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2012 (6) TMI 263 - HC - Income TaxProvisions of Section 40(a)(ia) is retrospective or not - Tribunal not considering the issue raised by the Revenue Held that - Referring to the circular of the Board 1/2009 dated 27.3.2009 particularly with reference to the amendment brought under the Finance Act 2008 FOR Section 40(a)(ia) with retrospective effect from 1.4.2005 CIT (A) held that since tax deducted at source had been paid well before the due date for filing the return of income the assessee was entitled to have the deduction - Since the Tribunal had gone only on the aspect of the actual deduction and had not gone into the applicability of the provisions of law considered by the CIT (A) for granting relief the proper course would be to remand the matter back to the Tribunal to re- consider - in favour of assessee.
Issues:
1. Interpretation of Section 40(a)(ia) of the Income Tax Act - retrospective application of Finance Act, 2010. 2. Admissibility of additional evidence by the Revenue and violation of principles of natural justice. 3. Dismissal of cross objection filed by the assessee. 4. Failure to remand the case back to lower authorities for proper disposal. Issue 1: Interpretation of Section 40(a)(ia) - Retrospective Application of Finance Act, 2010: The appellant filed the return of income for the assessment year 2007-08, showing a loss. The Assessing Officer disallowed a substantial sum under Section 40(a)(ia) for delay in remittance of tax deducted at source. The Commissioner of Income Tax (Appeals) held that the appellant was entitled to the deduction as the tax was paid before the due date for filing the return. However, the Revenue contended that the Finance Act, 2010 amendments were retrospective, thus negating the relief granted. The Tribunal found that the appellant had not paid TDS for all transactions before the due date, leading to disallowance. The appellant argued that the Tribunal should have considered the relief granted by the Commissioner and the Board's circular. The Court remanded the matter to the Tribunal to assess the applicability of the circular and the Finance Act, 2008. Issue 2: Admissibility of Additional Evidence and Violation of Principles of Natural Justice: The Tribunal admitted additional evidence filed by the Revenue but did not consider the appellant's contention that each transaction's value was below the TDS threshold. The Tribunal found that the total payments exceeded the threshold amounts, leading to disallowance. The appellant argued that the Tribunal did not consider the Board's circular and should have remanded the case for proper consideration. The Court directed a remand to assess the applicability of the circular and the Finance Act, 2008. Issue 3: Dismissal of Cross Objection: The Tribunal dismissed the cross objection filed by the assessee, leading to an appeal before the Court. The appellant contended that the Tribunal's decision was erroneous and should have considered the provisions of law and the relief granted by the Commissioner. The Court remanded the matter back to the Tribunal for a fresh consideration of the applicability of the circular and the Finance Act, 2008. Issue 4: Failure to Remand the Case for Proper Disposal: The Court noted that the Tribunal did not adequately consider the applicability of the circular and the Finance Act, 2008, as done by the Commissioner. The appellant argued that the Tribunal's decision was flawed and required a fresh assessment. The Court remanded the matter back to the Tribunal for proper consideration and ordered the disposal of the Tax Case Appeals.
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