TMI Blog2021 (2) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... nd gains of business or profession . Hence it is evident that the provisions of Section 40(a)(ia) is applicable while computing income chargeable under the head Profits and gains of business or profession and it is not applicable to any other heads of income. In the case of Mahatma Gandhi Seva Mandir [ 2012 (5) TMI 396 - ITAT MUMBAI] the Hon ble ITAT Mumbai has held that the exception in Section 40 is carved out, only for the purpose of Section 28 and not for computing the exemption of income of a charitable trust under Section 11. The disallowance made under Section 40(a) will only go to enhance the business profit of an assessee whose income is assessable under Section 28 and not otherwise. Hence, provisions of Section 40(a) are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the head Capital Gains that the assessee had deducted a sum of ₹ 76,99,056/- on account of commission while computing income under the head Long Term Capital Gain . The assessee had sold a property and declared Long Term Capital Gain (LTCG) on sale of property. In the course of assessment proceedings, the AO found that on the total commission of ₹ 76,99,056/- paid in connection with the sale of the property, the assessee had deducted tax at source only on a sum of ₹ 61,86,988/-. In respect of difference viz., ₹ 15,12,056/- no TDS had been done by the assessee. The AO invoked the provisions of section 40(a)(ia) of the Act and made the addition of ₹ 15,12,056/- to the total income returned by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the CIT(A), assessee is in appeal before the Tribunal. I have heard the rival submissions. The learned DR relied on the order of the CIT(A). The learned counsel for the Assessee reiterated the stand of the Assessee as put forth before the CIT(A). 8. I have considered the rival submissions. The provisions of Sec.40(a)(ia) of the Act reads thus: Amounts not deductible. 40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession ,- (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sub-section (1) of section 9; (iii) professional services shall have the same meaning as in clause (a) of the Explanation to section 194J; (iv) work shall have the same meaning as in Explanation III to section 194C; (v) rent shall have the same meaning as in clause (i) to the Explanation to section 194-I; (vi) royalty shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;] 9. The question for consideration is as to whether the provisions of Section 40(a)(ia) is applicable for computing the income chargeable under the head Profits and gains of business or profession or computation of income under any other heads of income also. Section 40 clearly stipulates th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l only go to enhance the business profit of an assessee whose income is assessable under Section 28 and not otherwise. Hence, provisions of Section 40(a) are not applicable in case of charitable trust or institution where income and expenditure is computed in terms of Section 11. 10. In view of the clear language of the relevant statutory provisions and in the light of decisions referred to in the earlier paragraphs, I am of the view that the disallowance u/s.40(a)(ia) of the Act made by the revenue authorities cannot be sustained and I direct the said addition to be deleted and allow the appeal of the Assessee. 11. In the result, appeal of the assessee is allowed. . Pronounced in the open court on the date mentioned on the caption ..... X X X X Extracts X X X X X X X X Extracts X X X X
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