The assessee created head wise provisions of expenses on adhoc basis in respect of various services received to facilitate closing of its books without reference to any particular party. Such excess amounts of provisions created got reversed subsequently. No tax deduction at source was made in respect of such provisions. The Income Tax Officer initiated proceedings under Section 201(1)/201(1A) of the Act considering the assessee to be ‘an assessee in default’ in respect of the amount of tax which was not deducted at source on such provisions. On appeal CIT(A) and Appellate Tribunal upheld the action of the Income Tax Officer.  On further appeal by the assessee, Hon’ble Karnataka High Court held that non-identification of the payees in the provisions and the disallowance of deduction expenditure under Section 40(a)(ia) of the Act has not been rightly appreciated by the Tribunal. Further, if the deduction is not claimed for the expenditures made in the provision even in the return submitted and the same is offered to tax in the subsequent year after reversing the entries pursuant to the receipt of the bills/invoices by the payees, the matter has to be analysed having regard to, whether income has accrued to the payees to deduct tax at source.  (AY. 2012-12,  2013-14)