ACIT, Ghaziabad V. Pankaj Bhargava, Ghaziabad

ITA 86/DEL/2012

• Counselvise Citation: 8620114 RSA 2012
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 26-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 06-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Difference of opinion
• Section: 194C; 28; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A .NO-86/DEL./2012 ASSESSMENT YEAR -2008-09 ACIT, VS PANKAJ BHARGAVA, CIRCLE-2, RDC-69, RAJ NAGAR, GHAZIABAD. GHAZIABAD PAN-AAFPB9109R (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SANJAY JAIN, CIT DR RESPONDENT BY: SH. ASHWANI TANEJA, FCA & SH. TARUN KUMAR, ADV. DATE OF HEARING:-26.09.2012 DATE OF PRONOUNCEMENT:-26.10.2012 ORDER PER RAJPAL YADAV, JM THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LD. CIT(A), GHAZIABAD DATED 24.10.2011 PASSED FOR AY 2008-09. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE NOT IN-CONSONANCE WITH RUL E 8 ITAT RULES. THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF THE GRIEVANCE OF REVENUE IS THAT LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE M ADE U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961. THIS DISALLOWANCE WAS MADE B Y THE AO ON THE GROUND THAT ASSESSEE HAS DEDUCTED THE TAX AT SOURCE U/S 19 4C @ 1 %, WHEREAS IT OUGHT TO HAVE DEDUCTIVE THE TAX U/S 194J @ 10 %. THE DIFFER ENCE CALCULATED ON THE BASIS OF THE RATE HAS BEEN DISALLOWED U/S 40(A)(IA). I.T.A .NO-86/DEL./2012 2 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS RUNNING A PROPRIETORSHIP CONCERN IN THE NAME AND STYLE OF M/S ALPS ENGINEERS , WHICH IS ENGAGED IN PROVIDING CONSULTANCY SERVICES TO ITS CLIENTS RELAT ED TO PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VILLAGES AS PER TE RMS OF THE LETTER OF AWARD GRANTED TO HIM. HE HAS FILED HIS RETURN OF INCOME ELECTRONICALLY ON 29.09.2008 DECLARING INCOME OF RS.13,95,360/-. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS SHOWN TOTAL TURN OVER OF RS.1,14,03,987/-. IN THE IMMEDIATELY PRECEDING YEAR, THE NET PROFIT RATE SHO WN BY THE ASSESSEE WAS 15.29%, WHEREAS THIS YEAR SUCH RATE IS 12.25%. THE LD. AO FOUND THAT ASSESSEE HAS MADE PAYMENT OF SERVICE CHARGES AS WELL AS COMM ISSION. THE LD. AO WAS OF THE OPINION THAT SERVICES AVAILED BY THE ASSESSEE F ROM DIFFERENT INDIVIDUAL ARE OF TECHNICAL NATURE, THEREFORE, WHILE MAKING THE PAYME NT, HE OUGHT TO HAVE DEDUCTED THE TAX U/S 194J INSTEAD OF DEDUCTING THE TAX U/S 1 94C OF THE ACT. THE LD. AO DIRECTED THE ASSESSEE TO PRODUCE SOME OF THE PARTIE S TO WHOM THE DESIGN CHARGES, SURVEY CHARGES AND COMMISSION HAVE BEEN PAID. ACCO RDING TO THE AO ONLY TWO PERSONS WERE PRODUCED BEFORE HIM, WHO HAVE DEPOSED THAT