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| The Tax Publishers2019 TaxPub(DT) 6231 (Kol-Trib) INCOME TAX ACT, 1961
Section 40(a)(ia), Proviso II
Where AO made disallowance under section 40(a)(ia) and assessee pleaded as to payees having included subject receipts in their returns and, therefore, applicability of second proviso to section 40(a)(ia), matter was remanded to AO for verification afresh.
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Business disallowance under section 40(a)(ia) - Non-deduction of tax at source - Assessee pleading payee having included subject receipts in their returns and, therefore, applicability of second proviso to section 40(a)(ia) -
Assessee entered into works agreement with M/s. Royal Calcutta Truf Club for rendering of several services and therefore, payment of Rs. 23 lakhs was made in lieu of the agreement with M/s. Royal Calcutta Turf Club. AO held that assessee was required to withhold tax under section 194C it had failed to do so. AO accordingly disallowed entire expenditure of Rs. 23 lakhs under section 40(a)(ia). Assessee contended that payee, i.e., M/s. Royal Calcutta Turf Club had duly included subject mentioned receipts in their return of income and had paid taxes thereon.Held: In view of amendment to second proviso to section 40(a)(ia) read with section 201(1) if payee had included subject mentioned receipts in their returns and paid taxes thereon, if any, then disallowance under section 40(a)(ia) would not operate in the hands of payer. Matter was remanded.
REFERRED :
FAVOUR : Matter remanded.
A.Y. : 2013-14
INCOME TAX ACT, 1961
Section 10(38) Section 74
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