2015 (11) TMI 1753 - HC - Income Tax

Disallowance u/s 40(a)(ia) - whether the provisions of section 40(a)(ia) as amended by the Finance Act, 2010 with effect from 1st April, 2010 are of clarificatory nature and therefore retrospective? - Held Yes.

Summary

Issues:
Challenge to order under section 260A of the Income Tax Act, 1961 regarding TDS under section 40(a)(ia) and retrospective application of provisions.

Analysis:
The appellant Revenue challenged the order of the Income Tax Appellate Tribunal related to the applicability of TDS under section 40(a)(ia) of the Income Tax Act, 1961. The appellant raised questions regarding the Tribunal's justification in not appreciating the fact that the provisions of section 40(a)(ia) as amended by the Finance Act, 2010 were clarificatory and retrospective in nature. The Tribunal was also questioned for not considering the Memorandum explaining the provisions in the Finance Bill, 2010, which clearly stated the retrospective application from 1st April, 2010 for the assessment year 2010-11 and subsequent years.

The assessment year in question was 2005-06, with the relevant accounting period being the previous year 2004-05. The Court noted that a previous decision in Tax Appeal No.493 of 2003 had already established that the amendment introduced by the Finance Act, 2010 had retrospective effect from 1st April, 2010. Given this precedent, the Court found that there was no need to delve into the detailed facts and contentions of the case. Referring to the judgment in Tax Appeal No.413 of 2013, the Court concluded that the impugned order by the Tribunal did not give rise to any substantial question of law warranting interference. Consequently, the appeal made by the appellant Revenue was dismissed.