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2012 (8) TMI 122 - AT - Income TaxAddition on account of non-deduction of TDS - Held that:- Provisions of sub clause (ia) of Section 40(a) speaks of amount “payable” on which tax is to be deducted and not in respect of amount of expenditure already paid during the year - Revenue’s argument does not have any merit that payment of earlier years’ outstanding expenses cannot be allowed in subsequent year unless specifically provided in the statute as proviso to s. 40(a)(ia) lays down that earlier year’s provision can be allowed in subsequent years only if TDS is deducted and deposited. Hence, Revenue’s fear is unfounded and the provision of s. 40(a)(ia) covers the situation - The Income-tax Act, 1961, already has a precedent in s. 43B which allows expenses only on payment basis and therefore, the argument of the Revenue that s. 40(a)(ia) would become otiose in cash system of accounting, was without any basis. Restore the matter back to the file of AO with a direction to recompute the amount of disallowance with reference to the amount which remained payable at the end of the year. However, no disallowance is to be made with respect to the amount, which have already been paid and did not remain outstanding at the end of the year - in favour of assessee for statistical purposes.
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