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2018 (6) TMI 1798 - AT - Income TaxTDS u/s 194I - Disallowance u/s 40(a)(ia) - assessee did not deduct any tax at source from such rental payment - HELD THAT:- The essence of this provision is that if the payer has not made deduction of tax at source, but the payee has furnished his return of income u/s 139 by including the amount received from the assessee-payer, then the assessee shall be deemed to have deducted and paid tax on the date of furnishing of return of income by the payee and as such no disallowance u/s 40(a)(ia) will be made. Though this proviso has been inserted by the Finance Act 2012 w.e.f. 1.4.2013 but several courts have held it to be retrospective. In CIT vs. Ansal Landmark Township Private Limited [2015 (9) TMI 79 - DELHI HIGH COURT] has held that second proviso to section 40(a)(ia) is declaratory and curative in nature and has retrospective effect from 1.4.2005. On a conjoint reading of second proviso to section 40(a)(ia) and first proviso to section 201(1), it becomes graphically clear that if the payee has furnished his return of income under section 139 and has taken into account such sum paid by the payer for computing income in such return of income and has paid income tax thereon, then the payer cannot be treated as assessee in default. A fortiori, no disallowance under section 40(a)(ia) can be made in such circumstances. Adverting to the facts of the instant case, it is seen that the assessee paid a sum to Bharat Petroleum Corporation Limited. There can be question of suspecting that the BPCL did not include such rental income from the assessee in its return of income. It is, therefore, held that the case of the assessee is covered by second proviso to section 40(a)(ia) and hence the disallowance made cannot be sustained. I, therefore, order to delete the disallowance. This ground is allowed. Addition of cash handling expenses to certain persons - AO disallowed the same by holding that no evidence of incurring such expenses was furnished - CIT(A) echoed the disallowance - HELD THAT:- After considering the rival submissions and perusing the relevant material on record, it can be seen that the assessee paid cash handling charges to certain persons on monthly basis. Vouchers for such payments have been placed on record. Since such expenses were incurred during the course of business and were necessary for carrying on the business, in my considered opinion, the same should not have been disallowed, therefore, order to delete the addition.
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