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2016 (2) TMI 428 - AT - Income TaxDisallowance u/s.40(a)(ia) - whether disallowance made u/s.40(a)(ia) to be considered as part of business profit of the assessee of the eligible projects so as to grant deduction u/s.80-IB(10)? - Held that:- An amount outstanding at the end of the close of the assessment year is not to be allowed as business expenditure in view of provisions 40(a)(ia) of the Act. Further, we make it clear that the AO should consider only payment which is not subject to TDS for disallowance and not short deduction of TDS. Since we have followed the order of the Special Bench in the case of Merilyn Shipping and Transporters vs. Addl.CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM ] and also CIT Vs. M/s.Vector Shipping Services (P) Ltd cited [2013 (7) TMI 622 - ALLAHABAD HIGH COURT], also the judgement Shri Thomas George Muhoot [2015 (7) TMI 810 - KERALA HIGH COURT] Further regarding the alternate submission of the Authorized Representative to consider the disallowance made u/s.40(a)(ia) of the Act, if any to be considered as part of the business profit in view of the judgement of Bombay High Court in the case of CIT Vs. GEM Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT ], wherein it was held that the assessee is entitled to exemption u/s.10A with reference to addition of disallowance of PF/ESIC payments as the plain consequence of the disallowance and add back made by the A.O is an increase in the business profits of the assessee. In our opinion, this plea of the assessee’s counsel to be upheld in view of the judgement. - Decided in favour of assessee
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