Implication for non deduction of tds by deductor

Dear All,

One of my client who is contractor as an service recepient under audit for last 3 year. in FY 2014-15 there is one party from whom he has taken hiring serviec around 7500000/- and claim expenses as hiring charges paid Rs.7500000/-, but not deducted any TDS. then whether disallowance u/s.40 attract.

But opposition party from whom he has taken hiring service, they had already shown Rs.7500000/- as there Gross receipt as Hiring charges received. also they give us confirmation regarding to TDS not deducted by deductor but we have claim as Income in our book. then on that ground whether disallowance can be waved.

required circular or case laws.

Also there is any specific format or form regarding to confirmation as deductor has not deducted TDS but deductee has claim as Income in her books, hence can be waved disallowance U/s.40 in deductor books.

Please reply its urgent

Regards,

Saumit Patil

Refer Proviso to Section 201(1) in this regard -

Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident—

(i) has furnished his return of income under section 139

(ii) has taken into account such sum for computing income in such return of income; and

(iii) has paid the tax due on the income declared by him in such return of income,

and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed

Further Rule 31ACB prescribed Form 26A for the purpose of furnishing CA certificate.

Hence disallowance of above amount can be avoided if -

1 - All of above 3 conditions are satisfied.

2.- Obtain a certificate from a chartered accountant in this behalf and furnish that certificate along with form 26A