DCIT, New Delhi V. M/s. Neemrana Hotels Pvt. Ltd., New Delhi

ITA 4554/DEL/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5473 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 19-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Business income; Difference of opinion
• Section: 143(3); 142(1); 40(a)(ia); 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 4554/DEL/2014 ASSESSMENT YEAR: 2010-11 DCIT, CIRCLE 13(1), ROOM NO. 212, C.R. BUILDING, I.P. ESTATE, NEW DELHI VS. M/S NEEMRANA HOTELS PVT. LTD. A-58, NIZAMUDDIN EAST, NEW DELHI 110 013 (PAN: AAACN0674J) (APPELLANT) (RESPONDENT) ORDER PER H.S. SIDHU, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 28.5.2014 PASSED BY THE LD. CIT(A)-XVI, NEW DELHI R ELATING TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- I. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY REDUCING THE DISALLOWANCE OF EXPENDITURE AS LICENS E FEES FROM RS. 1,40,99,015/- TO RS. 19,08,030/- MADE UNDER THE PROVISIONS OF SECTION 40A(IA) OF THE ACT BY NOT APPRECIATING THE FACT THAT THE AGREEMENTS CONTAIN SIMILAR CLAUSES OF USE AND REVENUE SHARING, DEPARTMENT BY MS. RINKU SINGH, SR. DR ASSESSEE BY SH. SANAT KAPOOR, ADV. 2 WHEREAS TDS HAVE BEEN DEDUCTED UNDER DIFFERENT SECTION. II. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ONT APPRECIATING THE PROVISION LAID DOWN IN SECTION 194 I OF THE I.T. ACT WHICH SAYS THAT THE RENT PAID UNDER ANY NOMENCLATURE IS LIABLE FOR TDS U/S. 194I. III. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY IGNORING THE PROVISIONS OF CIRCULAR NO. 715, DATED 8.8.1995, WHEREIN IT HAS BEEN LAID THAT PROVISIONS OF SECTION 194I OF THE ACT DOES NOT DEPEND UPON ANY SPECIFIC NOMENCLATURE. IV. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS ON CONTRADICTING HIS OWN FINDINGS WHEREIN THE LD. CIT( A) HAS SAID THAT ALL THE AGREEMENTS MADE WITH DIFFEREN T PARTIES HAVE SIMILAR CLAUSES, HOWEVER, THE TDS MADE FOR DIFFERENT PARTIES BY THE ASSESSEE UNDER DIFFERE NT SECTIONS HAS BEEN ACCEPTED. V. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRES H GROUNDS OF APPEAL AND / OR DELETE OR AMEND ANY OF THE GROUND OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE F ILED ITS RETURN ON 27.9.2010 DECLARING TOTAL INCOME OF RS. 4,26,29,870 /-. NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) WAS ISSUED. THEREAFTER, NOTICE U/S. 142(1) OF THE ACT ALONGWITH QUESTIONNAIRE DATED 3 4.4.2012 WAS ISSUED. IN RESPONSE TO THE SAME, THE AR FO THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS AND FILED NECES SARY DETAILS / DOCUMENTS AS CALLED FOR THEREIN FROM TIME TO TIME. