TMI Blog2011 (2) TMI 1430X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. The disallowance is simply made either for non-deduction of TDS in view of provisions of Section 040(a)(ia) or non-payment of TDS deducted to the govt. exchequer. In view of the above discussion, that the legal fiction created by Section 040(a)(ia) will not apply to the provisions of Section 271(1)(C), the disallowance made simply by invoking the provisions of Section 040(a)(ia) will not attract penalty for furnishing of inaccurate particulars of income because there is no inaccurate particulars of income in the return. Accordingly, we confirm the order of CIT(A) deleting the penalty and this issue of the Revenue s appeal is dismissed. - Shri Mahavir Singh, Judicial Member and Shri A.N.Phauja, Accountant Member For the Appellant: - Shri G.S. Suryavanshi, SR-DR For the Respondent: - Smt . Art i N Shah, AR O R D E R PER SHRI MAHAVIR SINGH, JUDICIAL MEMBER:- This appeal by Revenue is arising out of the order of Commissioner of Income-tax(Appeals)-XV, Ahmedabad in appeal No.CIT(A)-XV/DCIT (OSD / Cir.9/69/08-09 dated 15-09-2010. The assessment was framed by DCIT (OSD), Circle-9, Ahmedabad u/s.143(3) of the Income-tax Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h TDS was made the same was not deposited into government account was not disallowed voluntarily and added back to the total income, in view of Section 40(a)(ia) of the Act and a show cause notice u/s.271(1(c) of the Act was issued on 26-12-2007. In reply to show cause notice the assessee vide letter dated 12-06-2008 filed detailed submissions before Assessing Officer and the relevant portion of the said reply is reproduced as under:- In this connection we submit that we have neither concealed any income nor furnished inaccurate particulars. We submit as under, 1. We had already submitted the details of TDS along with our tax audit report. 2. Also this harsh provisions of section 40(a)(ia) came into effect from A.Y 2005-06 and even recent circular has allowed some concession against said provisions. 3. The amount of TDS is only ₹ 18,115/- and we had already paid the same amount before due date of return. In view of the facts and circumstances of the case, we request you that the return of income can not be stated to be false unless there is an element of deliberateness in it. It is possible that if the incorrectness of the return is due to harsh pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal. 4. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the facts are undisputed that the assessee had deducted TDS of ₹ 18,115/- from gross contract payment to carting contractor of ₹ 5,58,404/- but the same was not deposited into govt. exchequer before expiry of time prescribed under sub-section 1 of Section 200 of the Act. The assessee has deducted this amount on which the TDS has been made in view of section 40(a)(ia) of the Act but not deposited into government exchequer within specified time, is not allowable as deduction while computing the income chargeable under the head profit gains of business or profession for the year. We find from the orders of the lower authorities that there is no allegation that the payment of catering expenses on which TDS is deducted but not paid to Govt. exchequer is non-genuine or bogus. It is also a fact that the lower authorities have not brought anything or not disputed that the payment is excessive or unreasonable. The disallowance is simply made either for non-deduction of TDS in view of provisions of Section 40(a)(ia) of the Act or nonpayment of TDS deducted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troduced in one enactment cannot be incorporated in another enactment. The point that legal fiction cannot be extended to a new field was highlighted by Hon'ble Madras High Court in CIT v. Rajam T.S, (19SS) 125 ITR 207(Mad,) wherein it is held that section 41(2) creates a legal fiction under which the balancing charge is treated as business income chargeable to tax but when this amount is distributed to shareholders then it would not become deemed dividend and it would be only a capital receipt and not distribution of accumulated profits. Thus, a legal fiction was invoked in the hands of the assessee company and was not extended in the hands of the shareholders. Similarly, this Tribunal in the case of ITO v. Harley Street Pharmaceuticals Ltd. in ITA No.2492/Ahd/2007 vide order dated 16-03-2010 has interpreted Section 50C by stating that In the present case, section 50C creates a legal fiction for taxing capital gains in the hands of the seller and it cannot be extended for taxing the difference between apparent consideration and valuation done by Stamp Valuation Authorities as undisclosed investment U/s 69. In fact, section 69 itself is a legal fiction whereby investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f transfer of capital assets for the purposes of computation of capital gains u/s.48 of the Act. We further find that there is no evidence on record to show that the consideration over and above, what has been recorded in the sale deed, has been made by the assessee and in the absence of the same, no addition of undisclosed investment can be made by invoking the provision of Section 69B of the Act. 5. In the present case before us, the facts are undisputed that the assessee had deducted TDS from gross contract payment to carting contractor but the same was not deposited into govt. exchequer before expiry of time prescribed under subsection 1 of Section 200 of the Act in view of section 40(a)(ia) of the Act. We find that this is not allowable as deduction while computing the income chargeable under the head profit gains of business or profession for the year. We find from the orders of the lower authorities that there is no allegation that the payment of catering expenses on which TDS is deducted but not paid to Govt. exchequer is non-genuine or bogus. It is also a fact that the lower authorities have not brought anything or not disputed that the payment is excessive or unr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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