2014 (1) TMI 1488 - HC - Income Tax

Disallowance u/s 40(a)(ia) - Held that - The TDS on various expenditure was deducted by the assessee but an amount of Rs.30,71,212/- was credited to the government account on 06/04/2006 - According to the amendment under Section 40(a)(ia) by Finance Act, 2010 with effect from 01/04/2010 - If the tax deducted is deposited by the assessee before the due date of filing the return, the same is required to be given credit in the very assessment year - Decided against Revenue.

Summary

Issues:
1. Justification of ITAT in deleting addition/disallowance under Section 40(a)(ia) of the Income Tax Act.
2. Validity of reassessment order under Section 143(3) read with Section 147 of the Income Tax Act.

Analysis:

1. The main issue in this case revolves around the deletion of an addition/disallowance of Rs.30,71,212 made by the Assessing Officer under Section 40(a)(ia) of the Income Tax Act. The Tribunal had deleted this addition, and the question before the High Court was whether the ITAT was justified in law and fact in doing so. The High Court examined the relevant provisions and held that the amendment under Section 40(a)(ia) of the Income Tax Act, brought about by the Finance Act, 2010, with retrospective effect from 01/04/2010, required the tax deducted to be deposited by the assessee before the due date of filing the return for the same to be credited in the assessment year. Consequently, the High Court found no error in the ITAT's decision to delete the addition/disallowance.

2. The second issue raised in the appeal pertained to the validity of the reassessment order under Section 143(3) read with Section 147 of the Income Tax Act. However, given the resolution of the first issue regarding the addition/disallowance, the High Court deemed the challenge to the reassessment proceedings under Section 147 to be academic. The Court concluded that since the ITAT's decision on the primary issue was upheld, there was no substantial question of law remaining for consideration. Therefore, the High Court dismissed the Tax Appeal, as it found no legal basis to interfere with the ITAT's decision.

In summary, the High Court upheld the ITAT's decision to delete the addition/disallowance under Section 40(a)(ia) of the Income Tax Act, citing the retrospective effect of the relevant amendment. Consequently, the challenge to the reassessment proceedings under Section 147 was considered academic, leading to the dismissal of the Tax Appeal due to the absence of any substantial question of law warranting further review.