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Issues involved: Interpretation of u/s 40(a)(ia) of the Income Tax Act, 1961 regarding retrospective application of the amendment made by the Finance Act, 2010.
Summary: The Appellate Tribunal ITAT Kolkata heard an appeal filed by the Revenue against the order of the Commissioner of Income-tax (Appeals)-XX, Kolkata for the assessment year 2005-06. The main grounds of appeal were related to the interpretation of u/s 40(a)(ia) of the Income Tax Act, 1961. The Revenue contended that the ld. CIT(A.) erred in not accepting the retrospective effect of the amendment made in section 40(a)(ia) by the Finance Act, 2010 from the assessment year 2010-11. The case involved a disallowance of commission payment under section 40(a)(ia) due to non-deduction of TDS within the prescribed time limit. The assessment was initially completed under section 143(3) on a total income of Rs. 4,18,17,910/-. A notice u/s 154 was served as TDS against commission payment had not been paid within the specified period. The Assessing Officer disallowed Rs. 40,82,089/- as commission payment under section 40(a)(ia). However, the ld. CIT(Appeals) deleted the disallowance based on a previous ITAT decision for the assessment year 2005-06 in a similar case. After considering the arguments from both sides and reviewing the relevant material, the Tribunal noted that the issue had already been decided by the ITAT and the jurisdictional High Court. It was held that the amendment in section 40(a)(ia) by the Finance Act, 2010 was remedial and curative in nature, with retrospective application. The tax deducted during the year was paid to the government before the due date for filing the return under section 139(1). The Tribunal followed the decision of the High Court and dismissed the grounds of appeal raised by the Revenue. Therefore, the appeal filed by the Revenue was dismissed, and the order was pronounced in the Open Court on 29/02/2012.
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