2015 (5) TMI 183 - AT - Income Tax

Disallowance u/s 40(a)(ia) - CIT(A) held that amendment in the section are clarificatory and retrospective - Held that - When there was no dispute that the impugned TDS was deposited before the due date of filing of return then we can hold that the intention behind the amendment u/s.40(a)(ia) was to ensure the deposit of TDS and that the evidence of deposit of tax should be placed along with returned filed. In view of the legal position as discussed hereinabove, we are not inclined to disturb the factual as well as legal finding of learned CIT(A), and the same is hereby confirmed - Decided against Revenue.

Summary

Issues involved:
- Appeal filed by Revenue challenging deletion of addition under section 40(a)(ia) of the Income Tax Act, 1961 by CIT(A).
- Interpretation of retrospective applicability of section 40(a)(ia) as per Finance Act, 2010.
- Disallowance made by AO due to non-deposit of TDS within prescribed time.
- Consideration of legal precedents and case laws in determining the issue.
- Confirmation of CIT(A)'s findings by the ITAT Ahmedabad.

Analysis:
1. The Revenue filed an appeal challenging the deletion of an addition under section 40(a)(ia) of the Income Tax Act, 1961 by the CIT(A). The grounds of appeal included the contention that the provisions of section 40(a)(ia) as amended by the Finance Act, 2010 were clarificatory and retrospective in nature. The AO had disallowed an amount under section 40(a)(ia) as the TDS deducted was not deposited before the due date of filing the return. However, the CIT(A) held that the provision was retrospectively applicable, citing a decision by ITAT Ahmedabad in a similar case.

2. The facts emerged from the assessment order revealed that the Assessee company had disclosed a return of income at Rs. Nil, which was later reopened under section 147 due to non-deposit of TDS within the prescribed time. The AO made a disallowance under section 40(a)(ia) despite the TDS being deposited before the due date of filing the return. The CIT(A) relied on legal precedents and the retrospective applicability of the provision to cancel the disallowance.

3. The ITAT Ahmedabad considered the arguments presented by both sides and the legal position post the amendment in section 40(a)(ia). The Tribunal noted that the intention behind the amendment was to ensure timely deposit of TDS, which was fulfilled in the present case. Citing decisions of Hon'ble Courts, the ITAT confirmed the findings of the CIT(A) and dismissed the appeal of the Revenue. The ITAT emphasized the importance of providing evidence of TDS deposit along with the return filed.

4. In conclusion, the ITAT Ahmedabad upheld the decision of the CIT(A) regarding the retrospective applicability of section 40(a)(ia) and the non-disallowance of the amount in question. The legal position post the amendment was considered, and the Tribunal found no merit in the grounds raised by the Revenue, ultimately dismissing the appeal.