RSVA & Co. Vs ITO (ITAT Mumbai)
ITAT Deletes TDS Disallowance Because Branch Transfer Was Held Internal Adjustment; Disallowance on Payments to Partners Removed as ITAT Treats Them as Remuneration Under Section 40(b); ITAT Allows Related Party Payments Because Revenue Failed to Prove Expenditure Was Excessive; Car Hire and Salary Payments to Relatives Allowed as ITAT Finds No Evidence of Unreasonableness; ITAT Removes Section 40(a)(ia) Addition Because Payments to Partners Did Not Require TDS.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) allowed the appeal filed by the assessee, a chartered accountants’ firm, against the order of the CIT(A) for AY 2014-15 concerning disallowances made under Sections 40(a)(ia) and 40A(2)(b) of the Income Tax Act.
The assessee had filed its return declaring income of Rs.31,20,900. During scrutiny assessment, the Assessing Officer (AO) examined professional fees debited by the assessee amounting to Rs.28,93,046. On verification, the AO found that tax had been deducted at source only on payments aggregating to Rs.13,27,500 and disallowed the remaining Rs.14,90,656 for non-deduction of TDS under Section 40(a)(ia). The AO also disallowed Rs.9,28,000 under Section 40A(2)(b) in respect of payments made to related parties, holding that the assessee failed to justify the genuineness of such payments.
