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2017 (3) TMI 388 - HC - Income TaxDisallowance u/s. 40 a (ia) - whether the amendment to Section 40 a (ia) is clarificatory and not to be treated retrospectively w.e.f 1st April 2005 ? - Held that - Question whether explanation to Section 40 a (ia) of the Act is having retrospective effect or not - is squarely covered by the decision of Division Bench of this Court in Tax Appeal No. 412 of 2013 and other allied matters, by which it is held that the amendment made under Section 40 a (ia) of the Act, brought out by the Finance Act 2010 w.e.f 1st April 2010 is having retrospective effect. See CIT-Ahmedabad IV Versus Omprakash R. Chaudhary 2015 (2) TMI 150 - GUJARAT HIGH COURT Thus cannot be said that the learned Tribunal has committed any error in deleting the addition made on account of disallowance made under Section 40 a (ia) of the Act. - Decided in favour of assessee.
Issues:
Appeal against ITAT order allowing deletion of additions made by AO under Section 40[a](ia) of the IT Act for AY 2007-2008. Analysis: The appellant, feeling aggrieved by the ITAT order deleting additions made by the AO under Section 40[a](ia) of the IT Act, preferred a Tax Appeal. The issue revolved around whether the ITAT was correct in directing the AO to delete the addition without appreciating the retrospective effect of the amendment to Section 40[a](ia) of the IT Act. The facts revealed that the assessee had shown a liability of only &8377; 1,69,336 for TDS payable, whereas payments liable for TDS amounted to &8377; 1,41,99,565. The AO disallowed &8377; 89,67,962 and added it to the total income under Section 40[a](ia) of the Act. On appeal, the CIT(A) restricted the disallowance to &8377; 75,63,523, considering the amount deposited by the assessee after the accounting year. The Tribunal, in its impugned judgment, deleted the addition under Section 40[a](ia) of the Act by applying the amended provisions retrospectively. The appellant contended that the amendment to Section 40[a](ia) was clarificatory and not retrospective, questioning the Tribunal's decision. However, the Court referred to a Division Bench decision holding that the amendment brought by the Finance Act 2010 had retrospective effect from 1st April 2010. This decision was confirmed by the Supreme Court. The appellant did not dispute this fact during the proceedings. Consequently, the Court found no error in the Tribunal's decision to delete the addition under Section 40[a](ia) of the Act based on the retrospective application of the amended provisions. In conclusion, the Court dismissed the Tax Appeal, stating that no substantial question of law arose in the matter. The decision was based on the Division Bench ruling confirming the retrospective effect of the amendment to Section 40[a](ia) of the IT Act.
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