TMI Blog2022 (7) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... ng effect order. Further, this Court is of the opinion that in cases of short deduction of TDS, disallowance under Section 40a(ia) of the Act cannot be made and the correct course of action would have been to invoke Section 201 of the Act. On similar facts, the Calcutta High Court in CIT vs SK Tekriwal [ 2012 (12) TMI 873 - CALCUTTA HIGH COURT] dismissed the Revenue s appeal Disallowance u/s 40A - Also, both the CIT (A) and ITAT have given concurrent findings on facts in favour of the assessee on the issue of remuneration paid to the director Shri Sunil Baijal by observing that higher salary paid to the said director was accepted as remuneration by the assessing officer during the scrutiny assessment in the subsequent assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of Rs.1,03,53,150/- made by the assessing officer under Section 40A(2) of the Act in spite of the fact that assessee, during the course of assessment proceedings, failed to justify the service being rendered by the director Shri Sunil Baijal to the company for which he was earning such a huge amount of remuneration. 4. A perusal of the paper book reveals that the Commissioner of Income Tax (Appeals) while disposing of the appeal filed by the assessee had directed the Assessing Officer to verify whether copies of non-deduction of tax/deduction of tax at lower rate were filed by the assessee before passing the assessment order. The ITAT in the impugned order has recorded that the Assessing Officer after verifying the said tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 40(a)(ia) of the Act. The Ld. CIT, DR also argued that there is no word like failure used in section 40(a)(ia) of the Act and it referred to only non-deduction of tax and disallowance of such payments. According to him, it does not refer to genuineness of the payment or otherwise but addition u/s. 40(a)(ia) can be made even though payments are genuine but tax is not deducted as required u/s.40(a)(ia) of the Act. We are of the view that the conditions laid down u/s.40(a)(ia) of the Act for making addition is that tax is deductible at source and such tax has not been deducted. If both the conditions are satisfied then such payment can be disallowed u/s. 40(a)(ia) of the Act but where tax is deducted by the assessee, even under bonafide wron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis supplied) 6. Also, both the CIT (A) and ITAT have given concurrent findings on facts in favour of the assessee on the issue of remuneration paid to the director Shri Sunil Baijal by observing that higher salary paid to the said director was accepted as remuneration by the assessing officer during the scrutiny assessment in the subsequent assessment year; and that the assessing officer had not brought any evidence/material for making disallowance under Section 40A(2)(b) of the Act. The ITAT also noted that the Assessing Officer, without any reason or material facts, had arbitrarily disallowed 50% of the remuneration. The ITAT further held that the Assessing Officer had not given cogent reasons to conclude that the remuneration paid w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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