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TMI Blog2020 (12) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred by the revenue. The subject matter of I.T.A.No.199/2017 pertains to the Assessment Year 2009-10, whereas, subject matter of I.T.A.No.951/2017 pertains to Assessment Year 2010-11 and 2011-12. The subject matter of I.T.A.No.952/2017 pertains to Assessment Year 2010-11 and 2011-12. Since, in all the appeals, the same substantial question of law arises for consideration, therefore, they were heard together and are being decided by this common judgment. I.T.A.No.199/2017 was admitted by a Bench of this Court vide order dated 07.11.2017 on the following substantial question of law: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in deleting the disallowance made under section 40(a)(ia) in respect of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following its earlier order which has not reached finality and even when the ingredients of section 40(a)(ia) of the Act are satisfied in case of assessee? 4. Facts leading to filing of these appeals briefly stated are that assessee is engaged in business of software development and sale of software product licence, software maintenance and training in software. For the sake of brevity, facts from I.T.A.No.199/2017 are being referred to. The assessee filed the return of income for the Assessment Year 2009-10 after claiming brought forward losses and declared its income as 'NIL'. The return of income was processed on 30.10.2010 and the case was selected for scrutiny and notices under Section 143(2) and Section 142(1) of the Act were issued. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said payment, therefore, disallowance under Section 40(a)(ia) of the Act has rightly been made. It is also argued that Section 40 of the Act begins with a non obstante clause and has an overriding effect on Sections 3 to 38 of the Act and therefore, in case, any deduction is claimed under Section 32 of the Act while computing the income under the head of 'profits and gains of business and profession' can be disallowed if the assessee has not deducted the tax at source. 7. It is also submitted that the intention of the legislature in providing disallowance under Section 40(a)(i) of the Act is to ensure prevention of revenue leakage on foreign payments as recovery of tax from non resident payees is difficult. It is also submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribunal have recorded concurrent findings on the aforesaid issue in favour of the assessee, which do not suffer from any perversity and therefore, the substantial question of law is required to be answered in the negative. In support of aforesaid submissions, reliance has been placed on decision of the Supreme Court in 'NECTAR BEVERAGE (P.) LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX', (2009) 182 TAXMAN 319 and decision of High Court of Punjab and Haryana in 'COMMISSIONER OF INCOME TAX VS. MARK AUTO INDUSTRIES LTD.', (2013) 40 TAXMANN.COM 482. 9. We have considered the submissions made by learned counsel for the parties and have perused the record. Before proceeding further, it is apposite to take note of relevant extract o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vi) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9; 10. Thus, from close scrutiny of Section 40(a)(i) of the Act, it is axiomatic that an amount payable towards interest, royalty, fee for technical services or other sums chargeable under this Act shall not be deducted while computing the income under the head profit and gain of business or profession on which tax is deductible at source; but such tax has not been deducted. The expression 'amount payable' which is otherwise an allowable deduction refers to the expenditure incurred for the purpose of business of the assessee and therefore, the said expenditure is a deductible claim. Thus, Section 40 refers to the outgoing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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