TaxTMI 
TaxTMI 
Real Income Taxation: Avoiding Double Disallowance of Wages and Salaries Payable
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....1654 - ITAT CHENNAI Here is a detailed analysis and commentary on the legal case, structured with the specified sections: 1. INTRODUCTION This case deals with the validity of assessment proceedings u/s 153A of the Income Tax Act and the disallowance of wages payable and salaries payable claimed by the assessee. The core legal questions presented are: * Whether the disallowance of wages payabl....
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.... would lead to double disallowance, which is unjustified. Revenue's Contentions: * The Managing Director admitted to booking bogus wages and salaries payable at the year-end to reduce profits. * If the amounts recorded were bogus, the question of payment of such amounts in the subsequent year does not arise. * The assessee did not provide details of staff for whom the salary was outstan....
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....he expenses. The assessee made advance provisions for wages and salaries in one year and adjusted them against the actual payments made in the subsequent year without claiming the expenses again. 4. ANALYSIS AND DECISION The Tribunal concluded that since the provisions were reversed in the return filed u/s 153A, the actual payments made in the subsequent year should be allowed as deductions. Dis....
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....made in the earlier year. 5. DOCTRINAL ANALYSIS This case deals with the doctrine of real income and the principles of fairness in taxation. The Income Tax Act aims to tax the real income of an assessee, and disallowing both the provision and the actual payment would distort the financial results and lead to double taxation of the same income. The Tribunal's decision upholds the principle t....