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Once tax has not been deducted and even if such tax has been paid by the deductee, Disallowance u/s.40[a][ia] can be made
Case Law Details
- Case Name
- Asst./ Dy. Commr. of Income Tax (LTU) Vs. DICGC Ltd. (ITAT Mumbai)
- Appeal Number
- Only available for paid members
- Date of Judgement/Order
- Only available for paid members
- Related Assessment Year
- 2007- 08 & 2008- 09
- Courts
- All ITAT, ITAT Mumbai
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Asst./ Dy. Commr. of Income-tax (LTU) Vs. DICGC Ltd. (ITAT Mumbai)- First of all, we will consider the second part of the submission i.e. since the person to whom the payment was made has already offered the same for taxation, hence provisions of sec.40(a)(ia) cannot be invoked. This is not correct. Because the decision in the case of Hindustan Coca Cola Beverage (P.) Ltd. vs. CIT [supra] was rendered under the provisions of sec.201. Secondly, the Hon’ble Supreme Court vide para-10 has clearly mentioned that in view of Circular No.275/201/95-IT(Clause (b) of Explanation 1 to sec.115JB)...
i think we need to see the spirit of provisions rather than blindly following the rules word by word. in my opinion, the scheme of TDS with penalty for non deduction is for ensuring there is no revenue loss to the govt. to penalise a non deduction when the there is no loss of revenue ( as tax is already paid by the deductee) is not in the true spirit of the provisions, but rather a punishing attitude which is not certainly desirable. Various enforcement provisions are meant to ensure non leakage of revenue & if decision are taken to penalise, even in NIL loss of revenue, then a change in attitude / mindset of the tax depatment is very essential. they need to understand & appreciate tnat after al l the deductors are infact enabling them to protect revenue & it is s not the right attitude to penalise, in case the tax remittance is taken care by either of the parties.