section 40(a)(ia)

“Paid” vs “Payable” interpretation- Section 40(a)(i) & Section 40(a)(ia) clarified by Apex Court

Income Tax - There have been substantial debate around the point whether the term ‘payable’ used in section 40(a)(ia) would include amounts outstanding at the end of the year or both amounts outstanding as well as paid during the year....

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TDS defaults when amount is Payable to a Resident

Income Tax - In my earlier article I have made a discussion about the disallowance when the amount is payable to a non-resident /foreign company but TDS is not deducted by the payer . Section 40(a)(ia) deals with the situation when the amount is payable to a resident . Hereon also we will discuss the complete scenario in parts to have a better underst...

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TDS default on Payment of any Nature other Then Salary, to A Non-Resident / Foreign Company

Income Tax - In this article, I am going to have a discussion on Section 40(a)(i) of the Income Tax Act, 1961. Which deals with disallowance of certain business expenditure in case of TDS default is made by the Payer at the time of making payments to a non-resident or foreign company. ...

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Section 40(a)(ia) proposed to apply to Income from Other Sources

Income Tax - Provisions of section 40(a)(ia) shall, so far as they may be, apply in computing income chargeable under the head income from other sources as they apply in computing income chargeable under the head Profit and gains of business or Profession....

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Need to Rationalize Provisions of Section 40(a)(ia) of Income Tax, 1961

Income Tax - CA Sharad Jain Introduction: The section 40(a)(ia) of the Income Tax Act (“Act”) was brought on the statute by the Finance (No. 2) Act, 2004, with effect from 1-4-2005 i.e., from Assessment Year 2005-06 with the aim to ensure better compliances of TDS provisions. Since inception, these provisions are being felt by the tax assesses [&h...

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Change in provisions related to disallowance of expenditure on account of non-compliance with TDS provisions : Budget 2010-11

Income Tax - The existing provisions of section 40(a)(ia) of Income-tax Act provide for the disallowance of expenditure like interest, commission, brokerage, professional fees, etc. if tax on such expenditure was not deducted, or after deduction was not paid during the previous year....

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No Section 14A Disallowance if investments are business expediency & strategic investments

DCIT Vs. Sri Rikhab Chand Jain (ITAT Kolkata) - No disallowance U/s 14A of Act need to be made by invoking the provisions of Rule 8D (2) (ii) of Rules as investments admittedly are business expediency investments and strategic investments....

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Disallowance cannot be made by only giving weight age to nomenclature and without seeing real purpose for payment

Abhijit Majumder Vs. ITO (ITAT Kolkata) - Where assessee paid amount to deliveryman to deliver the newspapers and delivery persons were nothing but casually engaged labourers and they have no other work to perform and assessee had wrongly debited the amount as commission in its books, AO was not justified in making dis allowance under secti...

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TDS not deductible on Interest paid to a company carrying on Insurance business

I.T.O., Ward-8(1) Vs. M/s. Batram Properties Pvt. Ltd. (ITAT Kolkata) - The Income Tax Appellate Tribunal recently proclaimed that the provisions relating to TDS would not be applicable in case of interest paid to a Non-Banking Finance Companies (NBFC) which is also engaged in business of insurance. ...

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TDS not deductible on estimation /provision of expenses which was not paid

Apax Partners India Advisers (P.) Ltd. Vs Dy. CIT (ITAT Mumbai) - Apax Partners India Advisers (P.) Ltd. Vs Dy. CIT (ITAT Mumbai) Learned Counsel of the assessee submitted that the above is provision for legal expenses. He submitted that the said provision was reimbursed in the next year and the actual expenses booked and taxed were duly deducted at source. Learne...

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Discount on sales cannot be regarded as Commission liable to TDS U/s. 194H

Dish TV India Ltd. Vs Asstt. CIT (ITAT Mumbai) - Out of these four appeals two appeals are filed by the assessee while the other two appeals are filed by the Revenue for against the orders of the Commissioner (Appeals)--4, Mumbai dated 13-2-2017 and 6-2-2017 for assessment years 2011-12 and 2012-13 respectively....

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Disallowance for failure to withhold tax- Sec.195 rw Sec. 40(a)(i)

Circular No. 3/2015-Income Tax - (12/02/2015) - Circular No. 3/2015 Section 40(a)(i) of the Act stipulates that in computing the income chargeable under the head "Profits or gains of business or profession", any interest, royalty, fees for technical services or other sum chargeable under this Act either payable in India to a non-resident (not bei...

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S. 195 AOs to tax taxable part of sum paid to NR for TDS default

Instruction No. 02/2014 - (26/02/2014) - Sub: Deduction of tax at source under Section 195 read with Sections 201 of the Income-tax Act, 1961 relating to payment made to a non-resident-reg. Section 195 of the Income-tax Act (hereafter referred to as 'the Act') provides that any person, responsible for paying to a non-resident not being a ...