THEY HAVE CARRIED OUT NON-TECHNICAL WORK FOR THE ASSESSEE. THE AO THEREA FTER ISSUED SUMMONS AND IN RESPONSE TO THE SUMMONS, TWO PARTIES NAMELY JAI AMB EY COMPUTERS AND S.K.NIGAM APPEARED BEFORE THE AO. THEIR STATEMENTS WERE RECORDED. ACCORDING TO THE AO, BOTH OF THEM HAVE STATED THAT WORK PERFORMED BY THEM PERTAINS TO SPECIFIC TECHNICAL/PROFESSIONAL SERVICE S. ON THE BASIS OF THEIR REPLY, LD. AO HAS HARBOURED A BELIEF THAT THE PERSONS WHO HAVE NOT APPEARED BEFORE I.T.A .NO-86/DEL./2012 3 HIM OR THE ASSESSEE FAILED TO PRODUCE THEM BEFORE H IM, HAVE PROVIDED TECHNICAL SERVICES TO THE ASSESSEE AND, THEREFORE, TDS OUGHT TO HAVE BEEN DEDUCTED U/S 194J OF THE INCOME TAX ACT. THE AO IN THIS WAY HAS MADE THE ADDITION. 3. DISSATISFIED WITH THE ADDITIONS, ASSESSEE CARRIE D THE MATTER IN APPEAL BEFORE LD. CIT(A). HE FILED DETAILED RETURN OF SUBMISSION VIDE LETTER DATED 05.10.2011. THESE SUBMISSIONS HAVE BEEN REPRODUCED BY THE LD. F IRST APPELLATE AUTHORITY ON PAGES NO.-6-17 OF THE IMPUGNED ORDER. LD. CIT(A) H AS ALLOWED THE APPEAL OF ASSESSEE AND DELETE THE DISALLOWANCE. LD. FIRST AP PELLATE AUTHORITY IS OF THE OPINION THAT WORK PERFORMED BY THESE PARTIES WAS NO T OF TECHNICAL NATURE. IN THE EARLIER YEARS, SIMILAR PAYMENTS WERE MADE BY THE AS SESSEE AND NO DISALLOWANCE WAS MADE. THE OBSERVATIONS OF THE LD. CIT(A) IN PA RAGRAPH 5.8 ARE WORTH TO NOTE WHICH READ AS UNDER:- 5.8 I FIND THAT ALL THESE PARTIES WERE GIVEN COMPO SITE WORK CONTRACT, BY THE APPELLANT, IN AS MUCH AS THAT THE Y WERE GIVEN WORK OF SAMPLING, MARKING, ON-THE-SPOT PHYSICAL VERIFICATIO N AND OTHER TYPES OF DATA/INFORMATION-COLLECTION, WHICH WERE, THEN, F EEDED INTO THE TECHNICAL DESIGN BEING PREPARED BY THE APPELLANT. THIS ITSELF IMPLIES THAT THESE PARTIES WERE, RATHER THAN GIVING ANY PRO FESSIONAL/TECHNICAL CONSULTANCY, PERFORMING COMPOSITE WORK-ORDER TO SUI T THE TECHNICAL REQUIREMENT OF THE APPELLANT. THUS, THE SERVICES R ENDERED CAN MORE APPROPRIATELY BE CHARACTERIZED AS WORK CONTRACT U/ S 194C, THAN AS TECHNICAL PROFESSIONAL SERVICES U/S 194J. HERE, IT IS IMPORTANT TO MENTION THAT THE TWO PARTI ES TREATED BY THE AO AS PERFORMING PROFESSIONAL/TECHNICAL WORK IN A.Y 2007-08 HAS NOW BEEN ACCEPTED BY THE AO HIMSELF AS NOT PERFORMI NG ANY I.T.A .NO-86/DEL./2012 4 PROFESSIONAL/TECHNICAL WORK AFTER THE PARTIES WERE PRODUCED BY THE ASSESSEE & FOR WHICH NO ADDITION IS MADE BY THE AO AFTER VERIFICATION. THUS LOOKING TO THE ENTIRE FACTS OF THE CASE & LEGA L INTERPRETATION ABOVE, THOUGH THE CONTENTION OF THE ASSESSEE APPEARS TO BE CORRECT THAT THE PAYMENTS IN QUESTION ARE ATTRAC TED BY PROVISIONS OF SEC. 194C & NOT BY SEC. 194J. 4. LD. DR RELIED UPON THE ORDER OF