INCOME TAX ACT, 1961

Section 40(a)(ia) read with Section 40A(3)

Business disallowance under section 40(a)(ia) - Matter already remitted to determine whether there was a contract of agency agreement with regard to section 40A(3) - Inter-related issue -

Issue was with regard to disallowance made under section 40(a)(ia) for service charges paid by assessee to a company for such agency work of purchasing those materials without deduction of income-tax at source. Held: Since matter stood remitted by Tribunal with regard to section 40A(3), to first determine whether there was a contract of agency agreement between assessee, an individual and company (S), where assessee was managing director, therefore, unless such contractual relationship was established, both the issues with regard to disallowance under section 40A(3) for assessee having made cash payments to company for the alleged purchases of raw materials and building materials and also applying section 40(a)(ia) for service charges paid by assessee to company for such agency work of purchasing those materials without deduction of income tax at source could not be determined. Since both the issues were inter-related and since matter stood remitted by Tribunal for section 40A(3), the issue with regard section 40(a)(ia) was also restored.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2008-09 to 2009-10

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