TMI Blog2012 (4) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... of TDS before due date of filing of return - Held that:- Assessee has made the provision for such payment of tax at the end of the year, it is to be presumed that there is an arrangement for paying tax free income to the labourers – tax deducted at source at the end of the year can be deposited before the due date of filing of the return of income as decided in co-ordinate Bench of the Tribunal at Mumbai in the case of Bapu Saheb Nanasaheb Dhumal v. ACIT (2010 - TMI - 204337 - ITAT MUMBAI ) given a finding that Sec.40(a)(ia) cannot be invoked if the assessee remitted the TDS within the due date of filing of the return prescribed u/s 139(1) of the IT Act - appeal of the revenue dismissed. - IT Appeal No. 660 (Bang.) of 2011 - - - Dated:- 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee on 08-03-2007. Thereafter the assessee's return was selected for scrutiny and during the assessment proceedings u/s 143(3) of the IT Act various details were called for. In response to notice issued by the AO the assessee appeared and produced the books of accounts and also furnished the details called for. During the course of assessment proceedings, the AO observed that the assessee had claimed Rs. 41,762/- as tax deducted at source in his profit and loss account without actually deducting the same from the payments and when this was pointed out to assessee's representative, the representative of the assessee requested to disallow the same and therefore, the AO disallowed the same and added it to the total income of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges monthly/periodically to the recipients, but has failed to deduct tax at thereon and therefore, the provisions of Sec.40(a)(ia) are attracted. With regard to the ruling of the Tribunal at Mumbai Bench, he has stated that the said decision has not reached the finality and therefore, he does not accept the contention of the assessee. He accordingly, disallowed a sum of Rs. 18,80,085/- and added to the total income of the assessee. Aggrieved, the assessee preferred an appeal before the CIT(A) reiterating the submissions made before the AO and also placed reliance upon the provisions of Sec.195A of the IT Act. 3. After considering the assessee's contentions the CIT(A) observed that the assessee has made payments towards labour charges t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to him, the CIT(A) has erred in accepting the assessee's contention that the assessee has deducted tax at source in March 2008, whereas the assessee in fact had made the provision from its own account and has not deducted tax from the payments. Thus, according to him, the order of the CIT(A) has to be set aside and the order of the AO has to be restored. 5. The learned counsel for the assessee Shri S. Ranganath, on the other hand, supported the order of the CIT(A) and also drew our attention to the provisions of Sec.40(a)ia) and sub-clause A of clause-(ia) thereof wherein it has been held that in the case where the tax was deductible and so was deducted during the last month of the previous year on or before the due date specified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where under an agreement or other arrangement, the tax chargeable on any income referred to in the foregoing provisions of this Chapter is to be borne by the person, by whom the income is payable, then for the purposes of deduction of tax under those provisions such income shall be increased to such amount as would, after deduction of tax thereon at the rates in force for the financial year in which such income is payable, be equal to the net amount payable under such agreement or arrangement. Sec.40(a)(ia) provides that where any amount payable to a contractor for carrying out any work is paid without deducting tax at source under Chapter-XVII(B) and also even after deduction it has not been paid on or before the due date specified in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agreement or arrangement to pay the income-tax by the prayer itself. In the case before us, the assessee has not stated anywhere that the labour charges to be paid are agreed to be paid tax free or that the assessee has to bear the taxes. Another aspect of the issue before us is where the assessee has paid the TDS amount into the account of the Government before the due date of filing of the return, whether the disallowance u/s 40(a)(ia) is called for. In the provisions of Sec.195A, there is reference to agreement or arrangement for the payment of tax free income. However, it is not clear as to whether such an agreement or arrangement has to be in writing. In the absence of specific provision for the arrangement or agreement to be in writ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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