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Dy. Commissioner of Income tax Circle – 17 (1) , Hyderabad Versus M/s Devgen Seeds & Crop Technology P. Ltd.

2016 (11) TMI 535 - ITAT HYDERABAD

Disallowance u/s 40(a)(ia) - amount paid during the year - Held that:- We do not find any infirmity in the order of the CIT(A) in sustaining only the amount of ₹ 15,22,373/-, which is payable at the end of the year i.e. outstanding as on 31st March, 2015, as against the addition of ₹ 89,16,387/- made by the Assessing Officer, following the special bench decision of the ITAT in the case of Merlyn Shipping and Transport (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ). - Decided against revenu .....

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ation and production and sale of seeds, filed its return of income for AY 2009- 10 on 30/09/2009 declaring a loss of ₹ 1,00,74,055/-. The return was processed u/s 143(1) of the Act. Subsequently, the assessee filed a revised return on 15/10/2010 declaring total loss of ₹ 6,94,56,542/-. The case was selected for scrutiny and notices u/s 143(2) and 142(1) were issued. 2.1 During the course of assessment proceedings the AO observed that during the FY relevant to AY under consideration t .....

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therefore, disallowed the said amount u/s 40(a)(ia) of the Act. 3. Aggrieved, the assessee preferred an appeal before the CIT(A). 4. Before the CIT(A), the assessee contended that the payment made by it towards promotional expenses i.e. either towards purchase of promotional items or reimbursement of expenses incurred by the company s employee towards promotional activities, are not liable to TDS. It was further contended that section 40(a)(ia) is not applicable in the case of purchase of seeds. .....

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at the disallowance should be restricted to ₹ 15,22,373/-, which is outstanding at the end of the year i.e. outstanding as on 31 March, 2015. 5. The ld. CIT(A) after considering the submissions of the assessee and following the various case laws including the special bench decision of the ITAT in the case of Merlyn Shipping & Transports Vs. Addl. CIT, [2012 136 ITD 0023 (SB), held that the liability to deduct TDS out of promotional charges/payments does not arse and therefore out of ad .....

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