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2017 (12) TMI 875 - AT - Income TaxTDS u/s 194C - failure to deduct TDS u/s 194C on subcontract payments addition u/s 40(a)(ia) - Held that:- CIT(A) has verified the salary register submitted by the assessee in the form of letter, however from the order, it is not clear whether it is verified thoroughly with the data sheets, programme sheets and agreements with the employees, if any. Ld. AR has confirmed that this information is available with the assessee to prove the genuineness of the transaction. Ld. CIT(A) deleted the addition relying on the case of Merilyn Shipping (2012 (4) TMI 290 - ITAT VISAKHAPATNAM). However, this decision was reversed by the Hon’ble Supreme Court and further, this transaction needs verification at the AO level, accordingly, this issue is remitted to the file of the AO to verify the genuineness of the transaction and allow the same as per the provisions of law. Assessee may be given opportunity of being heard. Accordingly, grounds raised by the revenue on this are allowed for statistical purposes. Disallowance u/s 14A - Held that:- We direct the AO to recalculate the disallowance as per rule 8D as per the guidelines given above in the case of Transport Corporation of India [2016 (11) TMI 245 - ITAT HYDERABAD] and calculate the disallowance of expenditure under rule 8D(2)(ii) & (iii) taking the average investment from which the exempt income is received. By calculating as per the above direction, in case, the disallowance arrived u/s 14A is less than the disallowance made by Assessee, the disallowance made by the assessee may be sustained. Accordingly, ground raised by the assessee is allowed for statistical purposes.
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