DISALLOWANCE U/S 40a(ia)

[Guest]

Section 40 Start from ' Notwithstanding anything to the contrary in section 30 to 38, that means the expenses which are convred under the purview of section 30 to 38 would be disallowed u/s 40a(ia). that means if  incurred expenditure is part of trading account or manufacturing account liable to deduct tax and tax has not been deducted on that amount, would cover the ambit of section 40a(ia) or not .  if yes why? and if not Why?.

Further i would like to ask that 28(i) state that the profit and gains of any business or profession , what is that meaning, it means gross profit?

kindly reply as early as possibe, if relevant judgement is there, it would be most appropriate.

thanks.

[MOHAN S]

Mr. Praveen,

The terminology "Not withstanding anything to the contrary......." means irrespective of the specific provisions contained in sections.. to ... the disallowance u/s 40 (a) (ia) will apply. Specific disallowance of any expense is given in Section 40 (a ) itself. It does not mean ALL expenses specified in Sec 30 to 38 will get disallowed if Tax is not deducted. 

You must interpret the act in an harmonius manner.

AI Summary

Disallowance under section 40a(ia) limits deductibility when tax is not withheld, but it does not auto-disallow all listed expenses. Disallowance for failure to deduct tax at source under section 40a(ia) applies notwithstanding other expense provisions, but does not mean every expense listed in the statutory business expense provisions will be disallowed if tax was not deducted; the rule is a specific disallowance that must be read harmoniously with other provisions governing deductibility of business expenses.