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2011 (4) TMI 508 - AT - Income TaxDisallowance - Expenditure on account of royalty - Provisions of section 40(a)(ia) - the assessee disputed that the receiver not having any PAN, the assessee did not deduct the tax at source - It was also submitted that payment by way of royalty was diversion of income by overriding title and therefore there was no income accruing to the assessee on account of royalty and there was no obligation of any TDS - It was observed by him that the receiver had been appointed on behalf of the firm which had the license to operate the blood bank and therefore the royalty payable to the receiver was not in his personal capacity - The royalty was payable on behalf of the firm and the assessee was required to deduct tax at source - It was also observed by him that there was no direction of the High Court not to deduct tax at source - since the TDS provisions under section 194J in relation to royalty were applicable only from 13-7-2006 only the payments made for the period from 13-7-2006 onwards will be disallowed under section 40(a)(ia) for non-deduction of tax at source. - Decided against of assessee. Rent paid - under the provisions of section 40(a)(ia) - The claim of the assessee is that tax had been deducted and paid to the Central Government which was supported by the books of account and bank statement - The assessee could not produce the challan which was not traceable and which was the reason for disallowance - Hence, one more opportunity is required to be given to the assessee to trace the challan as it would not be proper to make addition if the tax had actually been deducted and paid to the Central Government - Accordingly restore the issue to the file of Assessing Officer for passing a fresh order after allowing opportunity of hearing to the assessee.
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