TDS to be deducted on year end provisions for expenses

IN THE INCOME TAX APPELLATE TRIBUNAL

The Relevant Text of the Order as follows :

15. Further, these provisions were debited to the profit and loss account and not added back to the computation of total income by the assessee. Once, the assessee has claimed these expenses by debiting into profit and loss account, it needs to deduct TDS on such expenditure, even if not credited to respective parties account. Since, the assessee has not deducted TDS, the expenses claimed are liable to be disallowed under section 40(a)(ia) of the Act, because as per the provisions of chapter XVII-B of the Act, TDS needs to be deducted either at the time of payment or at the time of credit to the party account. Further, even in a case where credit into the suspense account is subject to TDS under the provisions of the Act. Therefore, we are of the considered view that there is no merit in the argument of the assessee that TDS provisions are not applicable when year-end provisions are made without crediting to respective parties account. To this extent, we are fully subscribed to the findings recorded by the learned AO as well as learned CIT(A). As regards to the claim of the assessee that in subsequent Financial Year year-end provisions have been either reversed or paid subject to deduction of TDS, does not alter the legal position in so far as disallowance of expenses under section 40(a)(ia) of the Act for non-deduction of Tax at source. The law is very clear as per which TDS is required to be deducted when credit or payment whichever is earlier. As regards various case laws referred by the assessee, we find that all those cases are contrary to the provisions of chapter XVII-B r.w.s.40(a)(ia) of the Act, and hence are not followed. Therefore, considering facts and circumstances of the case, we are of the considered view that there is no error in findings recorded by the lower authorities in disallowing year-end provisions for non-deduction of TDS under respective provisions of the Act. Accordingly, we reject the ground taken by the assessee.