As per section 40(a)(ia), 30% of an expense is disallowed if tax is not deducted or after deduction is not paid to the government. Whether this provision shall be applicable only in the case of revenue expenditure or capital expenditure has been a matter of dispute between taxpayers and revenue. The revenue always argues for reducing the actual cost of a fixed asset if the tax has not been deducted for an expense that is capitalised as per provisions of section 43(1). In the cases of CIT v. Plasmac Machine Mfg. Co. Ltd. [1993] 201 ITR 650 (Bom.) and Sumilon Industries Ltd. v. ITO [2010] 3 taxmann.com 187 (Ahmedabad-ITAT), it was held that disallowance under this section could be made only from an expense that is claimed in Profit and Loss Account. Since, in the case of capital expenditure, no deduction is claimed under the P/L account, there should not be any disallowance under section 40(a)(ia) in respect of such payment.