No Disallowance of expense under S. 40(a)(i) for payment of Expense to American Resident without deduction of Tax

Provisions of section 40(a)(i) as it existed prior to it’s amendment  by Finance Act, 2003, with “effect from 1-4-2004 provided for disallowance of payment made to a non-resident only where tax is not deducted at source’ on such payment at source. A similar payment to a resident does not result in disallowance in the event of non-deduction of tax at source, Thus a non- resident left with a choice of dealing with’ a resident for a non-resident in business would opt to deal with a resident rather than anon-resident owing to the provisions of section 40(a)(i). To this ext...