Lower deduction of tds

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anyuta modi (Querist)
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21 December 2011 my assessee is co op bank. It deduct tds on MICR charges u/s 194 C @ 2%. Actually it should be deducted @ 10% u/s194J. Now assessing officer disallow MICR charges as lower deduction of TDs (2% instead of 10%). does assessing officer can disallow whole of expenses on above basis.

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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21 December 2011 NO WAY THERE ARE TWO ITAT JUDGMENTS IN THIS REGARD
IN Deputy Commissioner of Income Tax
v. S. K. Tekriwal (2011) 42(II) ITCL 306 (Kol-Trib) IT WAS HELD THAT there is nothing in section 40(a)(ia), to treat, the assessee as defaulter where there was a shortfall in deduction. With regard to the shortfall, it cannot be assumed, that there is a default. Section 40(a)(ia) of the Act refers only to the duty to deduct tax and pay to government account. If there is any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various TDS provisions, the assessee can be declared to be an assessee in default under section 201 and no disallowance can be made by invoking the provisions of section 40(a)(ia).
aLSO SEE Deputy Commissioner of Income Tax
v. Chandabhoy & Jassobhoy (2011) 42(II) ITCL 441 (Mum-Trib)
CA MANOJ GUPTA
JODHPUR
09828510543

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