TMI Blog2010 (6) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... ent by : Shri S S Rana ORDER PER VIJAY PAL RAO,JM 1. This appeal by the assessee is directed against the order dated 12.10.2009 of CIT(A)-33, Mumbai arises from giving effect order dated 7.8.2009 passed by the AO in consequence of the direction given by the CIT(A) order dated 31.03.2009 passed under section 154 for the assessment year 2005-06. 2. The assessee has raised following ground in this appeal: 1. The learned CIT(A) has erred in confirming the action of the AO in restricting the relief arising out of the proviso to section 40(a)(ia) at Rs.23,28,567/- instead of Rs.2,83,43,188 as claimed by the appellant; 2. The learned CIT(A) has erred in concluding that the appellant has interpreted the proviso to section 40(a)(ia) to suit his convenience.; 3. In the alternative and without prejudice to the above the learned CIT(A) erred in rejecting the contention of the appellant that the entire tax was deductible in March i.e. the last month of the previous year in respect of the entire sum of Rs.2,83,43,188 and thus the proviso squarely applied in respect of that sum. 4. The ld. CIT(A) erred in not appreciating that the method of accounting of crediting in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly in compliance with the said section and after making the proper verification as available before him. While giving effect to the order, the AO has given a finding that the actual payment made /credited in respect of those parties in the Month of March only of Rs. Rs.2,83,43,188/ and rest of the amount was paid before the month of March, 2005 during he Financial Year relevant to the assessment year under consideration. Therefore, the AO has allowed the deduction only to the extent of Rs..2,83,43,188/- and maintained the disallowance of the balance expenditure. 6. On further appeal, the CIT(A) confirm the addition made by the AO vide impugned order. 7. Before us, the learned AR of the assessee has submitted that the provision of section 194C are relevant only to the extent of ascertaining the deductibility of the tax on certain payment and not the actual deduction and deposit of the tax. The condition for actual deduction and deposits are prescribed u/s 40(a)(ia) for disallowing the expenditure. He has referred the sub-clause A and B of clause (ia) of sub-section (a) of section 40 and submitted that when the tax was deducted during the last month of previous year the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(a)(ia) is only in the case when the tax was deductible and deducted in the last month of the previous year which means when the tax is deductible and deducted on the close of the accounting year the same can be deposited on or before the due date of filing of the return of income under section 139(1). If it is deductible and deduced prior to the month of March then has to be deducted before the end of last month of the previous year. Section 40(a)(ia) of the Act has deterrent to the assessee to ensure timely deposits of TDS in the government treasury. As far as the time of payment of deposit of the tax, the same is relaxed under the provisions of section 40(a)(ia) but deductibility and time of deduction is provided under the provisions of section 194C and other provisions of Chapter XVII of the Act. Therefore, when the assessee in the case in hand has not deduced the tax in time and thereafter also not deposited in time from the date when it was to be deducted the provisions of section 40(a)(ia) are attracted and the expenditure so made without compliance of Chapter XVII are to be disallowed. He has relied upon the orders of the lower authorities. He has also relied upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [(i) (ia) any interest, commission or brokerage, [rent, royalty,] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, [has not been paid, (A) in a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in sub-section (1) of section 139; or (B) in any other case, on or before the last day of the previous year:] [ Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted (A) during the last month of the previous year but paid after the said due date; or (B) during any other month of the previous year but paid after the end of the said previous year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.] Explanation. For the purposes of this sub-clause, (i) commission or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction and payment prescribed u/s Chapter XVII/XVIIB are applicable for disallowance of the deduction 40(a)(ia) then the provisions of section 40(a)(ia) will be rendered as meaningless, absurdity and etios. As per the provisions of section 40(a)(ia) the deduction is disallowed only in the case when either no tax was deducted or it was not paid after deduction. But when the tax is deducted may be belatedly and deposited belatedly then deduction is allowable in the previous year in which it was so deposited. Therefore, if the provisions of section 194C with respect to the time of deduction and payments are applied for the disallowance u/s 40(a)(ia) then there will be no purpose or object for providing the certain conditions of actual deduction of tax and payment of tax u/s 40(a)(ia). In our view, the provisions of chapter XVII are relevant only for ascertaining the deductibility of the tax at source and not for the actual deduction and payment for attracting the provisions of section 40(a)(ia). Since in the case in hand when the assessee had deducted the tax in the last month of the previous year i.e March 2005 and deposited the same before the due date of filing of the retun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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