if tax has been deducted, even if under a bona fide wrong impression of the correct TDS provision.
