TMI Blog2019 (7) TMI 1665X X X X Extracts X X X X X X X X Extracts X X X X ..... that the provisions of section 40a(ia) have two limbs; one is where, inter alia, the assessee has to deduct tax and second where after deducting tax, inter alia, the assessee has to pay the same into government account. The Hon ble High Court of Calcutta went to observe that there was nothing in the said section to treat, inter alia, the assessee as defaulter where there is a shortfall in deduction and further, section 40a(ia) refers only to the duty to deduct tax and pay to government account. Undisputedly, in the present appeal also, there is no allegation that the tax deducted was not paid into the government account and the only fault of the assessee is the failure on its part to deduct tax at the prescribed rate. This, as per the judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 40(a)(ia) disallowance of expenditure cannot be made if there is a short deduction of TDS. 5. That the CIT (Appeals) failed to consider that Tax deducted at source is a vicarious - liability. Therefore, expenditure cannot be disallowed and appellant cannot be treated as assessee in default since the tax liability has been discharged by the payee. 6. That that the disallowance u/s 40(a)(ia) is illegal and bad in law and has been wrongly upheld by the C1T (A). In any case, in view of the proviso added by the Finance Act 2012, the assessee could not be treated as assessee in default and the disallowance is not sustainable and is liable to be deleted 7. Without prejudice to above, the CIT (Appeals) in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany paid license fees amounting to ₹ 3,56,56,068/- to various parties after deducting tax at source at the rate of 10%. However, in case of SRK Travel and Tour, the tax at source was deducted as 2% instead of 10% amounting to ₹ 24,00,000/-. The copies of agreements entered into by the assessee with various persons were also filed. The assessee deducted TDS u/s 194-I in respect of license fee paid to some parties whereas in case of SRK Travels and tour it claims that payments are not covered u/s 194-I. Thus the Assessing Officer made disallowance u/s 40(a)(ia) amounting to ₹ 19,20,000/-. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt account. The Hon ble High Court of Calcutta went to observe that there was nothing in the said section to treat, inter alia, the assessee as defaulter where there is a shortfall in deduction and further, section 40a(ia) refers only to the duty to deduct tax and pay to government account. Undisputedly, in the present appeal also, there is no allegation that the tax deducted was not paid into the government account and the only fault of the assessee is the failure on its part to deduct tax at the prescribed rate. This, as per the judgment of the Hon ble High Court of Calcutta, does not attract disallowance u/s 40a(ia) of the Act. We also note that a similar view has been taken by the ITAT Mumbai Bench in the case of DCIT vs. Chandabhoy rep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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