P.N. MEMORIAL NEURO CENTRE AND RESEARCH INSTITUTE LTD.,KOLKATA V. DCIT, CIRCLE- 11(1), KOLKATA, KOLKATA

ITA 328/KOL/2025

AI Insights

The case involves P.N. Memorial Neuro Centre and Research Institute Ltd, which appealed against the order of the National Faceless Appeal Centre, Delhi, confirming additions made by the AO for non-deduction of TDS on certain expenditures under Section 40(a)(ia) of the Income Tax Act for the Assessment Year 2016-17. The AO had disallowed 30% of various expenditures totaling approximately 8,64,69,802, citing non-deduction of TDS as required under sections 194H and 194J. The CIT(A) upheld these disallowances, leading to the appeal before the Tribunal. The Tribunal, after reviewing the submissions and evidence provided by the assessee, concluded that the assessee had complied with TDS provisions and had provided adequate details of the expenditures, thus setting aside the CIT(A)'s order and allowing the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792343 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Appeal Filed On: 17-02-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.B. CHAKRABORTHY
• Assessee Lawyers: MONAJ KATARUKA
• Keywords: Set aside; TDS; Non-deduction of tax
• Section: 37(1); 40(a)(ia)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No.328/KOL/2025 (Assessment Year: 2016-17) P.N. Memorial Neuro Centre and Research Institute Ltd. 8/1A/1, Keyatala Road, Kolkata-700029, West Bengal Vs. DCIT, Circle 11(1) Aaykar Bhawan, P-7, Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) PAN No. AADCP4772G Assessee by : Shri Monaj Kataruka, AR Revenue by : Shri S.B. Chakraborthy, DR Date of hearing: 09.09.2025 Date of pronouncement: 02.12.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 24.01.2025 for the AY 2016-17. 2. At the time of hearing, the ld. Counsel for the assessee pressed the ground nos.3, 5 and 6, which are extracted below:- “3. That on the facts and in the circumstances of the case the action of the ld. CIT (A) to confirm the addition made by the AO of ₹2,59,40,940/- on account of non- deduction of TDS u/s 40(a)(ia) of the act, being 30% of ₹8,64,69,802/- is contrary to the material evidences on record and the addition is arbitrary excessive and illegal. 5. That on the facts and in the circumstances of the case the action of the Ld. CIT(A) to confirm addition of Rs.1,62,66,583/- being 30% of the addition of Rs.5,42,21,943/- on account of incentives paid as not allowable u/s 40(a)(ia) for non-deduction of tax u/s 194H is contrary to the material evidences on record and the addition is arbitrary excessive and illegal.. Printed from counselvise.com Page | 2 ITA No. 328/KOL/2025 P.N. Memorial Neuro Centre and Research Institute Ltd; A.Y. 2016-17 6. That on the facts and in the circumstances of the case the action of the Ld. CIT(A) to confirm addition of Rs.1,02,32,441/- being 30% of the addition of Rs.3,41,08,137/- on account of sales promotion expenses as not allowable u/s 40(a)(ia) for non- deduction of tax u/s 194J is contrary to the material evidences on record and the addition is arbitrary excessive and illegal.” 2.1. The facts in brief are that the assessee filed the return of income on 12.09.2016, declaring the total income of ₹14,75,83,010/-. The case of the assessee was selected for scrutiny and statutory notices along with questionnaire were duly issued and served upon the assessee, which were also replied by the assessee. The ld. AO noted during the course of assessment proceedings, that the assessee incurred certain expenditure under the head miscellaneous expenses aggregating to ₹8,64,69,802/- during the year. The ld. AO observed that it appeared on the basis of facts available that no TDS was deducted at source and therefore, considering the provisions of Section 40a(ia) and 37(1) of the Act, the proportionate disallowance was computed at 30% of the total expenditure of ₹8,64,69,802/-, which comes to ₹2,59,40,940/- and the same was added to the income of the assessee. 