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2015 (7) TMI 907 - ITAT MUMBAIDisallowance for excess remuneration paid to the Directors - A.O. made the disallowance simply relying on the erroneous Remark in Auditors' Report - Held that:- The assessee had made excessive payment of remuneration to the Director. but same was approved by the central government, as required by the Companies Act.1n these circumstances, we are of the opinion that there was no contravention of the provisions of the Act - Decided in favour of assessee. Disallowance ul/s.40(a)(ia) - non deduction of TDS - Held that:- The assessee had filed additional evidences, that same were not admitted by the F AA, that the assessee had filed composite certificate of deducting taxes. It is found that Hon'ble Delhi High Court has in the matter of Naresh Kumar(2013 (9) TMI 275 - DELHI HIGH COURT ) has held that the proviso was applicable with retrospective effect.Section 40(a)(ia) of the Income-tax Act, 1961is a provision incorporated with that objective and purpose in mind. It is not basically a penal provision as when the tax deducted at source is deposited, the amount on which deduction was made is allowed as an expenditure incurred in the previous year in which the payment of tax deducted at source is made. Thus, it results in shifting of the year in which the expenditure can be claimed, even if payment has been made to the recipient and is to be allowed as expenditure in another year. The principle of matching, i.e., matching of receipts with expenditure to the extent indicated in section 40(a)(ia), therefore, gets affected. The provision can work harshly and may be very stringent in some cases. The legislative purpose and the object is to ensure payment and deposit of tax deducted at source with the Government. Tax deducted at source results in collection of tax.The amended provisions are clear and free from any ambiguity and doubt. They will help curtail litigation. The amended provision clearly support the expression “said due date” used in clause A of proviso to unamended section refers to time specified in Section 139(1) of the Act. The amended section 40(a)(ia) expands and further liberalises the statue when it stipulates that deductions made in the first eleven months of the previous year but paid before the due date of filing of the return, will constitute sufficient compliance. The matter needs further verification. Therefore, in the interest of justice, we are remitting the matter to the file of the AO for fresh adjudication - Decided in favour of assessee for statistical purposes.
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