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TMI Blog2014 (3) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... - ALLAHABAD HIGH COURT] followed - the provisions of section 40a(i) do not apply to those amounts which have already been paid by the assessee before the close of the relevant previous year – thus, the dis-allowance u/s.40a(i) applies only to the amounts ‘payable’ and not to those amounts which are already ‘paid’ – Decided against Revenue. - I.T.A. No. 1985/Mds/2011 - - - Dated:- 4-3-2014 - Dr. O. K. Narayanan And Shri Vikas Awasthy,JJ. For the Appellant : Shri T. N. Betgeri, JCIT For the Respondent : Shri R. Vijayaraghavan, Adv. ORDER Per Vikas Awasthy, Judicial Member: The appeal has been filed by the Revenue against the order of the Commissioner of Income Tax(Appeals)-LTU, Chennai dated 23-09-2011 relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance under Rule 8D by taking per cent as the average value of investment. The ld.DR further submitted that the second issue in appeal is with regard to dis-allowance u/s.40a(i) in respect of payments made in foreign currency towards professional and consultancy services. The payments-in-question were made for services which were highly technical in nature, therefore, are subject to the provisions of section 195 of the Act. The assessee ought to have deducted tax at source at the time of making payments. Moreover, the payments made were for the services rendered in India. The ld.DR strongly prayed for setting aside the findings of the CIT(Appeals) on these issues. 4. On the other hand, Shri R.Vijayaraghavan, appearing on behalf of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions. Hon ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd v. DCIT (328 ITR 81) has held that Rule 8D is applicable from assessment year 2008-09. No doubt, Hon ble Punjab Haryana High Court in the case of Hero Cycles (supra) has held that it could not be taken as a rule that some expenditure was always incurred in respect of the exempt income earned. Here, however, we note that the assessee itself had made a disallowance of Rs.66,312/-. Therefore, we are of the opinion that it cannot now turn around and say that no expenditure whatsoever was incurred for earning the exempt income. As already mentioned, Rule 8D is applicable for impugned assessment year. This being the case, we are of the opinion that the matter requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court in the case of CIT Vs. Crescent Export Syndicate in ITA No.20 of 2013 decided on 3rd April, 2013 and the Hon ble Gujarat High Court in the case of CIT Vs. Sikandarkhan N. Tunvar reported as 33 Taxman.com has held that the dis-allowance u/s.40a(i) does not distinguish between amount paid and payable . Both the Hon ble High Courts have not approved the principle laid down in the case of Merilyn Shipping and Transport Vs. ACIT (supra). However, the judicial precedence demands that the view in favour of the assessee should be adopted. In view of the judgment of the Hon ble Supreme Court of India in the case of CIT Vs. Vegetable Products Ltd., reported as 88 ITR 192 (SC), we have to follow the judgment of the Hon ble Allahabad Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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