Section 40 of Income Tax Act, 1961— In the instant case, The first ground is with regard to the disallowance of a sum of Rs. 10,68,968/- being interest reimbursement disallowed under Section 40a(ia) of the Income Tax Act, 1961 ('the Act') by the Assessing Officer and confirmed by the Id. CIT (Appeals).

Ground No. 2 is against the confirmation of the disallowances of wages in a sum of Rs. 7,94,786/- also u/s 40a(ia) of the Act. The Appellant has paid wages to temporary staff numbering 19 in a sum of Rs. 10,15,778/-. These were in respect of securities and maintenance services amongst other availed by the Appellant in the normal course of its business from different persons.

Ground Nos. 3 concerns disallowance u/s 40 (A) (2) of the Act. The Appellant had paid remuneration of Rs.l,60,000/- to his daughter Chandini who was a Sales Executive in the organization of the Appellant. Appellant himself had other business activities including that of being a Director in UITCDPL and so required managerial support. The Assessing Officer was of the view that there was an extra commercial element in the payment made to the daughter.

Held that— I am of the view that in the interest of justice, the same is admitted. I find considerable cogency in the contention of the ld. counsel for the assessee that the authorities below erred in disallowing Rs. 10,68,968/- under section 40a(ia) of the Income Tax Act, 1961 without even pausing to consider whether the receipt is of such incomes on which tax had been paid on those incomes by the respective recipients as envisaged under the proviso to section 201(1) of the Act. It is also noted that the this has not been verified at the level of the Assessing Officer during assessment, therefore, there is force in the contention of the ld. Counsel for the assessee that the matter may be remanded back to the Assessing Officer for consideration and fresh orders.[SUNIL SETHI VERSUS ACIT, CIRCLE 20 (1) , NEW DELHI] [2019] 20 ITCD Online (7) [ITAT DELHI]