2013 (8) TMI 943 - AT - Income Tax

Addition 40(a)(ia) - retrospectivity - Held that - Amendment to section 40(a)(ia) permitting the deductor to remit the TDS to Government account on or before the due date of filing return under section 139(1) is retrospective and therefore applicable to the assessment year 2009-10 as in the present case.

Summary

Issues:
1. Interpretation of the retrospective application of section 40(a)(ia) of the Income Tax Act, 1961.
2. Applicability of the amendment brought by the Finance Act, 2010 to section 40(a)(ia).
3. Assessment of sub-contract expenses and TDS provisions.
4. Judicial precedents and decisions regarding the retrospective nature of the provision.

Analysis:
1. The appeal before the ITAT Hyderabad concerned the retrospective application of section 40(a)(ia) of the Income Tax Act, 1961 for the assessment year 2009-2010. The assessee claimed that the amendment made by the Finance Act, 2010 to this section was retrospective and should be applicable to them.

2. The Assessing Officer disallowed the sub-contract expenses claimed by the assessee under section 40(a)(ia) due to non-remittance of TDS to the Government account. The CIT(A) allowed the appeal, following the decisions of the Calcutta High Court and ITAT Ahmedabad, which held that the amendment was retrospective and applicable to the assessee for the relevant assessment year.

3. The Revenue challenged the CIT(A)'s decision, arguing that the amendment was effective from the assessment year 2010-11 onwards and not retrospective. The Revenue contended that the legislative intent did not indicate retrospective application from assessment year 2005-06.

4. The ITAT considered various judicial precedents, including decisions by the Calcutta High Court, Karnataka High Court, and the Supreme Court, regarding the retrospective nature of tax provisions. The ITAT upheld the CIT(A)'s order, citing the decisions of the Calcutta High Court, Ahmedabad Bench, and Andhra Pradesh High Court, which supported the retrospective application of the amendment to section 40(a)(ia).

5. Ultimately, the ITAT concluded that the amendment to section 40(a)(ia) allowing the deductor to remit TDS to the Government account before the due date under section 139(1) was retrospective and applicable to the assessment year 2009-10. Therefore, the assessee's claim was allowed, and the appeal of the Revenue was disposed of accordingly.