HP HC overrules Merilyn shipping judgement on 40(a)(ia)

The Hon’ble HP HC in the case of Palam Gas Service Vs. CIT in ITA No. 9/2014 dated 25.06.2014 has held that provisions of 40(a)(ia) are applicable to amounts paid during the year as well as to amounts payable as at the close of the year. The Hon’ble High Court held as under :

“Lastly, insofar as the plea taken by the appellant that no disallowance can be made under Section 40 (a) (ia) as the freight charges had been paid and were not payable. Suffice it to state that the provisions of Section 40 (a) (ia) of the Act were applicable not only to the amount which were shown as outstanding on the closing of the relevant previous year, but to the entire expenditure which became liable for payment at any point of time during the year under consideration and which was also paid before the closing of the year as rightly held by the authorities below.”

To read complete text of judgement, click herePalm Gas service-HP HC