Payments made in excess of 20% held disallowed u/s 40A(3) (of Income Tax Act, 1961). ITAT
Payments made in excess of 20% held disallowed u/s 40A(3) (of Income Tax Act, 1961). ITAT
CIT(A) deleted disallowance made by AO u/s 40(a)(ia) (of Income Tax Act, 1961). In assessment, seen certain payments were made by assessee on a/c of freight charges. AO disallowed amt. of these exp. as assessee has not deducted TDS on payments. On appeal CIT(A) held, disallowance of exp. u/s 40(a)(ia) (of Income Tax Act, 1961) for violation of Sec.194C (of Income Tax Act, 1961) is not justified. On appeal ITAT held, IT Act provides, wherever payments in excess made in cash, 20% of said exp. are to be disallowed u/s 40A(3) (of Income Tax Act, 1961).-501382
Facts in Brief:
1. The only issue raised in the departmental appeal is against the action of the learned CIT (A) in deleting the disallowance of Rs.9,77,079/- made by the Assessing Officer under section 40(a)(ia) (of Income Tax Act, 1961).
2. In assessment, Assessing Officer noted that certain payments were made by the assessee on account of freight charges.
3. The Assessing Officer disallowed an amount of Rs.9,77,079/- of these expenses as the assessee has not deducted tax at source on these payments.
4. On appeal CIT(A) held that the disallowance of expenditure under section 40(a)(ia) (of Income Tax Act, 1961) for violation of section 194C (of Income Tax Act, 1961) is not justified.
On appeal ITAT held,
5. We are in agreement with the findings given by the learned CIT (Appeals) that re-writing of books or books being corrupt by virus does not give leverage to the assessee to flout the laws. The Income Tax Act provides that wherever the payments in excess of Rs.20,000/- are made in cash, 20% of the said expenditure are to be disallowed under section 40A(3) (of Income Tax Act, 1961).
7. We do not see any reason to interfere with the order of the learned CIT (Appeals). The ground of appeal raised by the assessee is dismissed.
8. In the result, the appeal of the Revenue in I TA No.783/Chd/2010 is dismissed and the appeal of the assessee in ITA No.692/Chd/2010 is partly allowed for statistical purposes.
News Reference: Himalyan Frozen Foods Ltd.,, ... vs Assessee
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