2014 (5) TMI 152 - HC - Income Tax

Disallowance u/s 40(a)(ia) of the Act TDS deposited beyond time Held that - Following CIT v. Rajinder Kumar 2013 (7) TMI 454 - DELHI HIGH COURT - the amendment made by the Finance Act, 2010 was curative and the amount has to be allowed as deduction, if the tax deducted is deposited on or before the last day for filing the return u/s 139(1) for the relevant AY thus, no substantial question of law arises for consideration Decided against Revenue.

Summary

Issues: Interpretation of Section 40(a)(ia) of the Income Tax Act

Analysis:
The High Court addressed the issue of the correct interpretation of Section 40(a)(ia) of the Income Tax Act in this judgment. The case involved an assessee engaged in consulting and designing services who had filed its return. During assessment, the Assessing Officer required the assessee to furnish Form 16A under Section 94(J). Subsequently, the AO disallowed amounts totaling &8377; 1,55,94,534/- on the grounds that the TDS of &8377; 8,85,679/- had been deposited beyond the prescribed period. This led to a proposed disallowance under Section 40(a)(ia). The assessee's appeals to CIT (Appeals) and ITAT were unsuccessful until the ITAT relied on a previous ruling in Bharati Shipyard Ltd. v. DCIT 2011 (11) ITR 599 to allow the assessee's claim.

The High Court noted that a similar issue was addressed in CIT v. Rajinder Kumar ITA 65/2013, which was derived from the decision in Bharati Shipyard Ltd. The court held that the amendment made by the Finance Act, 2010 was curative, allowing the deduction if the tax deducted was deposited on or before the last day for filing the return under Section 139(1) for the relevant assessment year. The court observed that this position was not disputed by the Revenue's counsel, leading to the conclusion that the appeal did not raise any substantial question of law. Consequently, the appeal was dismissed along with any pending application.

This judgment provides clarity on the interpretation of Section 40(a)(ia) of the Income Tax Act, emphasizing the importance of timely deposit of TDS amounts and the curative nature of the relevant amendment introduced by the Finance Act, 2010. The court's reliance on previous rulings and the dismissal of the appeal based on the lack of a substantial legal question further solidifies the understanding and application of the law in similar cases.