Shree Sita Edibles Ltd. Vs ITO (ITAT Raipur)
ITAT find that the issue involved in the present appeal lies in a narrow compass, i.e., as to whether or not, a short deduction of tax at source by the assessee would call for triggering the provision of Sec. 40(a)(ia) of the Act for disallowing the amount in question on a proportionate basis as had been done by the A.O in the present case before us. In our considered view, short deduction of tax at source by an assessee by wrongly taking recourse to a wrong provision as provided in Chapter XVII-B of the Act and deducting tax at source at a lower rate cannot form a basis for triggering the provisions of Sec.40(a)(ia) of the Act. Our aforesaid conviction is fortified by the judgment of the Hon’ble High Court in the case of CIT Vs. S.K Tekriwal (2014) 361 ITR 432( Cal.). In its aforesaid judgment, it was observed by the Hon’ble High Court that if there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various TDS provisions, then the assessee can though be declared to be an assessee in default u/s.201 of the Act but no disallowance can be made by invoking provisions of Sec. 40(a)(ia) of the Act.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-II, Raipur (C.G.), dated 19.06.2018, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 25.02.2016 for assessment year 2013-14. Before us the assessee has assailed the impugned order on the following grounds of appeal:
“1. In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming disallowance of Rs.20,12,600/- made by the AO invoking section 40(a)(ia), without appreciating the facts and the law properly. The disallowance made by the A.O and sustained by the Ld. CIT(A) is arbitrary, illegal, contrary to settled law and is not justified.
2. The appellant reserves the right to add, amend or modify any of the ground/s of appeal.”
2. Succinctly stated, the assessee company which is engaged in the business of manufacturing of Soya & Rice Bran Oil and its by-products a/w trading of its own products had e-filed its return of income for the assessment year 2013-14 on 31.10.2013, declaring an income of Rs. Nil. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act.
3. Assessment, was thereafter, framed by the A.O vide his order passed u/s.143(3) of the Act dated 25.02.2016 wherein after, inter alia, making a disallowance of Rs.20,12,600/- u/s.40(a)(ia) of the Act, the income of the assessee company was assessed by the A.O.
4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success.
5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us.
6. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. AR in order to drive home his contentions. On a perusal of the records, it transpires that the assessee company during the year under consideration had made a payment of Rs.25,15,760/- towards warehouse rent, as under:
