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QUERY: A Pvt. Ltd., and B Ltd. are sister concerns. A Pvt. Ltd. has made the payment of job work charges to B Pvt. Ltd. A.O. has made the disallowance of job work charges u/s. 40(a)(ia) for non deduction of TDS, in the hands of A Pvt. Ltd. B Pvt. Ltd, offers the job work income from A Pvt. Ltd., in the return of income. Since A Pvt. Ltd., closes its business operations in subsequent year, it cannot claim deduction of the TDS deposited to the credit of government will A Pvt. Ltd., still be liable for disallowance u/s. 40(a)(ia)?
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Yes. As per section 28 of the Income-tax Act 1961, the assessee should carry on the business during the year. Section 28 reads as under:

“The following income shall be chargeable to income tax under the head” Profits and gains of business or profession” –