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2011 (10) TMI 10 - ITAT, KOLKATA
Machine Hire Charges or payment to subscontractors - TDS u/s 194I or 194C - Assessee deducted tax @1% - AO considering that TDS was required to be deducted u/s 194I, disallowed expenses u/s 40(a)(ia) - Held that:- CIT(A) after verifying records and explanation submitted by assessee reached to a conclusion that payments are in the nature of contract payments made to sub contractors. - even revenue could not controvert the same. - Decided in favor of assessee.
Disallowance u/s 40(a) - Held that:- the conditions laid down u/s. 40(a)(ia) of the Act for making addition is that tax is deductible at source and such tax has not been deducted. If both the conditions are satisfied then such payment can be disallowed u/s. 40(a)(ia) of the Act but where tax is deducted by the assessee, even under bonafide wrong impression, under wrong provisions of TDS, the provisions of section 40(a)(ia) of the Act cannot be invoked.