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF RUNNING HOTE LS IN VARIOUS LOCATIONS SPREADING ALL OVER INDIA. DURING THE YEA R UNDER CONSIDERATION INCOME BY WAY OF ROOM, FOOD AND BEVERAGE INCOME HAS BEEN SHOWN AT RS. 24,11,24003/- APART FROM OTHER INCOME DECLARED AT RS. 55,08066/-. AO OBSERVED THAT DURING THE UNDER CONSIDERATION, T HE ASSESSEE COMPANY HAS PAID LICENSE FEES AMOUNTING TO RS. 3,00,41, 358/- TO VARIOUS PARTIES. THE DETAILS OF SUCH LICENSE FEES ALONGWI TH TDS ON THE SAME AS MADE BY THE ASSESSEE WITH VARIOUS PERSONS, DETAILS THEREOF ARE MENTIONED AT PAGE NO. 10-11 OF THE IMPUGNED ORDER. HOWEVER, THE AO MADE THE ADDITION U/S. 40(A)(IA) OF THE ACT ON THE PLEA THAT THE TDS SHOULD BE MADE ON THE PAYMENT SO MADE BY THE ASSES SEE AS PER THE PROVISIONS OF SECTION 194I (RENT) AND NOT AS PER S ECTION 194C (PAYMENT TO CONTRACTORS). THE AO OBSERVED THAT THE AGREEMEN TS WHETHER WITH M/S DELHI WAREHOUSING PVT. LTD. DWPL) OR WITH MS. MEERA KULKARNI AND OTHERS ARE IDENTICALLY WORDED IN SO FAR AS REVENUE SHARING OF GROSS OPERATING PROFIT FROM RIGHT TO USE OF PLACE AND RUNNING OF H OTEL BUSINESS THEREFROM IS CONCERNED. EVEN THOUGH THE AGREEMENTS CONTAIN SI MILAR CLAUSES OF USE AND REVENUE SHARING, THE ASSESSEE ITSELF DEDUCTED T DS U/S. 194I IN RESPECT OF LICENSE FEE PAID TO M/S DWPL WHEREAS IN THE CASE OF OTHER PARTIES THE PAYMENTS WERE CLAIMED AS COVERED U/S. 1 94C AND NOT U/S. 194I. THE NATURE OF PAYMENT WAS TERMED AS LICENSE F EE IN ALL THE CASES. 4 AO OBSERVED THAT THE ASSESSEE WAS VERY WELL AWARE T HAT THE PAYMENTS OF LICENSE FEES WERE IN FACT IN NATURE OF RENT AND HEN CE COVERED U/S. 194I BUT EVEN THEN IT DID NOT DEDUCT TAX AT SOURCE AT TH E RATES APPLICABLE AS PER SECTION 194I EXCEPT IN THE CASE OF M/S DWPL AND TDS HAS BEEN MADE AS PER SECTION 194C UNDER THE GARB OF CONTRACTUAL PAYMENTS. THEREFORE, AO HELD THAT THERE IS SHORT DEDUCTION OF TDS BY THE ASSESSEE UNDER SECTION 194-I IN THE CASES OF PEIRCE LESLIE INDIA L TD., SUDHIR MULJEE, FRANCIS WACZIARG, MATHESON BOSANQUET ENT LTD., MEER A KULKARNI, ASHOK JAIN AND SRK TRAVELS & TOURS PVT. LTD. THEREFORE, AO HELD THAT AS PER PROVISION OF SECTION 40(A)(IA) OF THE ACT, THE CORR ESPONDING EXPENDITURE OF LICENSE FEES TO THE EXTENT OF SHORT DEDUCTION IS NO T ALLOWABLE. ACCORDINGLY, ADDITION OF RS. 1,40,99,015/- WAS MADE AND ADDED IN THE HANDS OF THE ASSESSEE VIDE ORDER DATED 25.3.2013 P ASSED U/S. 143(3) OF THE INCOME TAX, ACT, 1961 AND ASSESSED THE INCOME A T RS. 5,67,28,870/- . AGAINST THE ASSESSMENT ORDER, ASSESSEE APPEALED B EFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 28.5.2014 HAS P ARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE IMPUGNED ORDER, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 4. LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE