Umananda Rice Mill Ltd Vs ACIT (ITAT Kolkata)
ITAT Kolkata held that disallowance under section 40a(ia) of the Income Tax Act for non-deduction of TDS untenable if payee has duly disclosed the receipt of the impugned payment in their return of income.
Facts-
The assessee has paid documentation charges consisting of freight and transportation charges of Rs. 6,24,709/- to Satyam Services on which tax was not deducted at source as required by the provisions of Section 194C of the Act. Accordingly a show cause notice was issued to the assessee as to why the disallowance should be made u/s 40a(ia) of the Act which was replied by the assessee’s Counsel before the AO by submitting that the said payment has duly been shown as income by Satyam Services in its return of income for AY 2011-12 and has paid tax accordingly. The assessee relied on the decision of Hon’ble Apex Court in the case of Hindusthan Coca Cola Beverages Pvt. Ltd. vs. CIT Appeal (civil) 3765 of 2007 wherein it has been held that no disallowance is required to be made as due tax has already been made under the Act by the recipient of income.
CIT(A) dismissed the appeal of the assessee. Being aggrieved, the present appeal is filed.
Conclusion-
The ld CIT(A) confirmed disallowance on the ground that the assessee has committed a default u/s 194C of the Act and decision in the case of Hindustan Coca Cola Beverages Pvt. Ltd. vs. CIT is not applicable to the facts of the case. Having gone through the facts on record and ratio laid down in the said decision, we are of the view, the crux of the ratio laid down in the said decision is that where the assessee has made any payment and the payee has duly disclosed the said receipt in the return of income and has paid taxes thereon, no disallowance u/s 40a(ia) of the Act to be made. therefore the Ld. CIT(A) has not interpreted the decision correctly. Since the payment made by the assessee to Satyam Services has duly been shown in the return of income of the said recipient and due tax was also paid which is not in dispute at all. Therefore respectfully following the ratio as laid down in the Apex Court decision as referred to above, we are inclined to set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition.
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