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2021 (8) TMI 420 - AT - Income TaxDisallowance u/s. 40(a)(ia) - assessee paid professional fees & legal fees without deduction of tax at source - addition was confirmed by Ld. CIT(A) - HELD THAT:- AR seek benefit of second proviso to Sec. 40(a)(ia) by submitting that the respective payees has offered this income in their return of income and paid due taxes thereupon and therefore, the disallowance is not sustainable. We concur with these submissions of Ld. AR. Accordingly, we restore this issue to the file of Ld. AO with a direction to the assessee to adduce requisite evidences/documents to show the fulfillment of the requirement of second proviso to 40(a)(ia) read with first proviso to Section 201(1). This ground stand allowed for statistical purposes. Disallowance on account of mismatch in receipts as reflected by the assessee vis-à-vis receipts as reflected in Form No. 26AS - HELD THAT:- AR reiterated that difference arises due to the fact that billing was erroneously done in the name of group concern. The Ld. AR also placed on record reconciliation, Form 26AS and ledger accounts in support of the submissions. Prima-facie, the arguments of Ld. AR has strength. The dispute is a matter of reconciliation only. Therefore, we direct Ld. AO to re-verify the above claim after appreciating the relevant documents as placed on record. If the billing is done in other name and the same has already been accounted for by the assessee as business receipts, the same could not be added again. This ground as well as the assessee's appeal stand allowed for statistical purposes. Addition u/s. 40A(3) - Disallowance of capital expenditure - expenses were mostly in the nature of labour charges paid by assessee on behalf of the principal in cash - HELD THAT:- Assessee has incurred expenditure on behalf of its principal and claimed the reimbursement of the same which is evidenced by the ledger account as placed on record. The net agency commission earned by the assessee has been credited to its Profit & Loss Account. We find that stated expenditure is in the nature of petty labour charges which has been incurred by the assessee on behalf of its principal. Similar issue arose in assessee's case for AY 2007-08 wherein the bench, in para 6 of the order, held that the provisions of Sec. 40A(3) would not be attracted to such payment. There is no new material before us to deviate from the earlier view of the bench. Facts are pari-materia the same in this year. Since Ld. CIT(A) has merely followed the order of Tribunal, no fault could be found in deleting the impugned addition. By confirming the stand of Ld. CIT(A), we dismiss the appeal of the revenue.
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