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The CIT(A) grossly erred in not appreciating that the expenditure incurred was mainly towards business promotion and hence the same did not warrant deduction of tax at source .Orders of CIT(A) in both these cases are set aside and restore the matter back to the file of AO for a fresh decision after providing reasonable opportunity of being heard to the assessee.

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Sec. 40(a)(ia) of Income Tax Act, 1961— Business Disallowance—Disallowance made u/s 40 (a)(ia) on account of non deduction of tax at source by assessee on payments made under the head Sales Promotion, Advertisement, Commission and Audit Fee was correct.

Facts: The solitary issue to be adjudicated in the instant appeal concern disallowance of a sum of Rs. 1,31, 80,311/- u/s 40 (a)(ia) on account of non deduction of tax at source by appellant on payments made under the head Sales Promotion, Advertisement, Commission and Audit Fee

Held, as per provisions of section 40 a) (ia), assessee ought to have deducted tax at source on payments made against Sales Promotion, Advertisement, Commission and Audit Fee. It is to be noted that Explanation to sub clause (ia) of section 40(a) clearly indicates that an assessee ought to deduct tax at source on such payments. In the instant appeal, it is noted that the assessee had no explanation to offer before AO. Even during appellate proceedings, assessee failed to explain reasons for its failure to deduct tax at source. Therefore, no interference in AO's order is called for. - SAI PANCHAMI DEVELOPERS V/s ITO - [2020] 26 ITCD Online 114 (ITAT-BANGALORE)

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