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Whether the Tribunal is correct in law in not adjudicating the main issue of applicability of provisions of section 40(a)(ia) in respect of disallowance of sub-contracting chares of RS.16,21,851/- made by assessing authority on the ground that the assessee had failed to deduct tax at source under section 194C of I.T. Act?

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Sec. 10A/10AA, 40(a)(i), 195 of Income Tax Act, 1961 – Deduction. - There is no dispute regarding genuineness of the expenditure that was disallowed and the fact that such expenditure is otherwise allowable as deduction in computing income from business. In such circumstances, even if the expenditure is disallowed u/s.40(a)(i) of the Act, the result will be that the disallowance will go to increase the profits of the business which is eligible for deduction u/s.10A/10AA of the Act and consequently the deduction u/s. 10A/10AA of the Act should be allowed on such enhanced profit consequent to disallowance u/s. 40(a)(i) of the Act.—JT. CIT vs. MPHASIS LTD.[2020] 26 ITCD Online 015 (ITAT-BANGALORE)