2.2. Similarly, the ld. AO observed that the assessee has shown the incentive under the head miscellaneous expenses for which no details were filed. The ld. AO further noted that no TDS has been deducted therefrom and accordingly, the ld. AO disallowed 30% of the amount of ₹5,42,21,943/-, which comes to ₹1,62,66,583/-. Similarly, in respect of third item the ld. AO noted that the assessee has incurred sales promotion of ₹ 3,41,08,137/- in respect of which the complete details of addresses, names, employees names, email, TDS deducted were not furnished and accordingly, the ld. AO disallowed 30% of the same, which comes to ₹1,02,32,441/-. 2.3. In the appellate proceedings, the ld. CIT (A) confirmed the order of the ld. AO by noting that the assessee has not furnished the Printed from counselvise.com Page | 3 ITA No. 328/KOL/2025 P.N. Memorial Neuro Centre and Research Institute Ltd; A.Y. 2016-17 details as called for by the ld. AO during the course of assessment proceedings in respect of expenditure of ₹8,64,69,802/-, incurred during the year on payment of fee, Dr. fee, radiology fee, nurses fee and other professional charges, such as security charges and also the generator hire charges and then recorded a finding that since, these expenses were falling u/s 194J of the Act , the same were disallowed at the rate of 30% u/s 40a(ia) of the Act. The ld. CIT (A) also noted that the assessee has not furnished the details of miscellaneous expenses and details about non-profitability of TDS provisions and thus, sustained the disallowance made u/s 40a(ia) of the Act of ₹2,59,40,940/-, being 30% of total expenditure claimed of Rs. ₹8,64,69,802/-. Similarly, the ld. CIT (A) in respect of incentives recorded the same findings and thus, confirmed the addition of ₹1,62,66,583/- being 30% of ₹5,42,21,943/-, in respect of incentive u/s 40a(ia) of the Act for non-deduction of tax at source. On the same lines, the ld. CIT (A) confirmed the disallowance of ₹1,02,32,441/-, being 30% of ₹3,41,08,137/- in respect of sale promotion expenses. 2.4. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has made a detailed submission before the ld. AO as well as the ld. CIT (A) furnishing the copy of audited accounts along with tax audit report. We note that the assessee has also furnished the details of expenses incurred during the year which were liable for TDS deduction at source and on which the TDS was also deducted wherever applicable. We note that in para no.34.a of TAR , the tax auditor reported the tax deducted and collected at source and details of deposit thereof by the assessee during the year. We note that there is no adverse comment by the tax auditor in the tax auditor that the assessee has not deducted the tax at source on the expenditure incurred during the Printed from counselvise.com Page | 4 ITA No. 328/KOL/2025 P.N. Memorial Neuro Centre and Research Institute Ltd; A.Y. 2016-17 year which was charged to the profit and loss account. The ld. AO has observed from the expenses charged in the profit and loss account that the complete details were not filed and therefore, presumed the TDS to be applicable u/s 194J of the Act and computed the disallowance which was confirmed by the ld. CIT (A) for the same reason. In our opinion, the disallowance can be made for the reason that no tax has been deducted by the ld. AO in respect of expenses incurred on miscellaneous expenses, sales promotion expenses and incentives nut not on presumptions and surmises. We have perused the documents furnished before us and find that the assessee has furnished the details of other expenses from page no. 53 to 54 of the assessee’s Paper Book, incurred under various heads of income on which the TDS was deducted, wherever applicable. Therefore, we are not in agreement with the conclusion drawn by the ld. CIT (A) that the expenses were required to be disallowed u/s 40a(ia) of the Act equal to 30% of the total expenses in respect of miscellaneous expenses, sales promotion and incentives, etc. as the assessee has not filed the details, whereas on the other hand, the assessee has furnished all the details before the authorities below and also submitted that the tax deducted at source. Accordingly, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. 3. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 02.12.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 02.12.2025 Sudip Sarkar, Sr.PS Printed from counselvise.com Page | 5 ITA No. 328/KOL/2025 P.N. Memorial Neuro Centre and Research Institute Ltd; A.Y. 2016-17 Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "