TDS - Section 40(a)(ia) - ITAT Special Bench Decision
THE assessee incurred brokerage expenses of Rs. 38.75 lakhs and commission of Rs. 2.43 lakhs without deducting TDS. Of this only Rs. 1.78 lakhs was payable and the rest was paid.
The question before the Special Bench was “whether Sec 40(a)(ia) of the Income Tax Act can be invoked only to disallow expenditure of the nature referred to therein which shown as ‘payable' as on the date of the balance sheet or it can bed invoked also to disallow such expenditure which become payable at any time during the relevant previous year and was actually paid within the previous year?”
The Special Bench by majority held,
"The provisions of section 40(a)(ia) of the Act are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow which had been actually paid during the previous year, without deduction of TDS".
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