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2015 (2) TMI 573 - AT - Income TaxDisallowance of deduction u/s 40(a)(ia) - assessee failed to deposit tax to Government account within due date on the ground that the provision in this section are amended by the Finance Act, 2010 with retrospective effect - CIT(A) deleted the addition - Held that - It can be seen that the amendment made by the Finance Act 2010 allows additional time upto 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 additional time till the due date of filing of the return, in case of TDS made during the last month of the previous year was already available by the amendment made by Finance Act 2008. Thus, it is apparent that 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. It is thus apparent that when the amendment introduced by the Finance Act, 2008 of relaxing the time for deposit of TDS was made retrospective from the year 2005 1st April 2005 , the amendment by Finance Act 2010 with regard to other limb of time limit for payment of TDS has to be held retrospective not from 1st April 2010 only. If we recall at this stage the speech of Finance Minister while introducing this provision by way of Finance Act, 2010, this amendment essentially has been brought for relaxing the current provision on disallowance of expenditure. The tax, if is deducted at any time during the financial year and paid before the date of filing of the return, the Legislature intended to allow deduction on such expenditure with an intention to permit additional time for most deductors upto September of the next financial year. CIT(A) has rightly deleted the disallowance. See Commissioner of Income Tax, Ahmedabad IV Vs. Om Prakash R Chaudhary 2015 (2) TMI 150 - GUJARAT HIGH COURT . - Decided in favour of assessee.
Issues Involved:
1. Withdrawal of Assessee's appeal. 2. Disallowance of deduction under Section 40(a)(ia) of the Income Tax Act. Detailed Analysis: 1. Withdrawal of Assessee's Appeal: The Assessee withdrew its appeal, and the Revenue had no objection to this withdrawal. Consequently, the Tribunal dismissed the Assessee's appeal as withdrawn. 2. Disallowance of Deduction Under Section 40(a)(ia): The core issue in the Revenue's appeal was the deletion of disallowance of deduction under Section 40(a)(ia) by the CIT(A). The Revenue contended that the CIT(A) erred in deleting the disallowance because the Assessee failed to deposit the tax to the Government account within the due date. The Revenue argued that the amendment by the Finance Act, 2010, which allowed for the deduction if the tax was paid before the due date of filing the return, was effective from 01/04/2010 and not retrospective from 01/04/2005. Facts and Arguments: - The AO disallowed a sum of Rs. 3,73,07,240 under Section 40(a)(ia) because the expenditure was made before the due date of filing the return, but the tax was not deposited within the due date. - The Assessee argued that the amendment made by the Finance Act, 2010, was curative and retrospective. - The CIT(A), in its rectified order dated 14.02.2014, decided in favor of the Assessee, deleting the disallowance. Tribunal's Findings: - The Tribunal noted the legislative changes and judicial interpretations regarding the amendment's retrospective nature. - The Hon'ble Gujarat High Court in the case of Commissioner of Income Tax, Ahmedabad IV Vs. Om Prakash R Chaudhary held that the amendment by the Finance Act, 2010, was clarificatory and retrospective from 01/04/2005. - The Tribunal observed that the amendment aimed to remedy unintended consequences and to make the provision workable by allowing the deduction if the tax was paid before the due date of filing the return. Judicial Precedents: - The Tribunal referred to several judicial precedents supporting the retrospective application of the amendment, including decisions by the Hon'ble Delhi High Court, Calcutta High Court, and Karnataka High Court. - No contrary decision was brought to the Tribunal's knowledge. Conclusion: Respectfully following the judicial precedents, the Tribunal held that the CIT(A) rightly deleted the disallowance under Section 40(a)(ia). Therefore, the Tribunal dismissed the Revenue's appeal. Result: Both the appeals filed by the Revenue and the Assessee were dismissed. The order was pronounced in the open court on 14/08/2014.
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