Facts:
The issue before the ITAT was:
Whether section 40(a)(ia) could be invoked when Form 15G/15H was obtained from the deductee although not filed before proper authority?
The ITAT held as under:
1) Section 40(a)(ia) spells out that the amount cannot be allowed as deduction only in the event when tax is deductible at source and such tax has not been deducted or, after deduction has not been paid.
2) In the instant case, it was the case of the AO that the assessee was required to deduct tax in terms of the provisions of section 194A. Section 194A is further qualified by section 197A(1A) which is a non obstante clause. Section 197A(1A) provides that liability to deduct tax under section 194A ceases when a declaration (i.e., Form 15G, Form 15H, etc.) is received by a person responsible for paying income to the payee.
