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2014 (11) TMI 1054 - AT - Income TaxTDS u/s 194C OR 194J - transaction charges - u/s 40(a)(ia) - short deduction of tds - Held that:- The conditions as laid down u/s 40(a)(ia) for making the disallowance is that, the tax on the amount paid or payable which is deductible at source under chapter XVII B and such a tax, has not been deducted or after deduction has not been paid on or before the due date specified in 139(1). There are only conditions for disallowance u/s 40(a)(ia), firstly, tax which was deductable has not been deducted and secondly, after deduction has not been paid. If both the conditions are satisfied then only disallowance u/s 40(a)(ia) can be made. The section does not envisages that, if the assessee has deduced the tax under wrong provisions of the act or there is a short deduction of tax then also, it entails disallowance under section 40(a)(ia). There is nothing in the section to treat the assessee as defaulter for claiming a deduction, where there is a short fall in deduction. This proposition has been upheld in the case of CIT Vs. S.K. Tekriwal reported in (2012 (12) TMI 873 - CALCUTTA HIGH COURT). In this case the assessee has deducted tax u/s 194C instead of 194J, the Hon’ble High Court held that the expenses cannot be disallowed u/s 40(a)(ia) merely on account of short deduction of tax at source. Similar view has been taken by the Co-ordinate Benches in the cases relied upon by the learned counsel, which has been referred in the foregoing para. Accordingly, we hold that no disallowance u/s 40(a)(ia) can be made merely because assessee has deducted TDS under section 194C instead of section 194J. - Decided in favour of assessee
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