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Whether the ld. CIT(A) was justified in confirming the disallowance made u/s.40(a)(ia) of the Act in the sum of Rs. 19,05,112/- on account of exhibition expenses paid to Idea House Pvt. Ltd. without deduction of tax at source?

Shanti Prime Publication Pvt. Ltd.

Sec. 40(a)(ia) of Income Tax Act, 1961—Business Disallowance —No disallowance u/s.40(a) as assessee being a payer cannot be treated as an assessee in default.

Facts: Being aggrieved of the order of CIT(A), assessee went on appeal before Tribunal and raised the ground that "whether CIT(A) was justified in confirming the disallowance made u/s.40(a)(ia) of the Act in the sum of Rs. 19,05,112/- on account of exhibition expenses paid to Idea House Pvt. Ltd. without deduction of tax at source"?

Held, that there are divergent views taken by different non-jurisdictional High Courts. In such a scenario, the Hon’ble Supreme Court in the case of Vegetable Products reported in 88 ITR 192 had held that the construction that is favourable to the assessee should have to be considered. Accordingly, we would like to place reliance on the decision of the Hon’ble Delhi High Court and hold that assessee herein being a payer cannot be treated as an assessee in default and consequently, no disallowance u/s.40(a)(ia) could be made in the hands of the assessee herein. - MEHRA EYETECH PVT. LTD. V/s ADDI. CIT - [2020] 27 ITCD Online 033 (ITAT-MUMBAI)