ACIT v. Hiravati Marine Products (P.) Ltd. (2019) 177 ITD 722 (Rajkot)(Trib.)

S. 40(a)(ia) : Amounts not deductible-Deduction at source– Failure to deduct tax at source–Not allowable as deduction. [S. 2(28A), 194A, 194J]

During relevant year, Canara Bank, bank informed assessee that its account had become NPA, and accordingly CA firm was appointed to conduct stock/receivable audit of its accounts for past three years. Assessee was under obligation to make payment of investigation charges carried out by firm of chartered accountant appointed by bank. Assessee failed to make payment to CA firm, banker made payment to CA firm on behalf of assessee which was recovered by bank from assessee by debiting its accounts in its books of account. AO held that tax had not been deducted at source while making said payments disallowed same accordingly disallowed the payment. Tribunal held that on facts, primary liability of assessee was to make payment to chartered accountant firm and merely because payment was made by bank on behalf of assessee did not mean that transaction was covered under provisions of S.194A, read with S. 2(28A) of the Act. Disallowance is up held. (AY. 2007-08, 2008-09)