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2014 (11) TMI 520 - AT - Income TaxAddition u/s 40(a)(ia) - Assessee contended that the delay in remitting the taxes to the Government were indeed paid before the due date of filing of return of income - Held that - As decided in CIT Vs Virgin Creations 2011 (11) TMI 348 - CALCUTTA HIGH COURT it has been held that amendment to Section 40a(ia) was having retrospective operation and such retrospectivity applied from 01-04- 2005 itself - remittances of deducted tax, if made before the due date of filing the return would be enough and Section 40a (ia) would not be attracted in CIT v. Alom Extrusions Ltd. 2009 (11) TMI 27 - SUPREME COURT - the TDS provision caused unintended inexplicable situation whereby the assessee who deducted the tax at source from the payments made by it for and on behalf of the Government and then if misses out the time limit of depositing the same with the Treasury within the time prescribed, the amount spent for its business purposes on account of the late deposit of such tax would result into disallowance of entire expenditure under section 40(a)(ia) - the amendment made by the Finance Act 2010 allows additional time up to the due date of filing of the return in respect of even those instances where TDS has been deducted during the first eleven months of the previous year - the relaxation made by the amendment made under the Finance Act, 2010 brings the law in parity with the aforementioned situation and accordingly, for the TDS deducted all throughout the year, time is extended from payment till the filing of return the order of the Tribunal is upheld Decided against revenue. Allowability of depreciation in computer peripherals @ 60% - Held that - CIT(A) rightly allowed the appeal of the assessee relying upon DCIT Vs Data Craft India Ltd. 2010 (7) TMI 642 - ITAT, MUMBAI - Nothing was brought by revenue to take a different view thus, the order of the CIT(A) is upheld Decided against revenue.
Issues:
1. Appeal filed by the revenue against CIT(A)-III, Bangalore's order. 2. CIT(A) deleted an addition made by AO under Section 40a(ia) of the IT Act. 3. Disallowance of tax deduction by AO due to late remittance by the assessee. 4. Argument regarding remittance made before the due date of filing return. 5. Interpretation of Section 40a(ia) regarding remittance of tax at source. 6. Retrospective operation of the amendment to Section 40a(ia) by Finance Act, 2010. 7. CIT(A) allowing depreciation on printers and scanners at 60%. 8. Dismissal of the revenue's appeal. Analysis: 1. The appeal was filed by the revenue against the order of CIT(A)-III, Bangalore. The revenue raised five grounds, with the second ground being the deletion of an addition made by the AO under Section 40a(ia) of the IT Act. The AO disallowed tax deduction due to late remittance by the assessee, leading to a disallowance of a specific amount. 2. The assessee argued that the remittances were made before the due date of filing the return, relying on a Co-ordinate Bench decision. The CIT(A) allowed this ground of the assessee, leading to a disagreement between the revenue and the assessee regarding the interpretation of Section 40a(ia) concerning the remittance of tax at source. 3. The Tribunal examined various judicial precedents, including decisions by the Kolkata High Court and the Karnataka High Court, regarding the retrospective operation of the amendment to Section 40a(ia) by the Finance Act, 2010. The Tribunal concluded that the amendment had retrospective effect from 1-4-2005, allowing remittance of tax deducted before the due date of filing the return, thereby dismissing the revenue's appeal on this ground. 4. Another issue raised was the allowance of depreciation on printers and scanners at a rate of 60%. The AO had disallowed this claim, but the CIT(A) allowed it based on a Special Bench decision. The Tribunal found no reason to interfere with the CIT(A)'s decision, dismissing the revenue's claim regarding depreciation on printers and scanners. 5. Ultimately, the Tribunal dismissed the revenue's appeal in its entirety, upholding the decisions of the CIT(A) on both the disallowance of tax deduction and the allowance of depreciation on printers and scanners. The judgment highlighted the retrospective operation of the amendment to Section 40a(ia) and emphasized the importance of timely remittance of tax at source.
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