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2017 (1) TMI 1688 - AT - Income TaxDisallowance u/s 40(a)(ia) - recipient has paid due taxes on the income - HELD THAT:- This issue is now covered by the case of CIT Vs. Ansal Landmark Townships Pvt. Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] wherein it is held that as long as the recipient has paid due taxes on the income embedded in such payments, disallowance under section 40(a)(ia) cannot be invoked - the matter can be remitted to the file of the Assessing Officer for the limited verification of the fact that the recipient has included the receipt from the assessee in the computation of income on which taxes have been paid. The assessee may obtain from the recipient concerned a certificate to this effect and file the same before the Assessing Office Disallowance under section 40A(2)(b) - HELD THAT:- Issue is now covered in favour of the assessee by the decision of PWS Engineers Limited vs. DCIT [2016 (6) TMI 596 - GUJARAT HIGH COURT] wherein held that as long as the amounts paid by the assessee to the specific persons are taxed in the hands of specific persons at the same rate, disallowance under section 40A(2)(b) will be meaningless inasmuch as “permitting the Revenue to tax the same income again at the same rate in the hands of the principal payer would amount to double taxation” - proper course of action will be to remit the matter to the file of Assessing Officer for verification of factual aspect as to whether or not the said amount is brought to tax in the hands of the recipient at the same rate. If that be so, the disallowance will stand deleted.
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