Case Law Details
Sanjay Bajpai Builders Private Limited Vs ACIT (ITAT Raipur)
Introduction: The recent judgment in the case of Sanjay Bajpai Builders Private Limited Vs ACIT (ITAT Raipur) throws light on an important tax provision, Section 40(a)(ia) of the Income Tax Act. The case involves the assessee’s failure to deduct Tax at Source (TDS) on interest payments to Non-Banking Financial Companies (NBFCs). This article provides a detailed analysis of the case and its implications.
The Context and Importance of Section 40(a)(ia): Section 40(a)(ia) of the Income Tax Act, 1961, disallows certain expenditures if the assessee fails to deduct TDS. The provision is aimed at ensuring compliance with tax laws and discouraging evasion.
Grounds for Appeal: Sanjay Bajpai Builders Private Limited appealed against an order that confirmed the disallowance of Rs. 15,89,324/- under Section 40(a)(ia) of the Income Tax Act. The appellant argued that proper opportunities were not given, especially considering the COVID-19 pandemic.
The Lower Authority’s Decision: The Assessing Officer (AO) and the CIT(Appeals) both held that since the assessee failed to substantiate its claim that the NBFCs had accounted for the interest income and paid tax on it, disallowance u/s 40(a)(ia) was warranted.
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