THE AO. HE POIN TED OUT THAT AO HAS ARRIVED AT A CONCLUSION THAT ASSESSEE AVAILED SKILL ED/TECHNICAL WORK FROM THE PERSONS TO WHOM PAYMENTS WERE MADE. THEREFORE, HE OUGHT TO HAVE DEDUCTED THE TDS U/S 194J. ON THE OTHER HAND, LD. COUNSEL FOR T HE ASSESSEE RAISED THREE PROPOSITIONS. IN HIS FIRST FOLD OF CONTENTION, HE APPRISED US ABOUT THE NATURE OF WORK PERFORMED BY THE ASSESSEE AND HOW THAT NATURE OF WORK FALLS WITHIN THE AMBIT OF CLAUSE F & I OF EXPLANATION-1 TO SECTION 1 94C. ACCORDING TO HIM, IF THE COMPLETE WORK UNDERTAKEN BY THE ASSESSEE, UNDER AN AWARD FALLS WITHIN THE AMBIT OF SECTION 194C THEN, HOW SUB ASSIGNMENT OF SUCH WO RK WOULD FELL WITHIN THE AMBIT OF SECTION 194J. IN HIS NEXT FOLD OF SUBMISS ION, HE SUBMITTED THAT ASSESSEE HAS MADE PAYMENTS TO SIXTEEN PARTIES, OUT OF THOSE TWO PARTIES WERE PRODUCED BEFORE AO, THEY CONFIRMED ABOUT THE PERFORMANCE OF NON-SKILLED WORK. OUT OF THE REMAINING 14, THE AO COULD PROCURE THE PERSONS OF TWO PARTIES, THEIR STATEMENTS WERE RECORDED FROM THE BACK OF ASSESSEE AND NO OPPORTUNITY TO CROSS- EXAMINATION, OF THOSE PERSONS WERE GRANTED. HE FUR THER SUBMITTED THAT ON THE BASIS OF INFORMATION SUPPLIED BY THOSE PARTIES, HOW AO CAN ASSUME THAT WORK I.T.A .NO-86/DEL./2012 5 PERFORMED BY ALL OTHER PERSONS IS OF TECHNICAL NATU RE AND FALLS WITHIN THE AMBIT OF EXPLANATION APPENDED TO SECTION 194J. THE THIRD FO LD OF SUBMISSION, IS BASED ON THE DECISION OF ITAT, CALCUTTA WHEREIN IT HAS BEEN HELD THAT DISALLOWANCE U/S 40(A)(IA) CAN BE MADE IN TWO SITUATIONS, NAMELY WHE RE ASSESSEE HAS FAILED TO DEDUCT THE TAX OR WHERE AFTER DEDUCTING THE TAX FAI LED TO DEPOSIT INTO THE GOVERNMENT ACCOUNTS. IN THE CASE OF SHORT DEDUCTIO N OF TAX ON ACCOUNT OF DIFFERENCE OF OPINION ABOUT THE APPLICABILITY OF PR OVISION, THE ASSESSEE COULD BE HELD IN DEFAULT U/S 201 BUT NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF SECTION 40(IA) OF THE ACT. HE PLACED ON RECORD A COPY OF TRIBUNALS ORDER, PASSED IN ITA NO. 1135/KOL/2010 IN THE CASE OF DCIT VS M/S S.K.TEKRIWAL. 5. WE HOW DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. THE STAND OF THE ASSESSEE IS THAT HE H AS PROVIDING CONSULTANCY SERVICES TO ITS CLIENTS WHO HAVE ENGAGED HIM FOR PREPARATION OF DETAILED PROJECT REPORTS RELATED TO PLANNING, DEVELOPMENT, IMPROVEMENT OF CI TIES, TOWNS AND VILLAGES, AS PER THE TERM OF CONTRACTS. IN FURTHERANCE OF SUCH CONTRACT, THE ASSESSEE PROVIDE CONSULTANCY RELATING TO WATER SUPPLY, SOLID WASTE M ANAGEMENT, SEWERAGE AND DRAINAGE SYSTEM OF VARIOUS MUNICIPAL BODIES AND GOV ERNMENT COMPANIES ENGAGED IN CONSTRUCTION OF HOUSING ACCOMMODATION. IN ORDER TO FULFILL THESE CONTRACTS, ASSESSEE HAS TO OUT-SOURCE