No disallowance can be made u/s 40(a)(ia) for late deduction of tax at source:

AO found that the assessee had made certain advance payments, deducted tax at source on the same in the month of March and deposited it to the credit of Govt. in the month of April. However, from the concerned ledger, AO observed that only a part of the said sum was paid/credited in the month of March. AO was of the view that on balance sum paid/credited in earlier months, TDS ought to have been made in the month of February or earlier month as the case may be i.e. at the time of payment or credit whichever is earlier and accordingly, such TDS ought to have been deposited to the credit of Govt. before 31^st March. Since, that was not done, he made disallowance u/s 40(a)(ia). Hon’ble ITAT was of the view that late deduction of tax at source shall not suffer from the rigours of disallowance u/s 40(a)(ia). Placing reliance on “CIT vs. Royal Builders – ITA No.520 of 2012”, it was held that even if TDS has been made in the month of March for payments/credits made in earlier months, since such TDS has been deposited before due date of filing return of income, disallowance u/s 40(a)(ia) is unwarranted.

[ACIT vs. M/s. Vijay Industries – ITA No.774/Ahd/2013]