Sum paid to NR without deduction of tax would not invite section 40(a)(i ) disallowance if such sum was capitalised

Dear Professionals,

Income Tax(Sum paid to NR without deduction of tax would not invite section 40(a)(i ) disallowance if such sum was capitalised):- The assessee(a NBFC) submitted that no disallowance could be made as it had not claimed payment to NR for providing engineering site services as expenditure but capitalised it and only depreciation was claimed thereon. The tribunal observed that, if the assessee had not deducted the amount (i.e. claimed it as expenditure) while computing the chargeable income, there was no necessity for further disallowance.[ Muthoot Finance Ltd. v. Addl. CIT (2014) 49 taxmann.com 580 (Cochin Trib.)]

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