OR DER OF THE LD. CIT(A) AND ALSO STATED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION DATED 27.11.2018 OF THE ITAT, E BENCH, NEW DELHI IN ASS ESSEES OWN CASE 5 PASSED IN ITA NO. 2893/DEL/2013 (AY 2011-12). IN TH IS BEHALF, HE FILED THE COPY OF THE AFORESAID DECISION BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS ESPECIALLY THE IMPUGNED ORDER. WE FIND THAT LD. CIT(A) HAS EL ABORATELY DISCUSSED THE ISSUES IN DISPUTE VIDE PARA NO. 4.6-4.7 AT PAGE NO. 16-18 OF THE IMPUGNED ORDER. FOR THE SAKE OF CLARITY, WE ARE REP RODUCING THE RELEVANT FINDING OF THE LD. CIT(A) AS UNDER:- 4.6 REGARDING THE LICENSE FEE PAID TO SRK TRAVELS & TOURS PVT. LTD, FROM THE AGREEMENT DT. 23/06/2005 BETWEEN THE APPELLANT AND THE PARTY IT IS EVIDENT THAT THERE IS NO INVOLVEMENT OF THE PARTY IN THE MANAGEMENT AND DAY TO DAY RUNNING OF THE BUSINESS AFFAIRS OF THE HOTEL IN THAT PROPERTY. THE LICENSE FEE PAYABLE TO THE PARTY DURING THE RELEVANT PERIOD IS MINIMUM OF RS. 18,00,000/- OR 17.5% OF GROSS OPERATING PROFIT WHICHEVER IS HIGHER SUBJECT TO MAXIMUM OF RS. 24,00,000/- PER ANNUM. THEREFORE, UNLIKE OTHER AGREEMENTS THERE IS A MAXIMUM CEILING OF RS. 24 LAKHS. THE LICENSE FEE IS PAYABLE SIMPLY BECAUSE THE PROPERTY IS LET OUT AND THE REQUIREMENT OF 6 THE APPELLANT COMPANY TO MAINTAIN PROPER ACCOUNTS IS SIMPLY BECAUSE THE PARTY IS OTHERWISE ENTITLED TO LICENSE FEE OF 17.5% OF GROSS OPERATING PROFIT SUBJECT TO MINIMUM CEILING OF RS. 18 LAKHS AND MAXIMUM CEILING OF RS. 24 LAKHS. IN ANY CASE SIMPLY BECAUSE THE PARTY IS ENTITLED TO CERTAIN PERCENTAGE OF GROSS OPERATING PROFIT SUBJECT TO MAXIMUM AND MINIMUM CEILING, DO NOT MAKE THE INCOME, A BUSINESS INCOME. BECAUSE THERE IS NO INVOLVEMENT IN THE BUSINESS OF RUNNING OF THE HOTEL. FURTHER THE PAYMENTS ARE ALSO SUBJECT TO CEILINGS I.E. THE PARTY WILL NOT BE ENTITLED BEYOND THE MAXIMUM CEILING. THEREFORE, IRRESPECTIVE OF HIGHER BUSINESS INCOME, THE PARTY WILL GET ONLY RS. 24 LAKHS. FURTHER, DURING THE PERIOD THE LICENSE FEE ACTUALLY PAID WAS RS. 24 LAKHS, WHICH IS THE FIXED MAXIMUM AMOUNT. THE FIXED AMOUNT ACTUALLY PAID HAS THE CHARACTER OF HOUSE PROPERTY INCOME. SINCE, THERE IS NO INVOLVEMENT OF THE PARTY IN THE BUSINESS AFFAIRS BEING RUN IN THE PROPERTY AND THE LICENSE FEE PAID IS SOLELY FOR THE USE OF LAND 7 AND BUILDING, THEREFORE, THE PAYMENTS MADE ARE IN THE NATURE INCOME OF HOUSE PROPERTY AND NOT IN THE NATURE OF INCOME FROM BUSINESS CARRIED OUT. IN VIEW OF THE ABOVE THE PAYMENTS MADE BEING IN THE NATURE OF INCOME BY WAY OF RENT, THEREFORE, THE APPELLANT IS LIABLE TO DEDUCT TAX ON ACCOUNT OF THE SAID PAYMENTS TO THE PARTY UNDER SEC 1941. SINCE THERE IS SHORT DEDUCTION OF TDS BY THE APPELLANT U/S 1941 AS SHOWN BY THE A.O. IN RESPECT OF THE ABOVE PAYMENTS TO SRK TRAVELS & TOURS PVT. LTD. TO THE EXTENT OF RS. 19,08,030/-, THEREFORE, THE A.O. IS JUSTIFIED IN DISALLOWING THE ABOVE PAYMENT MADE BY THE APPELLANT U/S 40(A)(IA). 