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of <h1>Tribunal Reverses Decision on Income Tax Disallowance: Trading Company Case</h1> <h3>Assistant Commissioner of Income Tax, Circle-3 (3), Kolkata Versus M/s. Imax Infrastructure Pvt. Ltd. (Vice-Versa)</h3> Assistant Commissioner of Income Tax, Circle-3 (3), Kolkata Versus M/s. Imax Infrastructure Pvt. Ltd. (Vice-Versa) - TMI Issues:1. Disallowance under section 40(a)(ia) of the Income Tax Act, 1961.2. Claim of depreciation by the assessee.3. Appeal against the order of the Learned Commissioner of Income Tax (Appeals).Analysis:Issue 1: Disallowance under section 40(a)(ia) of the Income Tax Act, 1961The case involved a company engaged in trading, subjected to a search and seizure operation. The Assessing Officer disallowed an amount under section 40(a)(ia) of the Act during assessment. The First Appellate Authority, however, deleted this disallowance based on the assessee's claim that the payees had included the income in their returns and paid taxes. The Authority directed the AO to verify this claim. The revenue appealed this decision, and the assessee conceded that only 30% of the disallowance should be sustained due to a retrospective amendment to the Act. The Tribunal reversed the Authority's decision, restoring the disallowance of 30% of the total amount.Issue 2: Claim of depreciation by the assesseeRegarding the claim of depreciation, the First Appellate Authority accepted the assessee's argument of double addition and directed the AO to verify the same. This issue was not further contested or addressed in the subsequent proceedings before the Tribunal.Issue 3: Appeal against the order of the Learned Commissioner of Income Tax (Appeals)The Tribunal allowed the revenue's appeal in part, reversing the decision of the First Appellate Authority on the disallowance under section 40(a)(ia) of the Act. The cross-objection by the assessee was dismissed as not pressed. The Tribunal's decision was delivered by Sri J. Sudhakar Reddy, Accountant Member, and Sri Aby T. Varkey, Judicial Member, on January 16, 2019, in Kolkata.This comprehensive analysis highlights the key legal issues involved in the judgment, focusing on the disallowance under section 40(a)(ia) of the Income Tax Act and the subsequent decision by the Appellate Tribunal.
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