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2021 (2) TMI 475 - AT - Income TaxNon-deduction of TDS on commission paid for sale of property - Invoking provisions of section 40(a)(ia) while computing income under the head “Capital Gain” - whether the provisions of Section 40(a)(ia) is applicable for computing the income chargeable under the head “Profits and gains of business or profession” or computation of income under any other heads of income also? - assessee is a partnership firm - HELD THAT:- Section 40 clearly stipulates that “Notwithstanding anything to the contrary in Sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head “Profits and gains of business or profession”. Hence it is evident that the provisions of Section 40(a)(ia) is applicable while computing income chargeable under the head “Profits and gains of business or profession” and it is not applicable to any other heads of income. In the case of Mahatma Gandhi Seva Mandir [2012 (5) TMI 396 - ITAT MUMBAI] the Hon’ble ITAT Mumbai has held that the exception in Section 40 is carved out, only for the purpose of Section 28 and not for computing the exemption of income of a charitable trust under Section 11. The disallowance made under Section 40(a) will only go to enhance the business profit of an assessee whose income is assessable under Section 28 and not otherwise. Hence, provisions of Section 40(a) are not applicable in case of charitable trust or institution where income and expenditure is computed in terms of Section 11. In view of the clear language of the relevant statutory provisions it is of the view that the disallowance u/s.40(a)(ia) of the Act made by the revenue authorities cannot be sustained and I direct the said addition to be deleted and allow the appeal of the Assessee.
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