TMI Blog2011 (4) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable income was ascertained at ₹ 3,77,76,730. The AO made a disallowance of ₹ 7.50 lakhs u/s 40(a(ia) of the Act. The AO examined the debit balance of ₹ 3.55 crores under the head commission . On verification of the details of the commission, it was found that no tax had been deducted on the following commissions: 1. RDX Impex Sales Promotion Ltd. ₹ 50,000 2. SRS Buildcon P. Ltd. ₹ 7,00,000 3. By virtue of the impugned order, the CIT(A) confirmed the disallowance of ₹ 7 lakhs. 4. Aggrieved, the assessee is in appeal. 5. Challenging the impugned order, the Ld.Counsel for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter alia, that the provisions of section 40(a)(ia) of the Act provided in nondeduction of amount which remains payable to a resident in respect of fees for technical services, etc.; that it is not applicable where expenditure is paid; that it is applicable only in cases where the payments are due and outstanding; that the word payable is not defined, though the word paid is defined u/s 43(2) of the Act to mean actually paid or incurred ; that hence, by implication, the word payable does not include paid ; that the difference in paid and payable is also there in the Rules for depositing the TDS and also for levy of interest u/s 234, where interest is worked out on the basis of tax actually deducted at source and not on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... text is shown to be otherwise. The legislature chooses its words deliberately and specifically. The expression implied in section 40(a)(ia) of the Act, is payable and not paid . In the present case, the commission involved undisputedly stands paid. Also, as observed in Jaipur Vidyut Vitran Nigam Ltd. (supra), section, 40(a)(ia) imbibes a legal fiction and it needs to be construed strictly. 13. In view of the above, the grievance of the assessee is found to be justified and is accepted as such. 14. Therefore, the order of the CIT(A) is cancelled and the disallowance of commission paid, amounting to ₹ 7 lakhs is deleted. 15. In the result, the appeal filed by the assessee is allowed. Order pronounced in open court on 25. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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