CERTAIN NON-T ECHNICAL WORKS SUCH AS COLLECTION OF DATA, LOCATING AND MARKETING OF CERTA IN BUILDINGS, OFFICE ETC. THE I.T.A .NO-86/DEL./2012 6 ASSESSEE FURTHER CONTENDED THAT THE PERSONS TO WHOM WORK WAS OUT-SOURCED HAS PERFORMED FOLLOWING ACTIVITIES:- (I) MARKING OF LANDMARKS SUCH AS IMPORTANT MONUMENTS, INSTITUTIONAL BUILDINGS, OFFICES, HOSPITALS, SCHOOL S, COLLEGE, CULVERTS, WATER BODIES ETC., NAMING OF MAJOR ROADS, MOHALLAS ETC. ON MAP PROVIDED BY ASSESSEE. (II) COMPUTER JOB WORK I.E MARKING NODE NOS. ON MAP, LEN GTH OR DIA OF PIPE ON COMPUTER & DELIVERING NUMBER OF SETS OF THE PRINT THEREOF ON THE BASIS OF ENGINEERING DESIGN DATA GIV EN BY ASSESSEE. (III) FIELD INSPECTION, DOOR TO DOOR WASTER COLLECTION, I NFORMATION COLLECTION REGARDING EXISTING FACILITY, COLLECTION OF SOIL SAMPLE & GETTING SOIL SAMPLE TEST FROM ANY SOIL TESTING LABO RATORY & SUBMISSION OF THE TEST REPORT TO ASSESSEE I.E SIMPL Y A DOOR TO DOOR DATA COLLECTION. 6. THUS, ACCORDING TO THE ASSESSEE ALL TECHNICAL WO RK WAS PERFORMED BY HIMSELF AND THE PARTIES FROM WHOM WORK WAS OUT-SOUR CED HAS ONLY PERFORMED, NON-SKILLED WORK EITHER BY SUPPLYING NON-SKILLED LA BOURS AT THE SITE FOR HELPING ASSESSEE TO MONITOR THE WORK OR BY SPECIALIZED MACH INES OPERATED BY NON- TECHNICAL PERSONS. NOW THE QUESTION FOR ADJUDICATI ON IS, WHETHER THE WORK PERFORMED BY THE PERSONS TO WHOM PAYMENT WAS MADE B Y THE ASSESSEE WAS OF TECHNICAL NATURE OR A SIMPLE WORK CONTRACT. IN ORD ER TO ADJUDICATE THIS DISPUTE, IT I.T.A .NO-86/DEL./2012 7 IS IMPERATIVE UPON US TO TAKE NOTE IN SECTION 194C AND 194J. THE RELEVANT PART OF SECTION 194C READ AS UNDER :- 194C(1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR F OR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CO NTRACTOR AND A SPECIFIED PERSON SHALL-------------- EXPLANATION-FOR THE PURPOSES OF THIS SECTION:- SPECIFIED PERSON SHALL MEAN,- (A)------------ (B)------------ (F) ANY AUTHORITY, CONSTITUTED IN INDIA BY OR UNDE R ANY LAW, ENGAGED EITHER FOR THE PURPOSE OF DEALING WITH AND SATISFYING THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURPOSE O F PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VIL LAGES, OR FOR BOTH; OR (I) ANY PERSON, BEING AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY OR AN ASSOCIATION OF OR A BODY OF INDIVIDUALS, IF S UCH PERSON,- (A) DOES NOT FALL UNDER ANY OF THE PRECEDING SUB-CL AUSES; AND (B) IS LIABLE TO AUDIT OF ACCOUNTS UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAI D TO THE ACCOUNT OF THE CONTRACTOR. 