TaxTMI 
TaxTMI 
2014 (8) TMI 277
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch/2014. The only issue arises for consideration is disallowance u/s 40(a)(ia) of the Act. 3. Shri R Sreenivasan, the ld. representative for the assessee submitted that the assessee is a non banking financial company engaged itself in providing gold loan and other allied investment activities. During the year under consideration the assessee has paid to non resident for providing engineering site services without deducting tax at the time of payment. According to the ld. representative, the assessee has not claimed the payment of Rs. 22,85,946 to the non resident as expenditure. The question of disallowance u/s 40(a)(ia) would arise only when the assessee claims payment as expenditure. Since the assessee capitalised the payment and claim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....provided in section 40(a)(ia) of the Act. On a query from the bench when the assessee has not claimed the payment made to non resident Indian as expenditure can there be a disallowance for non deduction of tax at the time of payment, the ld.DR could not clarify the position. 5. We have considered the rival submissions on either side and also perused the material available on record. We have carefully gone through the provisions of sections 40(a)(i) and 40(a)(ia) of the Act which read as follows: "40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",- (a) In the case of any assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....luding supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B such tax has not been deducted or, after deduction, has not been paid non or before the due date specified in subsection (1) of section 139: Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Explanation.- For the purposes of this sub-clause.- (i) "commission or brokerage" shall have the same meaning as in clause (i) of the Explanation to section 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the authorities below. The language of section 40 clearly says that the amount paid to non resident on which tax was not deducted shall not be deducted while computing the income chargeable to tax. Therefore, if the assessee has not deducted the amount claiming as expenditure while computing the chargeable income, there is no necessity for further disallowance. In other words, if the assessee has not claimed the payment to non resident as expenditure and not deducted while computing the income chargeable to tax, there is no question of further disallowance by the authorities. However, the fact needs to be examined whether the assessee has claimed the payment as deduction or not? Since no material is available on record with regard to compu....