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| The Tax Publishers2020 TaxPub(DT) 4710 (Chen-Trib) INCOME TAX ACT 1961
Section 40a(ia)
As long as the payee filed return of income disclosing payment received from the payer and in which the income earned by it is embedded and also paid tax on such income, the assessee would not be attracted as person in default, consequently no disallowance can be made under section 40(a)(ia) for non-deduction of TDS under section 194C.
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Business disallowance under section 40(a)(ia) - Non deduction of tax at source - Payment towards job work for gold plating done by supplier -
Assessee made payment towards job work for gold plating done by supplier on the materials supplied it. AO made disallowance under section 40(a)(ia) for non-deduction of TDS under section 194C as assessee did not submit any confirmation from the payee to the effect that returns of income, including receipts from the assessee was filed under section 139(1) by the payee. Held: Gold plating done by the supplier would not come within the mischief of section 194C, because the payment was in the nature of purchase of materials which attracted central sales tax. Further, in the case of M/s. Hindustan Coco-cola Beverage ((2007) 293 ITR 226 (SC): 2007 TaxPub(DT) 1452 (SC)), it was held that when the payee has included the amount received from the assessee in its return of income and also paid taxes on the said receipts, then there was no question of making any addition under section 40(a)(ia) for failure to deduct TDS under section 194C. Thus, addition made by AO was required to be deleted.
Followed:M/s. Hindustan Coco-Cola Beverage ((2007) 293 ITR 226 (SC): 2007 TaxPub(DT) 1452 (SC))
REFERRED :
FAVOUR : In favour of assessee
A.Y. : 2012-13
IN THE ITAT, CHENNAI BENCH
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