Section 40(a)(ia) disallowance on salary reimbursements and technical service payments was split between factual findings and a reserved legal issue

Section 40(a)(ia) was not applied to reimbursements for salaries of deputed employees because the Tribunal found, as a matter of fact, that the payments to sister concerns were salary reimbursements and not amounts exceeding the salaries payable; the High Court therefore declined to interfere with that factual conclusion. A separate contention that overall tax implication between payer and payee required disallowance was treated as part of the same factual issue and was not independently entertained. Disallowance under Section 36(1)(iii) for alleged non-business advances was also not pursued, as the Tribunal found no such advances and noted the assessee had sufficient interest-free funds. Only the question whether payments for technical and professional services attracted disallowance under Section 40(a)(ia) without TDS was admitted for further consideration.

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