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Issues involved: Appeal against order of CIT(A)-II, Nashik for assessment year 2006-07. Interpretation of provisions of S. 40(a)(i-a) regarding disallowance of payments already made without T.D.S.
The appeal was filed by the assessee against the order of the CIT(A)-II, Nashik for the assessment year 2006-07. The Ld. AR mentioned that ground no. 1 & 2 were superfluous and not pressed. The only ground left for adjudication was regarding the applicability of provisions of S. 40(a)(i-a) to payments already made outside the purview of that section, resulting in disallowance of Rs. 28,53,089. The Ld. Counsel for the assessee referred to a Tribunal order in another case and argued that S. 40(a)(i-a) provisions are applicable only to payments still pending 'payable' to parties. Since the amounts in question were already paid without T.D.S, the provisions were deemed inapplicable. The decision of Jaipur Bench and Pune Tribunal supported this interpretation. The Tribunal concluded that the payments made could not be disallowed u/s 40(a)(i-a) as the provisions apply only when the amount is 'payable', not when it has been paid. The Tribunal held that in the present case, the amounts were already 'paid', thus the provisions of S. 40(a)(i-a) were not applicable. Following precedent, the Tribunal reversed the CIT(A)'s order and allowed the relevant grounds raised by the assessee. Ground no. 1 and 2 were not pressed, and ground no. 4 was deemed consequential. Judgement: The appeal of the assessee was partly allowed, with the order pronounced on 12th January, 2011.
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