2013 (10) TMI 474 - HC - Income Tax

Addition u/s 40(a)(ia) of the Income Tax - Addition of Rs. 50,48,001/- under Section 40(a)(ia) of the Act on account of non deposit of Tax Deducted at Source ( TDS ) within the time prescribed under Section 200(1) of the Act Held that - In view of the retrospective amendment made in Section 40(a)(ia) of the Act providing for deduction in case the amount of TDS is deposited on or before the due date specified in subsection (1) of Section 139 of the Act, addition made is deleted Decided against the Revenue.

Summary

Issues:
1. Interpretation of Section 40(a)(ia) of the Income Tax Act, 1961.
2. Allowability of deduction for Tax Deducted at Source (TDS) deposited before filing the return.
3. Judicial review of findings by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal.

Analysis:
1. The case involved the interpretation of Section 40(a)(ia) of the Income Tax Act, 1961, specifically regarding the deduction of Tax Deducted at Source (TDS). The assessee, a Government Contractor, had filed its return of income for the Assessment Year 2005-06, declaring a total income. The Assessing Officer made an addition under Section 40(a)(ia) on account of non-deposit of TDS within the prescribed time. The Commissioner of Income Tax (Appeals) considered a retrospective amendment in the section and allowed the deduction if the TDS was deposited before filing the return under Section 139(1) of the Act.

2. The issue of whether the deduction for TDS deposited before filing the return was allowable was crucial in this case. The Commissioner of Income Tax (Appeals) found that the TDS was deposited before the filing of the return, and therefore, the amount was deductible. The Income Tax Appellate Tribunal upheld this finding, stating that there was no reason to interfere with the decision as there was no contrary material to the finding of fact. The Tribunal dismissed the appeal filed by the Revenue based on these grounds.

3. The judicial review of the findings by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal was challenged by the Revenue in the High Court. The High Court, after examining the findings, concluded that the order did not warrant any interference. The Court noted that a finding of fact had been recorded regarding the timely deposit of TDS before filing the return, as required by the retrospective amendment in Section 40(a)(ia). Since the findings were factual and in line with the legal provisions, no substantial question of law arose, leading to the dismissal of the appeal.

In conclusion, the High Court upheld the decisions of the lower authorities regarding the allowability of deduction for TDS deposited before filing the return, emphasizing the importance of complying with the provisions of the Income Tax Act.