Section 40(a)(ia) applies only to year-end payables, not amounts already paid during the year.

Section 40(a)(ia) was treated as applying only to expenditure remaining payable at year-end, not to amounts already paid during the accounting year. The Tribunal followed existing judicial precedent and accepted that the disallowance mechanism is confined to sums outstanding as on 31 March. On that basis, the Revenue's challenge failed and the relief granted by the first appellate authority remained undisturbed.

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Issues: Whether disallowance under section 40(a)(ia) of the Income-tax Act, 1961 is confined to amounts remaining payable on 31 March or extends to amounts already paid during the year.

Analysis: The appeal was decided on the basis that the issue stood covered by existing judicial precedents. The Tribunal accepted the view that the disallowance provision operates only in relation to sums outstanding as payable at year-end and does not apply to amounts already paid during the accounting year.

Conclusion: The disallowance under section 40(a)(ia) was upheld only to the extent of amounts payable at the close of the year, and the Revenue's challenge failed.

Final Conclusion: The Revenue's appeal and the assessee's cross objection were both dismissed, leaving the relief granted by the first appellate authority undisturbed.

Ratio Decidendi: Section 40(a)(ia) applies only to expenditure that remains payable as on 31 March and not to amounts already paid during the relevant year.

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