4.7 THE AR OF APPELLANT ALSO SUBMITTED THAT DISALLOWANCE U/S 40(A)(IA) DOES NOT COVER SHORT DEDUCTION OF TDS OR DEDUCTION OF TDS UNDER WRONG HEAD DUE TO DIFFERENCE OF OPINION OR ANY OTHER REASONS. THE ABOVE SUBMISSION OF THE APPELLANT IS NOT SUSTAINABLE BECAUSE CHAPTER XVII-B CONTAINS SPECIFIC PROVISIONS OF TDS AT DIFFERENT RATES IN RESPECT OF DIFFERENT NATURE 8 OF PAYMENTS LIKE SALARY, INTEREST ON SECURITIES, DIVIDENDS, INTEREST, RENTS, PAYMENTS TO CONTRACTORS ETC. SEC 40 (A)(IA) PROVIDES THAT PAYMENTS OF THE NATURE SPECIFIED THEREIN SHALL NOT BE ALLOWED AS DEDUCTION IF TDS AS PROVIDED IN CHAPTER XVIIB IS LIABLE TO BE MADE AND SUCH TDS HAS NOT BEEN MADE OR PAID BEFORE THE DUE DATE. THEREFORE, IF DISALLOWANCE U/S 40(A)(IA) CANNOT COVER SHORT DEDUCTION OF TDS OR TDS UNDER WRONG HEAD AS CLAIMED BY THE APPELLANT, THE PROVISIONS IN CHAPTER XVIIB PROVIDING DIFFERENT RATES OF TDS WOULD BE MEANINGLESS. IF PROVISIONS OF SEC 40(A)(IA) CANNOT COVER SHORT DEDUCTION OF TDS, THE ASSESSEES WOULD BE AT LIBERTY TO MAKE TDS AT LOWER RATES AND THEREFORE, THE PROVISIONS OF SEC 40(A)(IA) WOULD ALSO BE MEANINGLESS ALTOGETHER. IN VIEW OF THE ABOVE, I AM OF THE OPINION THAT PROVISIONS OF SEC 40(A)(IA) COVERS BOTH NON-DEDUCTION AS WELL AS SHORT- DEDUCTION OF TDS. IN THIS CONTEXT THE REFERENCE MAY BE MADE TO SECOND PROVISO TO SEC 40(A)(IA) INSERTED BY THE FINANCE ACT, 9 2012 WITH EFFECT FROM 01.04.2013 WHICH SAYS:- [PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE OF THIS SUB-CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO.] THE ABOVE PROVISO PROVIDES PROTECTION TO THE ASSESSEE IN CASE OF FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX WITH EFFECT FROM 01.04.2013 SUBJECT TO FULFILLMENT OF CONDITION MENTIONED THEREIN. IN OTHER 10 WORDS, THIS PROTECTION WAS NOT THERE BEFORE 01.04.2013. THE PROVISO CLEARLY SAYS THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX. FROM THE ABOVE, IT IS CLEAR THAT SHORT DEDUCTION OF TAX WAS ALWAYS RECOGNIZED BY LEGISLATURE EVEN UNDER THE PROVISIONS OF SECTION 40(A)(IA). WHILE THE PROTECTION IS NOW AVAILABLE WITH EFFECT FROM 01.04.2013 SUBJECT TO THE FULFILLMENT OF CONDITIONS IN THE PROVISO SUCH PROTECTION WAS NOT THERE BEFORE 01.04.2013. THEREFORE, FAILURE OF THE ASSESSEE ON ACCOUNT OF SHORT DEDUCTION SHALL FACE THE CONSEQUENCES OF DISALLOWANCE U/S 40(A)(IA). IN VIEW OF THE ABOVE, AO IS FULLY JUSTIFIED IN DISALLOWING THE ABOVE PAYMENT OF RS. 19,08,030/- MADE TO SRK TRAVELS & TOUR PVT. LTD. THEREFORE, THE DISALLOWANCE MADE BY THE A.O. IS REDUCED FROM RS. 1,40,99,015/- TO RS. 19,08,030/-. 