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ABCAUS Excel for Chartered Accountants

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Chartered Accountants

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In a recent judgment Delhi High Court has ruled that the condition to deposit TDS within the prescribed time cannot be read into sub-clause (iii) of clause (a) of Section 40 of the Act as-unlike the language of item (B) of sub-clause (i) of clause (a) of Section 40-the same has not been specifically enacted.

Section 40(a)(iii) provides for disallowance of deduction claimed on account of any payment as salary if it is payable outside India or to a non resident and if tax at source (TDS) has not been deducted therefrom.

At the same time the Court also answered the question whether an Assessee can claim deduction on an expense which is not reflected in its profit and loss account for the relevant period, in favour of the appellant

Case Details:
ITA 32/2004
Anz Grindlays Bank (now Standard Chartered Grindlays Bank Ltd)  (Appellant) vs. Deputy Commissioner of Income Tax (Respondent)
Coram: Justice S.Muralidhar Justice Vibhu Bakhru
Date of Judgment: 01-03-2016

Question of Law before the Court:
“Whether the Income Tax Appellate Tribunal was right in law in holding that salaries paid to ex-patriate employees overseas on which tax was paid in accordance with CBDT Circular dated 685 dated 17/20 June 94 and Circular 686 dated 12.8.94, is not permissible as a deduction in computation of taxable business income in view of the provisions of Section 40 (a)(iii) of the Income Tax Act, 1961 read with Article 7 of the IndoUK Double Taxation Avoidance Treaty?"  

 

 

Download Full Judgment Click Here >>

Salaries paid to ex-patriate employees overseas where tax was paid as per CBDT Circular 685/686-1994 allowable deduction u/s 40(a)(iii) | 02-03-2016 |

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