IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR THURSDAY, THE 31ST JANUARY 2008 / 11TH MAGHA 1929 ITA.No. 176 of 2001() --------------------- ITA.568/COCH/1996 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT: ----------------- THE COMMISSIONER OF INCOME TAX, CIRCLE I, DIVISION I, TRICHUR. BY ADV. SRI.P.K.R.MENON(SR.),SC FOR IT SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENTS: ------------- M/S. TEAM PAREL, IRINJALAKUDA, TRICHUR. BY ADV. SRI.JOSEPH MARKOSE SRI.THOMAS VELLAPPALLY THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 31/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & T.R. RAMACHANDRAN NAIR, JJ. -------------------------------------------- I.T.A. No. 176 OF 2001 -------------------------------------------- Dated this the 31st day of January, 2008 JUDGMENT C.N. Ramachandran Nair,J. This appeal is filed against the order of the Tribunal upholding the order of the CIT (Appeals) holding that disallowance under Section 40(a)(i) is not permissible in Section 143(1)(a) proceedings. Disallowance is provided only if the payments referred to in Section 40 (a)(i) are not subject to deduction of tax at source. Disallowance under the said Section is called for only after enquiry and not in proceedings under Section 143(1)(a) which only provides for correction of mistakes or disalllowance of prima facie inadmissible items. Since the disallowance in this case is possible only after enquiry and only after considering the nature of expenditure, and failure of deduction, the Tribunal rightly dismissed the departmental appeal. We therefore dismiss the appeal filed by the revenue. (C.N.RAMACHANDRAN NAIR) Judge. (T.R.RAMACHANDRAN NAIR) Judge. kk 2