5.1 WE FURTHER FIND THAT TRIBUNAL VIDE ORDER DATED 27.11.2018 IN ASSESSEES OWN CASE PASSED IN ITA NO. 2893/DEL/2013 (AY 2011-12) HAS ADJUDICATED THE SIMILAR AND IDENTICAL ISSUE VIDE P ARA NO. 3.0 TO 5.0 AT PAGE NO. 3 TO 5 OF THE AFORESAID ORDER AND ALLOWED THE SIMILAR ISSUE IN 11 FAVOUR OF THE ASSESSEE. FOR THE SAKE OF CONVENIEN CE, WE ARE REPRODUCING HEREWITH THE RELEVANT PORTION OF THE TRIBUNALS ORD ER:- 3.0 THE LD. AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE U/S 194C OF THE ACT ON THE GROUND THAT TRANSACTION WITH M/S SRK TRAVELS & TOURS PVT. LTD. WAS A BUSINESS TRANSACTION AS THE ASSESSEE WAS REQUIRED TO PAY PORTION OF THE GROSS OPERATING PROFIT TO THE PARTY FROM WHOM THE PROPERTY WAS TAKEN ON LEASE TO RUN THE HOTEL. IT WAS SUBMITTED THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE U/S 194C IN THE CASE OF OTHER PARTIES ALSO FROM WHOM THE PREMISES HAD BEEN TAKEN ON LEASE AND THE SAME STOOD ACCEPTED BY THE ASSESSING OFFICER AS WELL AS THE LD. COMMISSIONER OF INCOME TAX (APPEALS). IT WAS FURTHER SUBMITTED THAT THE IMPUGNED PAYMENT WAS TREATED AS BUSINESS INCOME BY THE RECIPIENT OF THE AMOUNT. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT NO DISALLOWANCE COULD BE MADE U/S 40A (IA) OF THE ACT IF THERE WAS A SHORT DEDUCTION OF TAX AND THE PROVISIONS WOULD APPLY ONLY IF NO TAX WAS DEDUCTED. IT WAS FURTHER SUBMITTED THAT THE STAND OF THE DEPARTMENT THAT THE PAYMENT WAS IN THE 12 NATURE OF RENT AND, THEREFORE, WOULD ATTRACT PROVISIONS OF SECTION 1941 OF THE ACT WAS INCORRECT. THE LD. AR PLACED RELIANCE ON THE JUDGMENT OF HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. S.K. TEKRIWAL REPORTED IN 361 ITR 432 (CAL) WHEREIN IT HAD BEEN HELD THAT IN CASE OF ANY SHORTFALL DUE TO ANY DIFFERENCE OF OPINION AS T O THE TAXABILITY OF ANY ITEM OR NATURE OF PAYMENT FAILING UNDER VARIOUS TDS PROVISIONS, NO DISALLOWANCE CAN BE MADE BY INVOKING PROVISIONS OF SECTION 40A (IA) OF THE ACT. IT WAS ALSO SUBMITTED THAT A SIMILAR VIEW HAD BEEN TAKEN BY THE COORDINATE BENCHES OF MUMBAI AND DELHI ITAT. 4.0 IN RESPONSE, THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE (SR. DR) PLACED RELIANCE ON THE CONCURRENT FINDINGS OF THE ASSESSING OFFICER AS WELL AS THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND HIGHLIGHTED THE FACT THAT IN THIS CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD GIVEN A CATEGORICAL FINDING THAT SINCE THERE WAS NO INVOLVEMENT OF M/S SRK TRAVELS & TOURS PVT. LTD. IN THE MANAGEMENT OF DAY TO DAY RUNNING OF THE BUSINESS AFFAIRS OF THE 13 HOTEL IN THAT PROPERTY, THEREFORE, THE PAYMENT MADE BY THE ASSESSEE WAS IN THE NATURE OF RENT AND THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE U/S 1941 OF THE ACT AND, THEREFORE, THE DISALLOWANCE U/S 40A(IA) WAS JUSTIFIED. