Supreme Court - Disallowance u/s 40(a)(ia) would apply to amounts remaining payable at the end of the year - CA Ashutosh Lohani | 05-07-2014 |

Remember that CBDT had come up with a circular on 16-12-2013, wherein it has asserted that provision of section 40(a) (ia) would cover not only the amounts which arc payable as on 31st March of a previous year but also amounts which are payable at any time during the year. Read the Circular >>

Earlier in July, 2013 the Hon’ble Allahabad High Court had turned down the Income Tax Appeal of the Income Tax Department against the order of the ITAT. While passing the order, the Hon’ble  Allahabad High Court had observed that:

“…….when such type of expenses incurred by the appellant were totally paid and not remained payable as at the end of the relevant accounting period, provisions of section 40(a)(ia) of the Act are not applicable. ………………."

“It is to be noted that for disallowing expenses from business and profession on the ground that TDS has not been deducted, the amount should be payable and not which has been paid by the end of the year. ”

“We do not find that the Tribunal has committed any error in recording the finding on the facts, which were not controverted byt he department and thus the question of law as framed does not arise for consideration in the appeal. ”

The Income Tax Department had preferred a Review Application against the above judgement of the Hon’ble  Allahabad High Court which had also been turned down. While dismissing the review petition, The Hon’ble Allahabad High Court further remarked that,

“The department has sought review of our judgment dated 9.7.2013 on the grounds that two other appeals have been admitted on similar question, and that the judgment of Vishakhapatnam Bench of the Tribunal, on which the reliance is place, has been stayed by the Andhra Pradesh High Court.   “

“We do not find that the grounds of review are good and sufficient. The department has not pointed out any error apparent on the face of record. The admission of two other appeals on the same question or stay of judgment of Vishakhapatnam Bench of the Tribunal is not a ground on which the judgment of the Court may be reviewed. “