Section 40A(2)

Section 40A(2) — the law in short

What the courts have decided on section 40A(2), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v Tasgaon Taluka S.S.K. Ltd Supreme CourtCuts both ways
  The Assessing Officer has disallowed the whole difference between the statutory minimum cane price and the State advised price my sugar co-operative paid its members. Can he?
  No — not the whole difference. The Supreme Court held that only that component of the final or additional cane price fixed under Clause 5A of the Sugarcane (Control) Order 1966 which represents profit is an appropriation of profit; the rest is deductible expenditure. The Assessing Officer must actually do the exercise of identifying the profit component from the accounts and the material supplied to the State Government, and all the orders below were set aside and the matters remitted for that purpose.
• PCIT v Future First Info Services P Ltd High CourtHelps taxpayerHigh Courts differ
  The AO says I short-deducted TDS on director remuneration. Can he disallow the payment under 40(a)(ia)?
  No. The Delhi High Court held that where there is short deduction of tax at source, disallowance cannot be made under s.40(a)(ia) and the correct course open to the officer is to invoke s.201.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.