2011 (1) TMI 1467 - AT - Income Tax

Summary

Issues involved: Appeal against addition of Rs. 35,75,695 by way of disallowance u/s.40(a)(ia) of the Income-tax Act,1961.

Summary:
The appellant, a transport contractor, appealed against the addition of Rs. 35,75,695 by way of disallowance u/s.40(a)(ia) of the Income-tax Act,1961. The Assessing Officer disallowed a part of the transport charges due to tax deduction issues. The appellant contended that the tax deduction at source was made before the due date of filing the return, thus not making them a defaulter u/s.40(a)(ia). The appellant cited similar cases to support their argument. The authorities below misinterpreted the retrospective amendments made in 2008 and 2010, leading to the disallowance. The ITAT, Cuttack Bench decision supported the appellant's claim. Consequently, the appeal was allowed, directing the Assessing Officer to delete the disallowance made u/s.40(a)(ia) amounting to Rs. 35,75,695.

In conclusion, the appellant's appeal was allowed, and the disallowance u/s.40(a)(ia) was deleted, based on the interpretation of tax deduction at source provisions and retrospective amendments in the Income-tax Act,1961.