TMI Blog2012 (11) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... elates to the disallowance of ₹ 46,92,094/- by invoking section 40(a)(ia) of the Act on the ground that assessee had not deducted the requisite tax at source on the impugned amount representing service charges paid to KEM Hospital. 3. In brief, the facts are that assessee is a partnership firm carrying on the business of running a Diagnostic Centre in the premises of KEM Hospital, Pune. The assessee paid a sum of ₹ 46,92,084/- as service charges to KEM Hospital for use of the premises for running a Diagnostic Centre. The Assessing Officer held that it was a professional arrangement and the payment made fell within the ambit of sec. 194-J of the Act, which required deduction of tax at source on such payment. Observing that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that without prejudice to the assessee s plea that the impugned payments to KEM Hospital were outside the provisions of deduction of tax at source, no disallowance u/s 40(a)(ia) of the Act was merited, inasmuch as, the entire amount was actually paid by 31-3-2007 and nothing remained outstanding as at the end of the previous year relevant to the assessment year under consideration and for the aforesaid reason, section 40(a)(ia) of the Act could not be invoked. In support of the proposition, reliance has been placed on the decision of Special Bench of Vishakhapatnam Tribunal in the case of Merilyn Shipping Transports (146 TTJ 1) (SB) Vishakhapatnam. Further to substantiate the position that the amount has actually been paid, a referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the assessee, the amount in question i.e. service charges to KEM Hospital amounting to ₹ 46,92,084/- is not outstanding as on 31-3-2007 and therefore, even if the requisite tax has not been deducted at source on such payments such expenditure could not be disallowed u/s 40(a)(ia) of the Act as the amounts have been actually paid. This stand of the assessee is in line with the decision of Special Bench of Vishakhapatnam Tribunal in the case of Merilyn Shipping Transports (supra). Following the same, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition. 8. In the result, appeal of the assessee is allowed. Decision pronounced in the open court on 20th November 2012. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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