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2021 (12) TMI 460 - HC - Income TaxDisallowance of deduction expenditure u/s 40(a)(ia) - reasoning recorded by the Tribunal is that in the case on hand, the payees were identified and it is not an adhoc provision as the provisions contained odd figure also - Whether the order of the Tribunal is perverse in law as it failed to appreciate that the provisions were created on head-wise expenses and not with reference to any particular party and consequently such amounts of provisions did not attract the provisions of Section 194C, 194-I, 194-J and 194-H of the Act? - HELD THAT:- The said reasoning is wholly unjustifiable, as could be seen from the material available on record, in the provisions made, payees were not identified. The genuiness of the provision cannot be determined on the basis of the figures. The cryptic reasoning of the Tribunal is not suffice to support the findings arrived at. It is trite that proper reason is the essential ingredient of a valid order. It is ex-facie apparent that the contention of the assessee inasmuch as non-identification of the payees in the provisions and the disallowance of deduction expenditure under Section 40(a)(ia) has not been rightly appreciated by the Tribunal. In this scenario, the judgment of the Hon'ble Apex Court in the case of Shree Choudhary Transport Company [2020 (8) TMI 23 - SUPREME COURT] would not be of any assistance to the Revenue unless the material aspects are considered with respect to Section 40(a)(ia) of the Act read with Sections 194C, 194H, 194I, 194J – relevant Sections under which TDS was required to be deducted by the assessee. These factors necessarily requires to be addressed by the Tribunal keeping in mind the provisions of the Act as well as the legal principles enunciated by the Hon’ble Courts. If the deduction is not claimed for the expenditures made in the provision even in the return submitted and the same is offered to tax in the subsequent year after reversing the entries pursuant to the receipt of the bills/invoices by the payees, the matter has to be analysed having regard to, whether income has accrued to the payees to deduct tax at source. In the given circumstances, we deem it appropriate to set aside the impugned order and remand the matter for fresh consideration by the Tribunal. Appeal is allowed.
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