26 May 2011
Sec40(a)(iii) says any payment which is chargeable under the head “Salaries”, if it is payable— (A) outside India; or (B) to a non-resident,and if the tax has not been paid thereon nor deducted therefrom under Chapter XVII-B then it is disallowed while computing income tax.
From the above it is clear that,disallowance arises only in case of salary payment to non resident.In case of residents disallowance provision does n't attract.
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