Commissioner of Income Tax-21 v. Dr. Jaideep Kumar Sharma

1. These appeals by the Revenue are directed against the common order dated 25^*^ July,2014 passed bytheIncome Tax Appellate Tribunal(TTAT') in ITA No.5696/Del/2011 for Assessment Year ('AY') 2008-09 and ITA No.3893/Del/2010 for AY 2007-08.

2. The Assessee is a Doctor and is carrying on his professional activities at his diagnostic centre i.e. Dr. Jaideep's Diagnostic Centre, 30 JCM DLF-II, Gurgaon.He is the Proprietor ofthe said Centre.The Assessee filed a return ofincome on 26^*^ September, 2008 declaring an income of Rs.7,95,291/-. The return was picked up for scrutiny and a notice was issued to the Assessee by the Assessing Officer ('AO'). During the course of the assessment proceedings,it was noticed that the Assessee had debited a sum ofRs.56,21,675/- under the head "Lab Test Expense". It was noticed that this payment was made to M/s SRL Ranbaxy Ltd. without deduction oftax at source although the payment was covered under Section 194J ofthe Act. Accordingly,the AO disallowed the expense under Section 40(a)(ia)ofthe Act and added it back to the income ofthe Assessee.

3. Aggrieved by the order ofthe AO,the Assessee filed an appeal before the Commissioner ofIncome Tax(Appeals)[CIT(A)].The CIT(A)accepted the ITA Nos.95& 352of2015 Page2of[4] plea ofthe Assessee that the payment made to M/s SRL Ranbaxy Ltd. was not liable for deduction under Section 194J ofthe Act.

4. TheITAT has in the impugned order dated 25^*^ July,2014 referred to the insertion ofthe second proviso to Section 40(a)(ia) ofthe Act by Finance Act, 2012 as discussed by Agra Bench of the ITAT in the case of Rajiv Kumar Aggarwal v. CIT (order dated 29^ May, 2013 in ITA No.337/Agra/2013)which in turn followed the decision ofthis Court in CIT

V. Rajinder Kumar 362 ITR 241. It was held that the second proviso is declaratory and curative in nature. It was held that as long as the corresponding income was brought to tax in the hands ofthe payee, it was notintended to disallow the expenditure in the hands ofthe payer due to non deduction oftax at source.

5. The ITAT has in the impugned order in the present case noted that "the Assessee has filed necessary confirmation from the payee that they have paid the amount received from the Assessee. The confirmation filed by the Assessee was enclosed in the paper book filed before the CIT(A)."

6. In similar circumstances, this court recently in CIT v. AnsalLandmark Township (P.) Ltd. (2015) 377ITR 635(Del) decided a similar issue in ITA Nos.95& 352of2015 Page3of[4] favour ofthe Assessee approving the order ofthe Agra Bench ofthe ITAT in the Rajiv KumarAggarwal{supra).

1. While admitting the present appeal on 27^ February,2015 the following questions were framed for consideration: "Did the ITAT fall into error in holding that the disallowance under Section 40 (a) (ia) on account of the assessee not following the provisions of Section 194(J)and 194(C)in the given facts ofthis case,was notjustified."

8. In the light of the above discussion, the question is answered in the negative i.e. in favour ofthe Assessee and against the Revenue. The appeal is dismissed.

S.MURALIDHAR,J NOVEMBER 19,2015 MK VIBHU BAKHRU,J