Asstt. CIT v. Rishti Stock and Shares (P.) Ltd.

INCOME TAX ACT, 1961

--Business disallowance under section 40(a)(ia)--Reimbursement of expenses from which TDS not deducted--AO disallowed 'transaction charges' under section 40(a)(ia). Assessee submitted that no amount was outstanding at the end of year and hence, disallownce could not have been made under section 40(a)(ia). Held: Unless the amount was payable at the end of year, no disallowance could be made under section 40(a)(ia). It was noticed that for disallowing expenses from business and profession on the ground that tax had not been deducted, amount should be payable and not which had been paid by the end of year. In case TDS had been deducted on salaries by agent on behalf of assessee, then assessee was not required to deduct TDS on reimbursement. Therefore, appellate authority was not justified in deleting the disallowance made by AO.