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2016 (1) TMI 929 - ITAT COCHIN

2016 (1) TMI 929 - ITAT COCHIN - TMI - Disallowance invoking provisions of sec. 40(a)(ia) - Held that:- Hon'ble Kerala High Court in the case of Thomas George Muthoot (2015 (7) TMI 810 - KERALA HIGH COURT ) had categorically held that Section 40(a)(ia) disallowance is also applicable to the expenditure which are paid during financial year also. - The language of the Section does not warrant an interpretation that it is attracted only if the interest remains payable on the last day of the financi .....

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nt year is 2006-07. 2 There is a delay in filing the appeal by 38 days. The assessee has filed a petition accompanied by an affidavit for condonation of delay in filing the appeal. On perusal of the affidavit filed in support of the petition for condonation of delay, we are of the opinion that the assessee was having sufficient reasons in filing the appeal belatedly. Therefore, we condone the delay in filing the appeal and proceed to dispose off the mater on merits. 3 The solitary issue that ari .....

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the Act fixing the total income of ₹ 38,97,500/-. The AO, by invoking provisions of section 40(a)(ia) of the Act, disallowed an expenditure of ₹ 31 lakhs being the payment made to artists without deducing tax at source. 5 On appeal before the CIT(A), the assessee relied on the judgment in the case of M/s Cee Pee Granites Pvt Ld and that of M/s Vector Shipping, where the SLP of the department has been dismissed. It was contended that since in this case the amounts have already been p .....

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dot; of 2012 judgment dated 02.05.2013 and the Hon'ble Calcutta High Court in CIT '.Is. Cresent Export Syndicate - ITA NO.20 of 2013, G.A.No.190 of 2013 have laid town proposition that where the assessee has failed to deduct the tax at source and deposit the same within the specified period, the expenditure relatable to such deduction of tax at source would not be allowed as deduction, while computing the income of the assessee. Admittedly in the facts of the present case the assessee wa .....

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ports is not acceptable. It is also noticed that the Hon'be High Court of Gujarat vide its order dated 02-05-2013 in the case of CIT vs. Sikandarkhan N. Tunvar (Tax Appeal No. 905/2012 & Ors.) has held that the Special Bench in the case of Merilyn Shipping & Transports does not lay down the correct law. Accordingly, both the High Courts did not approve the decision rendered by the Special Bench in the above said case. 6 The CIT(A) further elaborately quoted the order of the Cochin Be .....

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ee is in appeal before us. At the very outset, the ld counsel for the assessee fairly submitted that the issue whether section 40(a)(ia) would be applicable only to the amounts outstanding/payable and not to the amount which has already been paid, is decided against the assessee by the judgment of the Hon ble jurisdictional High Court in the case of Thomas George Muthoot in ITA 278 of 2014 ( judgment dated 3,7.2015). The ld DR present was duly heard. 8 We have heard the rival submissions and per .....

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e that is payable and not to be extended to cover an expenditure that has been paid. The judgment of the Hon ble jurisdictional High Court in the case of Thomas George Muthoot (supra) had categorically held that section 40(a)(ia) disallowance is also applicable to the expenditure which are paid during financial year also. The relevant findings of the Hon ble jurisdictional High Court in the case of Thomas George Muthoot (supra) read as follows: 17.Another contention that was pressed into service .....

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