7. THE RELEVANT PART OF SECTION 194J READ AS UNDER :- (1) ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY SUM BY WAY OF (A) FEES FOR PROFESSIONAL SERVICES, OR (B) FEES FOR TECHNICAL SERVICES, [OR] (C) ROYALTY, OR (D) ANY SUM REFERRED TO IN CLAUSE (VA) OF SECTION 28 SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CH EQUE OR DRAFT OR BY ANY OTHER MODE, WHICH EVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO [TEN] PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THERE IN: EXPLANATION-FOR THE PURPOSES OF THIS SECTION- I.T.A .NO-86/DEL./2012 8 (A) PROFESSIONAL SERVICES MEANS SERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON LEGAL, MEDICAL, ENGINE ERING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOU NTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR ADV ERTISING OR SUCH OTHER PROFESSION AS IN NOTIFIED BY THE BOARD F OR THE PURPOSES OF SECTION 44AA OR OF THIS SECTION; (B) FEES FOR TECHNICAL SERVICES SHALL HAVE THE SAME M EANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION(1) OF SECTION 9. 8. THE BARE PERUSAL OF SECTION 194C WOULD REVEAL TH AT IN CASE PAYMENT IS BEING MADE WITH REGARD TO A CONTRACT ENTERED FOR TH E PURPOSE OF DEALING WITH AND SATISFYING THE NEED FOR HOUSING ACCOMMODATION FOR T HE PURPOSE OF PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VIL LAGES THAN SUCH PAYMENT WOULD COME WITHIN THE AMBIT OF SECTION 194C. ON TH E OTHER HAND, EXPLANATION APPENDED TO SECTION 194J SUGGEST THAT PROFESSIONAL SERVICE WOULD BE CONSTITUTED, ALL THOSE SERVICES WHICH ARE RENDERED BY A PERSON IN THE COURSE OF CARRYING ON LEGAL, MEDICAL, ENGINEERING OR ARCHITECTURAL PROFES SION ETC. THE JOBS AVAILED BY THE ASSESSEE FROM THE PERSONS DID NOT FALL WITHIN T HE AMBIT OF THIS EXPLANATION, RATHER THEY ARE ANCILLARY JOBS CONNECTED WITH MAIN PERFORMED BY THE ASSESSEE, WHICH FALLS WITHIN THE AMBIT OF CLAUSE F & I OF EXP LANATION-1 TO SECTION 194C. THE LD. FIRST APPELLATE AUTHORITY HAS EXAMINED THIS ASPECT IN DETAIL. CONSIDERING THE FINDING OF CIT(A) ON THIS ISSUE, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A). 9. AS FAR AS THE SECOND FOLD OF SUBMISSIONS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE IS CONCERNED, WE ARE OF THE OPINION THAT E VIDENCE POSSESSED BY THE LD. AO IS NOT SUFFICIENT TO SAY THAT ALL THESE PERSONS HAVE PERFORMED TECHNICAL DUTIES. I.T.A .NO-86/DEL./2012 9 THE AO HAS BEEN HARPING UPON THE STATEMENT GIVEN BY REPRESENTATIVE OF JAI AMBEY AND S.K. NIGAM HUF. BOTH THESE PERSONS HAVE GIVEN UNDERTAKING THAT THEY HAVE PERFORMED NON-TECHNICAL WORKS WHICH INCLU DE COMPUTER JOB WORK, DATA ENTRY ETC. THE COPIES OF THE UNDERTAKINGS ARE AVAI LABLE ON PAGE NOS-32 TO 40B OF THE PAPER BOOK. 10. IN VIEW OF THIS CONTRARY STAND, IT IS DIFFICULT TO INFER THAT ALL THE ENTITIES WERE RENDERING TECHNICAL