Case Law Details
JMK Enterprises Pvt. Ltd. Vs DCIT (ITAT Delhi)
The issue in the present ground is with respect to the disallowance made u/s 40(a)(ia) of the Act on account non deduction of TDS of salary payment. It is an undisputed fact that during the year assessee has claimed expenses of Rs.64,03,670/- as remuneration to directors. It is the contention of the assessee that out of the aforesaid remuneration, the remuneration paid during the year was only Rs.30,00,000/-and the TDS on such amount was deducted.
The issue is only with respect to the provision made for salary of the balance amount of Rs.34,03,670/- on which TDS has not been deducted u/s 192 of the Act by the assessee. According to assessee Rs.34,03,670/- is a provision made for salary and has not been paid during the year under consideration and has been paid in subsequent year and TDS was also deducted and deposited in subsequent year. As far as the quantum of payment of salary of Rs.30,00,000/- during the year is concerned and the provision for salary made for Rs.34,03,670/- there is no dispute about the quantum.
The only dispute is whether the assessee is liable to deduct TDS u/s 192 of the Act on salary provision made during the year but not paid during the year under consideration. We find that Hon’ble Delhi High Court in the case of CIT vs. Taj Quebecor Printing Ltd. (supra) has held that the person making the salary payment is required to make a deduction towards tax at source only at the time of making such payment.
The accrual of the payment and the actual act of making the payment must both exist in order that a deduction at source may be made. It has further held that no deduction at source is contemplated under Section 192 in cases where a payment towards salary has accrued but is not made. Before us, Revenue has not placed on record any contrary binding decision in its support. In such a situation, we relying on the aforesaid decision of Hon’ble Delhi High Court in the case of Tej Quebecor Printing Ltd. (supra) are of the view that AO was not justified in making addition u/s 40(a)(ia) of the Act.
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