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2023 (5) TMI 53 - AT - Income TaxRevision u/s 263 - Disallowance u/s. 40(a)(ia) - scope of amendment made to section 40(a)(ia) - amount of tax deducted at source is deposited before the due date for filing the return of income - HELD THAT - As decided in Calcutta Export Co case 2018 (5) TMI 356 - SUPREME COURT clearly laid down the ratio that the amendment to section 40(a)(ia) with respect allowability of the expenses on which tax is deducted incurred during the year that is remitted to Government account on or before the due date for filing the return of income u/s.139(1) being curative in nature is retrospective. In assessee s case the tax deducted during the period from 1.10.2008 to 28.2.2009 was credited to the Govt. account during May, 2009 to July, 2009 i.e. before the due date for filing the return of income u/s.139(1). Therefore respectfully following the ratio laid down by the Apex Court, we hold that no disallowance is warranted in assessee s case for the impugned amount and the disallowance made by the AO is deleted. Appeal by the assessee is allowed.
Issues Involved:
1. Applicability of Section 40(a)(ia) of the Income Tax Act. 2. Retrospective nature of the amendment made by the Finance Act, 2010 to Section 40(a)(ia). 3. Compliance with TDS provisions and the timing of TDS payment. Detailed Analysis: 1. Applicability of Section 40(a)(ia) of the Income Tax Act: The assessee, engaged in the business of building and developing residential and commercial complexes, filed a return of income for AY 2009-10 declaring a total income of Rs. 98,41,018. The assessment was completed under Section 143(3) with an income of Rs. 1,03,48,780. The CIT, Kozhikode, set aside the assessment order under Section 263, directing a fresh assessment due to the late crediting of TDS to the Government account. The AO disallowed Rs. 7,49,20,296 under Section 40(a)(ia) due to the delayed TDS payment. 2. Retrospective Nature of the Amendment Made by the Finance Act, 2010 to Section 40(a)(ia): The assessee contended that the TDS was deposited before the due date for filing the return of income, thus complying with the provisions of Section 40(a)(ia) as amended by the Finance Act, 2010. The amendment, effective from 01.04.2010, was argued to be retrospective as it was curative in nature. The CIT(A) upheld the disallowance, relying on the jurisdictional High Court decision in Thomas George Muthoot. The Tribunal considered the Supreme Court's decision in CIT v. Calcutta Export Co., which held that the amendment to Section 40(a)(ia) is retrospective, applying from the date of its insertion, i.e., AY 2005-2006. 3. Compliance with TDS Provisions and the Timing of TDS Payment: The assessee argued that the TDS deducted during 01.10.2008 to 28.02.2009 was deposited between May 2009 and July 2009, before the due date for filing the return under Section 139(1). The Tribunal noted that the Supreme Court in Calcutta Export Co. emphasized that the amendment aimed to ensure tax compliance without punishing the taxpayer. The amendment allowed TDS payments made before the due date for filing returns to be deductible, even if deposited later. The Tribunal concluded that the assessee complied with the amended provisions, and no disallowance under Section 40(a)(ia) was warranted. Conclusion: The Tribunal held that the amendment to Section 40(a)(ia) by the Finance Act, 2010, being curative, is retrospective. Since the assessee deposited the TDS before the due date for filing the return, no disallowance was warranted. The disallowance made by the AO was deleted, and the appeal by the assessee was allowed. Pronouncement: The judgment was pronounced in the open court on January 20, 2023.
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