SERVICES. THE LD. FIRST APPELL ATE AUTHORITY HAS EXAMINED THE QUALITY OF EVIDENCE AVAILABLE ON THE RECORD VIS-A-V IS THE EXPLANATION MADE BY THE ASSESSEE. WE DO NOT SEE ANY REASON TO INTERFERE TH E ORDER OF LD. CIT(A) ON THIS ASPECT ALSO. 11. WITH REGARD TO THIRD PROPOSITION THAT ONCE TAX WAS DEDUCTED BY THE ASSESSEE THOUGH UNDER A WRONG PROVISION THAN ON ACCOUNT OF S HORT DEDUCTION OF TAX, THE ASSESSEE CAN BE TREATED IN DEFAULT U/S 201, BUT NO DISALLOWANCE U/S 40(A)(IA) OF THE INCOME TAX ACT IS TO BE MADE. THE ITAT, CALCUTTA H AS EXAMINED THIS ISSUE IN DETAIL. THE FOLLOWING FINDING OF THE ITAT, CALCUTT A IS WORTH TO NOTE:- WE ARE OF THE VIEW THAT THE CONDITION LAID DOWN U/ S 40(A)(IA) OF THE ACT FOR MAKING ADDITION IS THAT TAX IS DEDUC TIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED. IF BOTH THE CONDIT IONS ARE SATISFIED THEN SUCH PAYMENT CAN BE DISALLOWED U/S 40(A)(IA) OF THE ACT BUT WHERE TAX IS DEDUCTED BY THE ASSESSEE, EVEN UNDER B ONAFIDE WRONG IMPRESSION, UNDER WRONG PROVISIONS OF TDS, THE PROV ISIONS OF SECTION 40(A)(IA) OF THE ACT CANNOT BE INVOKED. HE RE IN THE PRESENT CASE BEFORE US, THE ASSESSEE HAS DEDUCTED TAX U/S 1 94C(2) OF THE ACT AND NOT U/S 1941 OF THE ACT AND THERE IS NO ALLEGAT ION THAT THIS TDS IS NOT DEPOSITED WITH THE GOVERNMENT ACCOUNT. WE A RE OF THE VIEW THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT HAS TWO LIMBS, ONE IS WHERE, INTER ALIA, ASSESSEE HAS TO DEDUCT TAX AN D THE SECOND WHERE AFTER DEDUCTING TAX, INTER ALIA, THE ASSESSEE HAS T O PAY INTO I.T.A .NO-86/DEL./2012 10 GOVERNMENT ACCOUNT. THERE IS NOTHING IN THE SAID S ECTION TO TREAT, INTER ALIA, THE ASSESSEE AS DEFAULTER WHERE THERE I S A SHORTFALL IN DEDUCTION. WITH REGARD TO THE SHORTFALL, IT CANNOT BE ASSUMED THAT THERE IS A DEFAULT AS THE DEDUCTION IS NOT AS REQUI RED BY OR UNDER THE ACT, BUT THE FACTS IS THAT THIS EXPRESSION, ON WHI CH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139. THIS SECTION 40(A)(IA) OF THE ACT REFERS ONLY TO THE DUTY TO DEDUCT TAX AND P AY TO GOVERNMENT ACCOUNT. IF THERE IS ANY SHORTFALL DUE TO ANY DIFF ERENCE OF OPINION AS TO TAXABILITY OF ANY ITEM OR THE NATURE OF PAYMENTS FALLING UNDER VARIOUS TDS PROVISIONS, THE ASSESSEE CAN BE DECLARE D TO BE AN ASSESSEE IN DEFAULT U/S 201 OF THE ACT AND NO DISAL LOWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA ) OF THE ACT. 12. TAKING INTO CONSIDERATION ALL THESE ASPECTS, WE DO NOT FIND ANY MERIT IN THIS APPEAL AND ACCORDINGLY IT IS DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.10.2012. SD/- SD/- (T.S.KAPOOR) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26/10/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI