Even Tax Deducted under wrong provision will attract dis allowance of 40(a)(ia)

By | August 6, 2015
(Last Updated On: August 6, 2015)

Question When the Tax is to be deducted u/s section 194J but is deducted under section 194C,whether the disallowance u/s 40(a)(ia) will be done ?

Yes, If Section 40(a)(ia) is understood in the manner as laid down by the Apex Court, it can be seen that the expression “tax deductible at source under Chapter XVII-B” occurring in the Section has to be understood as tax deductible at source under the appropriate provision of Chapter XVII-B. Therefore, as in this case, if tax is deductible under Section 194J but is deducted under Section 194C, such a deduction would not satisfy the requirements of Section 40(a)(ia). The latter part of this Section that such tax has not been deducted, again refers to the tax deducted under the appropriate provision of Chapter XVII-B. Thus, a cumulative reading of this provision, therefore, shows that deduction under a wrong provision of law will not save an assessee from Section 40(a)(ia).


Commissioner of Income-tax-1, Kochi


P V S Memorial Hospital Ltd.

IT APPEAL NOS. 2 OF 2012 & 16 OF 2014

JULY  20, 2015

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