I-T - A person is required to deduct tax at source not only on amounts payable but also when sums are actually paid: ITAT
By TIOL News Service
HYDERABAD, APRIL 11, 2018: THE ISSUE BEFORE THE BENCH IS - Whether as per the provisions of Section 40(a)(ia) a person is required to deduct tax at source not only on amounts payable but also when the sums are actually paid. AND THE ITAT VERDICT IS YES.
Facts of the case
The Assessee-company, engaged in manufacture of pipes for water supply and sewerage scheme and also turnkey contractors in infrastructure sector, filed return for the relevant AY. The Assessee had claimed deduction u/s 80IA of the Act. However, the AO completed the assessment and made disallowances u/s 80IA and 40(a)(ia) of the Act. With respect to disallowance made u/s 80IA, the AO was of the view that Assessee was only executing works contract as a contractor and not as a developer of infrastructural facilities and therefore, had not fulfilled all the conditions and requirements of the provisions of Section 80IA for claim of deduction. The AO also invoked the provisions of Section 40(a)(ia) to disallow the amounts on which TDS was not deducted or TDS deducted but not paid. On Assessee's appeal, the CIT(A) partly allowed the appeal.
The Tribunal held that,
++ as the issue of disallowance made u/s 40(a)(ia) is now decided by the Supreme Court of India in the case of Palam Gas Service, in which it was held that even the amounts paid during the year are also covered by the provisions of Section 40(a)(ia), the Special Bench decision of the ITAT in the case of Merilyn Shipping and Transport Ltd is no longer a valid one. Consequently, the order of CIT(A) is to be set aside.
(See 2018-TIOL-526-ITAT-HYD)
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