#TDS disallowance

ITAT Mumbai rules that disallowance under Section 40(a)(ia) of the Income Tax Act is limited to expenditures claimed in the profit and loss account and does not extend to amounts capitalized as work-in-progress (WIP). This holding clarifies TDS compliance obligations for taxpayers using different accounting methods, ensuring capitalized expenditures remain unaffected by the disallowance provision.

ITAT Mumbai reaffirms that cooperative housing societies, as mutual undertakings, are not liable for disallowance under Section 40(a)(ia) of the Income Tax Act for non-deduction of TDS. The ruling clarifies that mutual associations' income remains exempt from tax, shielding them from penal disallowances on payments to members.

ITAT Bangalore sets aside a ₹32.69 crore disallowance under Section 40(a) for failure to specify the exact TDS provision violated. The ruling mandates procedural clarity, requiring tax authorities to identify the precise legal basis for disallowance before penalizing assessees.