INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Order prejudicial to interest of Revenue - Non-disallowance of interest on which TDS not deducted -

Assessee filed return of income declaring Nil income. Assessment was completed under section 143(3) of the Act accepting the return of income filed by the assessee. The Commissioner, in exercise of the powers under section 263, was of the view that the order of AO was erroneous and prejudicial to the interest of Revenue on the ground inter alia that as per 3CD report TDS was not deducted on Rs. 2,24,000 and the same was ought to have been disallowed under section 40(a)(ia) of the Act. The assessee submitted that the expenditure claimed was the sum total of payments made to various parties and payment to each of the party did not exceed the threshold limit for deduction of tax at source. Held:The assessee could not point out as to why interest expenses cannot be disallowed under section 40(a)(ia) of the Act. Form 3CD report clearly mentioned a sum of Rs. 2,24,000 as the sum on which TDS was not made. The plea of the assessee that the aforesaid sum is the sum total of all small payments made to different persons and that each of the payment was below the threshold limit of sum on which TDS has to be made as per law, was not substantiated by the assessee.

REFERRED :

FAVOUR : In favour of Assessee

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 263 Section 37(1) Section 28

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