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TMI Blog2014 (11) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Assessing Officer in disallowing the claim of Transaction Charges of Rs. 12,72,440/- u/s 40(a)(ia) of the Income Tax Act, 1961 on the alleged plea that the company has not deducted the TDS u/s 194J, without appreciating the fact that the assessee had deducted the TDS u/s 194C of the Income Tax Act, 1961. On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has failed to appreciate the fact that the disallowances u/s 40(a)(ia) of the Income Tax Act, 1961 is to be made only in the even of non deduction of the TDS and not for short deduction of TDS. On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has erred in not following the decision of jurisdictional Tribunal, on which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia) can only be made when assessee has not deducted tax at all or after deduction has not been paid. Here in this case the assessee has deducted TDS, though under 194C, as the assessee was under a bona fide belief that tax was deductable u/s 194C and not u/s 194J. The controversy, whether the transaction charges are fee for technical services or not has been settled by the Bombay High Court in the case of Kotak Securities Ltd. much after the date of filing of return of the assessee, which was on 06.11.2009. Further he relied upon series of decisions of the Tribunal, wherein it has been consistently held that no disallowance u/s 40(a)(ia) can be made if there is a short deduction of tax or TDS has been deducted under different sections. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deduction has not been paid on or before the due date specified in 139(1). In other words, there are only conditions for disallowance u/s 40(a)(ia), firstly, tax which was deductable has not been deducted and secondly, after deduction has not been paid. If both the conditions are satisfied then only disallowance u/s 40(a)(ia) can be made. The section does not envisages that, if the assessee has deduced the tax under wrong provisions of the act or there is a short deduction of tax then also, it entails disallowance under section 40(a)(ia). There is nothing in the section to treat the assessee as defaulter for claiming a deduction, where there is a short fall in deduction. This proposition has been upheld by the Hon'ble Kolkata High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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