TMI Blog2014 (4) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-4-2014 - Shri N.R.S. Ganesan and Shri B.R. Baskaran, JJ. For the Appellant : Shri V.M. Krishnakumar For the Respondent : Shri K.K. John, Sr DR ORDER N. R. S. Ganesan (Judicial Member).- This appeal of the assessee was disposed of by this Tribunal by order dated March 29, 2012. The assessee carried the matter before the High Court by way of appeal under section 260A of the Act. 2. The High Court, by judgment dated November 26, 2013, confirmed the order of this Tribunal holding that the assessee has to deduct tax under section 194-I of the Act and the provisions of section 194C are not applicable in respect of transactions between the assessee and the contractee. However, with regard to short deduction of tax, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to short deduction of tax was considered by this Tribunal elaborately in the case of Apollo Tyres Ltd. v. Deputy CIT in I. T. A. Nos. 31 and 74/ Coch/2010 and C. O. No. 2/Coch/2010, order dated May 29, 2013 (Cochin). After considering the provisions of section 40(a)(ia) of the Act and section 201 of the Act as also the relevant case law on the subject, the Tribunal has observed as follows : 8. We have considered the rival submissions on either side and also perused the material available on record. We have also carefully gone through the provisions of section 40(a)(ia) of the Act, which reads as follows : '(ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer to disallow any payment towards interest, commission or brokerage, fee for professional service, fees for technical service etc., on which tax is deductible at source under Chapter XVII-B and if such tax has not been deducted or after deduction has not been paid. 9. We have also carefully gone through the provisions of section 201(1A) which reads as follows : '(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub- section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,- (i) at one pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy of interest on the amount on which tax was not deducted whereas the Legislature has omitted to do so in section 40(a)(ia) of the Act. In other words, the provisions of section 40(a)(ia) does not enable the Assessing Officer to disallow any proportionate amount for short deduction or lesser deduction. 11. We have carefully gone through the judgment of the Andhra Pradesh High Court in the case of P. V. Rajagopal [1998] 233 ITR 678 (AP). While considering the provisions of section 201 which stood for the assessment years 1989-90 to 1993-94, the Andhra Pradesh High Court found that there is nothing in the section to treat the employer as the defaulter where there is a shortfall in the deduction of tax at source. For the purpose of conveni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f simple interest thereon referred to in sub-section (1A) shall be a charge upon all the assets of the person, or the company, as the case may be, referred to in sub-section (1) . . . This section has two limbs, one is where the employer does not deduct tax and the second where after deducting tax, the employer fails to remit it to the Government. There is nothing in this section to treat the employer as the defaulter where there is a shortfall in the deduction. The Department assumes that where the deduction is not as required by or under the Act, there is a default. But the fact is that this expression 'as required by or under this Act' grammatically refers only to the duty to pay the tax that is deducted and cannot refer to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Kolkata Bench of the Tribunal. 13. In view of the above, this Tribunal is of the considered opinion that section 40(a)(ia) does not envisage a situation where there was short deduction/lesser deduction as in case of section 201(1A) of the Act. There is an obvious omission to include short deduction/lesser deduction in section 40(a)(ia) of the Act. Therefore, this Tribunal is of the considered opinion that in case of short/lesser deduction of tax, the entire expenditure whose genuineness was not doubted by the Assessing Officer, cannot be disallowed. Accordingly, the orders of the lower authorities are set side and the entire disallowance is deleted. 6. In view of the above decision of this Tribunal in the case of Apollo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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