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN THIS CASE ARE UNDISPUTED AND WE FIND THAT THE ASSESSEES CASE IS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. S.K. TEKRIWAL (SUPRA) WHEREIN THE HONBLE CALCUTTA HIGH COURT HAD HELD THAT IN CASE OF ANY SHORTFALL DUE TO ANY DIFFERENCE OF OPINION AS TO THE TAXABILITY OF ANY ITEM OR NATURE OF PAYMENTS FALLING UNDER THE VARIOUS TDS PROVISIONS, THE ASSESSEE CAN BE DECLARED TO BE THE ASSESSEE IN DEFAULT U/S 201 OF THE ACT BUT NO DISALLOWANCE CAN BE MADE BY INVOKING PROVISIONS OF SECTION 40A(IA). THE HONBLE HIGH COURT OF CALCUTTA OBSERVED THAT THE PROVISIONS OF SECTION 40A(IA) HAVE TWO LIMBS; ONE IS WHERE, INTER ALIA, THE ASSESSEE HAS TO DEDUCT TAX AND SECOND WHERE AFTER DEDUCTING TAX, INTER ALIA, THE ASSESSEE HAS T O PAY THE SAME INTO GOVERNMENT ACCOUNT. THE 14 HONBLE HIGH COURT OF CALCUTTA WENT TO OBSERVE THAT THERE WAS NOTHING IN THE SAID SECTION TO TREAT , INTER ALIA, THE ASSESSEE AS DEFAULTER WHERE THERE I S A SHORTFALL IN DEDUCTION AND FURTHER, SECTION 40A(IA) REFERS ONLY TO THE DUTY TO DEDUCT TAX AND PAY TO GOVERNMENT ACCOUNT. UNDISPUTEDLY, IN THE PRESENT APPEAL ALSO, THERE IS NO ALLEGATION THAT TH E TAX DEDUCTED WAS NOT PAID INTO THE GOVERNMENT ACCOUNT AND THE ONLY FAULT OF THE ASSESSEE IS THE FAILURE ON ITS PART TO FT DEDUCT TAX AT THE PRESCRIBED RATE. THIS, AS PER THE JUDGEMENT OF THE HONBLE HIGH COURT OF CALCUTTA, DOES NOT ATTRACT DISALLOWANCE U/S 40AFIA) OF THE ACT. WE ALSO NOTE THAT A SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT MUMBAI BENCH IN THE CASE OF DCIT VS. CHANDABHOY & JASSOBHOY REPORTED IN (2012) 17 TAXMANN.COM 1 58 (MUM.) AND HONBLE HIGH COURT OF KARNATAKA IN CIT -LTU VS. HEWLETT- PACKARD INDIA SALES (P.) LTD. REPORTED IN 382 ITR 496 (KAR). ACCORDINGLY, RESPECTFULLY FOLLOWING THE RATIO OF THE JUDGMENTS AS AFORESAID, WE ALLOW GROUND NO. 4 OF THE ASSESSEES APPEAL. 5.1 AFTER PERUSING THE AFORESAID FINDING OF THE LD. CIT(A) AS WELL AS THE FINDING OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE DO NOT FIND ANY 15 INFIRMITY OR LEGALITY IN THE ORDER PASSED BY THE LD . CIT(A), HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE W HEREIN HE HAS REDUCED THE DISALLOWANCE FROM RS. 1,40,99,015/- TO RS. 19,0 8,030/- AND ACCORDINGLY THE GROUNDS RAISED BY THE REVENUE STAN D REJECTED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED ON 05-02-2019. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 05/02/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES