AO
made disallowance u/s 40(a)(ia) @ 0.5% of total freight payments which was
deleted by CIT(A). On appeal, Hon’ble ITAT found that during the course of
search, certain incriminating material w.r.t default in TDS compliances were
found for years subsequent to the concerned years. However, no such material
was found for the year under consideration. Hence, AO extrapolated the data for
subsequent years and estimated the impugned disallowance @ 0.5%. It was held
that before making disallowance u/s 40(a)(ia), the pre-requisite conditions are
that AO must bring material on record to show that the assessee was liable to
deduct tax at source in respect of expenditure specified in that section,
assessee has defaulted in deducting TDS or making payment of such TDS after
deduction and assessee has claimed deduction in respect of such expenditure.
Since AO failed to discharge the burden which was on him under law, CIT(A) was
right in deleting the said disallowance.
[ACIT
vs. Chartered Logistics Ltd. - IT(SS)A No.35 & 36/Ahd/2013 – 08/11/2013]
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