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2012 (4) TMI 240 - AT - Income TaxProvision gratuity u/s. 40A(9) - AO noticed that the assessee has made a provision for gratuity and debited the same to Income & Expenditure Fund – assessee stated that corporation contributes to the approved gratuity fund of RBI by way of contractual obligation for its employees all of whom are on deputation from RBI - gratuity liability for the staff deputed to the Corporation has to be reimbursed to the RBI - AO observed that reimbursement to RBI does not in any way change the character of provision for gratuity – Held that :- confirmed the deletion of disallowance on account of provision for gratuity. Non deduction of TDS - disallowance u/s. 40(a)(ia) - assessee contended that since the person to whom the payment was made has already offered the same for taxation, hence provisions of sec.40(a)(ia) cannot be invoked. - applicability of decisions in the case of Hindustan Coca Cola (2007 -TMI - 1676 - SUPREME COURT OF INDIA ) and Mahindra & Mahindra (2009 -TMI - 59571 - ITAT BOMBAY-H ) held that:- the principles laid down in these two decisions cannot be adopted for the purpose of interpreting sec.40[a][ia]. Further, we find that sec.201 deals with the mode of recovery of taxes and once tax due has already been paid then the same demand cannot be enforced again. However, sec.40[a][ia] deals with the disallowance of expenditure itself. Therefore, merely by invoking the Heydon’s principle the statutory provisions cannot be rendered redundant. Therefore, we are of the opinion that once tax has not been deducted and even if such tax has been paid by the deductee, disallowance u/s.40[a][ia] can still be made.
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