S. 40(a)(ia) TDS Disallowance applies only to amounts “payable” as at 31st March and not to amounts already “paid” during the year

M/s. Merilyn Shipping & Transports vs. ACIT (ITAT Visakhapatnam Special Bench)

 

The assessee incurred brokerage expenses of Rs.38.75 lakhs and commission of Rs.2.43 lakhs without deducting TDS. Of this only Rs. 1.78 lakhs was payable and the rest was paid. The AO disallowed the entire expenditure u/s 40(a)(ia). Before the CIT (A), it was argued that disallowance u/s 40(a)(ia) could be made only of the amount “payable” and not of that which had already been “paid” though it was rejected. On appeal to the Tribunal, the matter was referred to the Special Bench. HELD by the Special Bench: