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2015 (7) TMI 357 - AT - Income TaxDisallowance u/s 40(a)(ia) - Disallowance for salary paid - Held that:- The issue duly covered in favour of assessee because it is an undisputed fact that payments were made during the year itself and therefore, were not outstanding as payable. The Special Bench in the case of Merylin Shipping &Transport Co. in [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] has clearly held that disallowance u/s 40(a)(ia), can be made of the amounts which are payable and cannot be made of the amounts which have already been paid. Similar findings has also been made in case of Vector Shipping Service Pvt. Ltd. reported at [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] against which SLP filed by the department has also been dismissed. Though in the case of CIT Vs Cresent Export Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT] and CIT vs Sikander Khan [2013 (5) TMI 457 - GUJARAT HIGH COURT] are not in favour of assessee but keeping in view of case of CIT VS Vegetable products [1973 (1) TMI 1 - SUPREME Court ], the assessee is entitled to application of judgement benefiting to it - Decided in favour of assessee. Addition u/s 41(1) being salary payable - Held that:- Various courts have decided that addition u/s 41(1) can only be made if the provisions of liability are written back in the P & L account and in the absence of such write back, addition u/s 41(1) cannot be made. It is undisputed fact that provisions were not written back and were outstanding in the balance sheet and reflection of such liabilities in the balance sheet itself proves that liabilities had not ceased and therefore, provisions of Section 41(1) were not applicable. - Decided in favour of assessee. Amount received from the Director as a violation of Section 269SS - Held that:- There was no violation of provisions of Section 269SS as these provisions are not applicable in a case where the assessee had received loans or deposits by way of passing of a journal entry and therefore, Ld. CIT(A)'s action in confirming the action of A.O. in initiating penalty u/s 271D is not justified - Decided in favour of assessee.
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