In this case AO has made addition merely on the basis of ledger extract filed by the assessee on the assumption that the said payments are interest payments which attracts TDS under the provisions of section 194A of the Act, without conducting further inquiries in the background of the assessee’s claim that the said payments are loss from subscription to chits. The AO should have conducted necessary inquiries before making the dis allowance u/s. 40(a)(ia). The AO has not exercised his option to conduct the necessary inquiries and made the addition purely on suspicion and surmises, based on the ledger extract ignoring the evidence filed by the assessee to claim that the said amount is loss on account of chit which was wrongly booked under the head interest payment to MCI Leasing Ltd. At the same time, the assessee, though claims said payment is not interest, but chit loss, failed to furnish required evidence. If payment to MCI Leasing Ltd. is on account of chit loss, then, the question of TDS does not arise. Consequently, no dis allowance of expenditure u/s. 40(a)(ia). Therefore, we set aside the issue to the file of Assessing Officer and direct him to examine the issue in the light of claim of assessee that the said amount is loss on chit account which does not come under the purview of provisions of section 194A of the Act.
TDS not deductible on loss on subscription to chit
Case Law Details
- TaxGuru Citation
- 2017 taxguru.in 835
- Case Name
- Shri Ashok Kumar Rai Vs. The Joint Commissioner of Income Tax (ITAT Bangalore)
- Appeal Number
- Only available for paid members
- Date of Judgement/Order
- Only available for paid members
- Related Assessment Year
- 2011- 12
- Courts
- All ITAT, ITAT Bangalore
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