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Word ‘Payable’ In Section 40(A) (Ia) Of Income Tax Act Also Covers Amount Actually ‘Paid’

The Supreme Court, in Palam Gas Service vs Commissioner of Income Tax, has held that though the word used in Section 40(a) (ia) of the Income Tax Act, is ‘payable’, it would also cover the situations where the amount is already paid, but no advance tax was deducted thereupon.

A bench comprising Justice AK Sikri and Justice Ashok Bhushan extensively quoted the judgments of high courts of Punjab & Haryana, Madras and Calcutta in this regard and affirmed the same.

The court also overruled the Allahabad High Court judgment, which had held that Section 40(a) (ia) would apply only when the amount is ‘payable’.

Section 40 of the Act enumerates certain situations wherein expenditure incurred by the assessee, in the course of his business, will not be allowed to be deducted in computing the income chargeable under the head ‘Profits and Gains from Business or Profession’.

Article referred: http://www.livelaw.in/word-payable-section-40a-ia-income-tax-act-also-covers-amount-actually-paid-sc/

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