HEALTHWARE PRIVATE LIMITED,HYDERABAD V. DCIT., CIRCLE-2(1), HYDERABAD

ITA 888/HYD/2025

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M/s. Healthware Pvt. Ltd. filed an appeal against the order of the Learned First Appellate Authority, which upheld the disallowance of a deduction claimed by the assessee in their return for the Assessment Year 2018-19. The deduction pertained to an amount of Rs.23,67,760/-, which was initially disallowed in the preceding assessment year due to non-deduction of tax at source but was later claimed again in the current year after the requisite TDS was deposited. The Centralised Processing Centre (CPC) disallowed the claim, leading to a reduced reported loss. The Tribunal examined the regular assessment order under section 143(3), which had allowed the deduction, and concluded that the intimation under section 143(1) did not survive post the regular assessment, leading to the setting aside of the First Appellate Authority's order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 777216 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2025
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2018-2019
• Appeal Filed On: 20-05-2025
• Laws Referred To: Income Tax Act, 1961
• Court: TRIBUNAL
• Department Lawyers: SACHIN KUMAR
• Assessee Lawyers: C S SUBRAHMANYAM
• Keywords: Set aside; TDS; Non-deduction of tax
• Section: 143(3); 40(a)(ia)

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad श्री विजय पाल राि, उपाध् यक्ष एिं श्री मिुसूदन सािडिया, लेखा सदस् य क े समक्ष । BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA No.888/Hyd/2025 (निर्धारण वर्ा/Assessment Year:2018-19) M/s. Healthware Pvt. Ltd., Hyderabad. PAN:AABCH2124A Vs. Dy. Commissioner of Income Tax, Circle 2(1), Hyderabad. (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri C S Subrahmanyam, C.A. and Shri V Siva Kumar,Advocate रधजस् व द्वधरध/Revenue by: Dr. Sachin Kumar, SR-DR सुिवधई की तधरीख/Date of hearing: 16/09/2025 घोर्णध की तधरीख/Pronouncement: 19/09/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by M/s. Healthware Pvt. Ltd. (“the assessee”), feeling aggrieved by the order passed by the Learned ADDL/JCIT (A)- 1, Chandigarh, (“Ld. First Appellate Authority”), dated 24.03.2025 for the A.Y. 2018-19. 2. The assessee has raised the following grounds of appeal : Printed from counselvise.com ITA No.888/Hyd/2025 2 3. The brief facts of the case are that, the assessee company filed its return of income for A.Y. 2018–19 on 16.10.2018 declaring a business loss of Rs.75,21,678/-. During the immediately preceding Printed from counselvise.com ITA No.888/Hyd/2025 3 assessment year (A.Y. 2017–18), the assessee had disallowed an amount of Rs.23,67,760/- under section 40(a)(ia) of the Income Tax Act, 1961 (“the Act”) due to non-deduction of tax at source. In the year under consideration, the assessee deposited the requisite TDS and accordingly claimed deduction of Rs.23,67,760/- in its return. However, the Centralised Processing Centre (“CPC”), while processing the return under section 143(1) of the Act vide intimation dated 04.01.2019, disallowed the claim thereby reducing the returned loss to Rs.51,53,918/-. 4. Aggrieved with the order of CPC, the assessee filed appeal before the Ld. First Appellate Authority. The Ld. First Appellate Authority dismissed the appeal holding that the assessee failed to substantiate that the said amount was disallowed in the preceding year and that the corresponding TDS was deposited during the current year. 5. Aggrieved with the order of Ld. First Appellate Authority, the assessee is in further appeal before us. The Learned Authorised Printed from counselvise.com ITA No.888/Hyd/2025 4 Representative (Ld. AR) invited our attention to page no.46 of the order of Learned Assessing Officer (“Ld. AO”) passed under section 143(3) of the Act on 05.04.2021 for the same year. It was submitted that in the said scrutiny assessment, the Ld. AO has duly examined the claim and allowed deduction of Rs.23,67,760/- to the assessee after verifying that the same was disallowed in A.Y. 2017–18 and the corresponding TDS was deposited during the year under consideration. The Ld. AR further submitted that once the claim has been accepted by the Ld. AO in the regular assessment, the intimation under section 143(1) of the Act disallowing the same loses its force. Reliance was placed on the principle that a regular assessment order under section 143(3) of the Act merges with the intimation under section 143(1) of the Act. Accordingly, the Ld. AR pleaded that the order of the Ld. First Appellate Authority, which has affirmed the adjustment made under section 143(1) of the Act , deserves to be set aside and the assessee’s appeal be allowed. 6. Per contra, the Learned Departmental Representative (Ld. DR) supported the order of the Ld. First Appellate Authority. It was Printed from counselvise.com ITA No.888/Hyd/2025 5 submitted that the assessee failed to furnish necessary details and evidences before the first appellate authority to substantiate that the amount of Rs.23,67,760/- was disallowed in the preceding year and that the requisite TDS was deposited during the current year. The Ld. DR contended that the Ld. First Appellate Authority has given a categorical finding that no evidence was filed before him, and therefore, the order passed by the Ld. First Appellate Authority requires to be upheld. 7. We have considered the rival submissions and perused the material available on record. We have also gone through the page no. 46 of the assessment order passed under section 143(3) of the Act dated 05.04.2021 and we find that the Ld. AO has allowed the deduction of Rs.23,67,760/- to the assessee. Once the claim has been examined and accepted by the Ld. AO in the scrutiny assessment under section 143(3) of the Act, the adjustment made by CPC under section 143(1) of the Act does not survive. It is a settled law that when a regular assessment under section 143(3) of the Act is made, the intimation under section 143(1) of the Act merges with Printed from counselvise.com ITA No.888/Hyd/2025 6 such assessment and has no independent existence. Consequently, the order of the Ld. First Appellate Authority upholding the CPC adjustment cannot be sustained. Therefore, in view of the above discussion, we hold that the assessee is entitled to deduction of Rs.23,67,760/- as already allowed by the Ld. AO under section 143(3) of the Act. Accordingly, the order of the Ld. First Appellate Authority is set aside and the appeal of the assessee is allowed. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 19th Sept., 2025. Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad. Dated: 19.09.2025. * Reddy gp Copy of the Order forwarded to : 1. M/s. Healthware Pvt. Ltd., 8-2-623/A, Serene Towers, Road No.10, Banjara Hills, Hyderabad-500034 2. The DCIT, Circle 2(1), Hyderabad. 3. Pr.CIT, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard file. BY ORDER, Printed from counselvise.com "