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2015 (11) TMI 1731 - AT - Income TaxDisallowance u/s 40(a)(ia) - liability to deduct tax - Held that:- In a case where the deductee/payee has paid tax and as such the person responsible for paying is no longer required to deduct or pay any tax, legitimate business expenditure would stand disallowed since the section contemplated by the first proviso viz. deduction and payment of tax in a subsequent year would never come about. Such unintended consequence has been sought to be taken care of by the second proviso inserted in section 40(a)(ia) by the Finance Act, 2012. AO while passing an order under section 201(1)/201(1A) of the IT Act for the impugned assessment year 2009-10 took the view that the assessee is not in default in respect of TDS on the payment of ₹ 7,00,567/- to M/s. Reliance Capital as the assessee has produced Certificate of the Accountant/declaration that the duty has included the charges received from the assessee in his return and has paid entire taxes on the same. - Decided in favour of assessee.
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