#TDS Compliance

ITAT Kolkata rules that disallowance of brokerage expenses under Section 37(1) of the Income Tax Act requires concrete evidence of non-service, not mere suspicion. TDS compliance and books of accounts are sufficient to substantiate claims, shifting the burden of proof to the revenue authorities.

The ITAT Bangalore ruled that tax at source under Section 40(a)(ia) is triggered when professional fees are accrued in the books, not when paid - allowing deduction in the year TDS is actually deposited, even if delayed. This clarifies compliance for asset managers and intermediaries making accrual-based provisions, aligning tax treatment with accounting principles.

The ITAT Delhi has ruled that payments for satellite bandwidth services do not qualify as royalty under Section 9(1)(vi) of the Income Tax Act, even after the Finance Act 2012’s clarificatory amendments. This affirms that Double Taxation Avoidance Agreements take precedence over domestic tax law changes, protecting foreign service providers from retrospective TDS demands and setting a critical precedent for cross-border digital infrastructure payments.

ITAT Mumbai rules that discounts and margins earned by pharmaceutical distributors on resale are trading income, not commission, exempting them from TDS under Section 194H. This clarifies a widespread industry practice and shields distributors from wrongful TDS demands, impacting thousands of pharma supply chain entities nationwide.

ITAT Mumbai rules that disallowance under Section 40(a)(ia) of the Income Tax Act is limited to expenditures claimed in the profit and loss account and does not extend to amounts capitalized as work-in-progress (WIP). This holding clarifies TDS compliance obligations for taxpayers using different accounting methods, ensuring capitalized expenditures remain unaffected by the disallowance provision.

ITAT Kolkata rules that late fees under Section 234E of the Income Tax Act cannot be levied for TDS statements filed before June 1, 2015, aligning with Madras, Karnataka, and Kerala High Court judgments. This decision shields taxpayers from retrospective penalties for pre-2015 filings.

ITAT Pune rules that late fees under Section 234E of the Income Tax Act cannot be imposed for periods prior to 01.06.2015, even if TDS returns were filed late. The Tribunal also held that delays in filing appeals must be condoned when the assessee challenges the jurisdiction of the authority, ensuring substantive justice over procedural rigidity.

The Bombay High Court ruled that the limitation period for TDS default proceedings under Section 201(3) of the Income Tax Act begins separately for each quarterly return, not cumulatively for the financial year. This interpretation strengthens taxpayer protections by preventing retrospective defaults for earlier quarters. Businesses and tax practitioners must now ensure compliance on a quarterly basis to avoid time-barred proceedings.

ITAT Pune upholds disallowance of unproven expenses and TDS non-compliance, affirming that mere audit certification does not absolve assessee of statutory burden of proof.

ITAT holds that TDS under Sections 194C and 194J does not arise if aggregate payments fall below statutory thresholds or exemption conditions are met, clarifying compliance obligations for traders.

ITAT Delhi holds that Section 234E penalty cannot be imposed when TDS return is filed on time initially and a duplicate filing occurs due to technical non-reflection in Form 26AS.