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CBDT circular on Section 40(a)(ia)-TDS Disallowance

Circular No. 10/DV/2013-Income Tax - (16/12/2013) - Circular No. 10/DV/2013-Income Tax It has been brought to the notice of the Board that there are conflicting interpretations by judicial authorities regarding the applicability of the provisions of section 40(a)(ia) of the Income-tax Act,...

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Recent Posts in "section 40(a)(ia)"

No Section 14A Disallowance if investments are business expediency & strategic investments

DCIT Vs. Sri Rikhab Chand Jain (ITAT Kolkata)

No disallowance U/s 14A of Act need to be made by invoking the provisions of Rule 8D (2) (ii) of Rules as investments admittedly are business expediency investments and strategic investments....

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Disallowance cannot be made by only giving weight age to nomenclature and without seeing real purpose for payment

Abhijit Majumder Vs. ITO (ITAT Kolkata)

Where assessee paid amount to deliveryman to deliver the newspapers and delivery persons were nothing but casually engaged labourers and they have no other work to perform and assessee had wrongly debited the amount as commission in its books, AO was not justified in making dis allowance under section 40(a)(ia) for no TDS by only giving w...

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TDS not deductible on Interest paid to a company carrying on Insurance business

I.T.O., Ward-8(1) Vs. M/s. Batram Properties Pvt. Ltd. (ITAT Kolkata)

The Income Tax Appellate Tribunal recently proclaimed that the provisions relating to TDS would not be applicable in case of interest paid to a Non-Banking Finance Companies (NBFC) which is also engaged in business of insurance. ...

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TDS not deductible on estimation /provision of expenses which was not paid

Apax Partners India Advisers (P.) Ltd. Vs Dy. CIT (ITAT Mumbai)

Apax Partners India Advisers (P.) Ltd. Vs Dy. CIT (ITAT Mumbai) Learned Counsel of the assessee submitted that the above is provision for legal expenses. He submitted that the said provision was reimbursed in the next year and the actual expenses booked and taxed were duly deducted at source. Learned Counsel submitted that assessee is [&h...

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Discount on sales cannot be regarded as Commission liable to TDS U/s. 194H

Dish TV India Ltd. Vs Asstt. CIT (ITAT Mumbai)

Out of these four appeals two appeals are filed by the assessee while the other two appeals are filed by the Revenue for against the orders of the Commissioner (Appeals)--4, Mumbai dated 13-2-2017 and 6-2-2017 for assessment years 2011-12 and 2012-13 respectively....

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Reopening of assessment beyond a period of 4 years to make fishing inquiries not justified

Crescent Construction Co. Vs. Asst. CIT (ITAT Mumbai)

The primary condition of reasonable belief having nexus with the material on record is still operative. However, we are of the view, that mere fresh application of mind to the same set of facts or mere change of opinion does not confer jurisdiction to the assessing officer even under the post-1989 section 147 of the Act. ...

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Addition for non TDS deduction not justified if form 15G been obtained

Sri Nidamanuri Nageswara Rao Korukonda Vs. ITO (ITAT Visakhapatnam)

Though the amount was credited to her account in the books of accounts of the assessee, the payment was not made to her and before making the payment and filing the return of income, the assessee had obtained the form 15G and forwarded to the Ld. CIT. Since the recipient was not having taxable income, obtaining form 15G before making the ...

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Sect. 36(1)(iii)- Interest-free loans & allowability of Interest on borrowings

Pr. CIT Vs. Consumer Marketing (India) (P) Ltd. (Gujarat High Court)

Where assessee paid interest on term loan which had entirely been used for purpose of purchasing the assets for purpose of business which were hypothecated to bank and it had sufficient interest-free funds to take care of advances, the deduction under section 36(1)(iii) was allowable....

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Mitusubishi TDS Case: Delhi HC Refers matter to Chief Justice due to difference of opinion

CIT Vs. Mitsubishi Corporation India P. Ltd. (Delhi High Court)

CIT Vs. Mitsubishi Corporation India P. Ltd. (Delhi High Court) Due to difference of opinion on below issues  between Justices S Muralidhar and Prathiba M Singh, Delhi High Court, has referred the Mitusubishi’s TDS case to Chief Justice for appropriate orders:- (i) Whether the ITAT fell into error in holding that Section 40(a) (i) of [...

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Allahabad High Court also rules that sec 40(a)(ia) is applicable on “Payable”

Ashok Auto Sales Ltd v/s CIT (Allahabad High Court)

Allahabad HC in case of Ashok Auto Sales Ltd v/s CIT held that Vector shipping is not correct preposition of law as held by Honb'le SC in case of M/s Palam Gas Service vs. CIT....

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