2014 (8) TMI 731 - HC - Income Tax

TDS payment made after due date Effect of amendment to section 40(a)(ia) Held that - Following the decision in COMMISSIONER OF INCOME TAX II Versus GUJARAT STATE ROAD TRANSPORT CORPORATION 2014 (2) TMI 120 - GUJARAT HIGH COURT - amendment u/s 40(1)(ia) of the Income Tax Act, 1961 brought out by the Finance Act, 2010 w.e.f. 01.04.2010 is having retrospective effect Decided against Revenue.

Summary

Issues Involved:
1. Disallowance of TDS payment under Section 40(a)(ia) of the Income-tax Act, 1961.
2. Disallowance of employees' contribution towards P.F. and ESIC under Section 36(1)(va) of the Income-tax Act, 1961.

Analysis:

Issue 1: Disallowance of TDS payment under Section 40(a)(ia) of the Income-tax Act, 1961:
The Revenue challenged the deletion of disallowance of TDS payment under Section 40(a)(ia) for Assessment Year 2009-10. The main contention was whether TDS payment made before the due date of filing the return of income should be allowable as an expenditure. The Tribunal upheld the deletion, citing the retrospective effect of the amendment to Section 40(a)(ia) by the Finance Act, 2010 from 01.04.2010. The Revenue argued that the retrospective application could not extend prior to 01.04.2010 due to a previous amendment by the Finance Act, 2008. However, the Court referred to a Division Bench decision holding that the 2010 amendment has retrospective effect. Consequently, the Court held against the Revenue and dismissed the tax appeal regarding this issue.

Issue 2: Disallowance of employees' contribution towards P.F. and ESIC under Section 36(1)(va) of the Income-tax Act, 1961:
The Revenue also contested the deletion of disallowance related to employees' contribution towards P.F. and ESIC under Section 36(1)(va). The Tribunal relied on a Supreme Court decision in the case of Alom Extrusions Ltd. to support the deletion. The Revenue argued that the Supreme Court's decision did not cover employees' contribution under Section 36(1)(va). The Court noted the specific controversy in the Alom Extrusions Ltd. case and emphasized that the deduction under Section 36(1)(va) was distinct. The Court directed further consideration of this issue based on the Division Bench decision in Tax Appeal No. 637/2013 and other related matters, scheduling a final disposal hearing.

In conclusion, the judgment addressed the issues of disallowance of TDS payment and employees' contribution towards P.F. and ESIC under specific sections of the Income-tax Act, 1961. The Court's analysis focused on the retrospective application of relevant amendments and the interpretation of legal provisions in light of previous judicial decisions.