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TMI Blog2011 (9) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... d this Special Bench by posting the following question for our consideration and decision:- Whether on the facts and in the circumstances of the case, the amendment brought out by the Finance Act, 2010 to section 40(a)(ia) w.e.f. 1-4-2010, is remedial and curative in nature and is, therefore, retrospective in nature. 2. Ground No. 2 of this appeal by the assessee arising out of the order passed by the CIT(A) on 15-1-2001 in relation to the assessment year 2005-06 is against the confirmation of disallowance of ₹ 2,31,820 made by the Assessing Officer on account of delayed payment of ESI PF dues. 3. After considering the rival submissions and perusing the relevant material on record we find that the said contribution received from the employees has been admittedly deposited after the due date under the respective Act but before the close of the previous year relevant to the assessment year under consideration. The Hon'ble Madras High Court in CIT v. Shri Ganapathy Mills Company Ltd. [2000] 243 ITR 879 (Mad.) has held that no disallowance can be made where the contribution is deposited late but within the grace period. In most of the cases the deposit has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s against due date of payment of 7th March, 2005. Second item is the amount paid to contractors totalling to ₹ 50,08,083 up to 28-2-2005 on which tax deducted at source was actually paid on 23rd June, 2005 as against the due date of payment on 7-3-2005. 7. We have heard the rival submissions and perused the relevant material on record in the light of precedents cited before us. The question for our consideration is as to whether section 40(a)(ia) amended by the Finance Act, 2010 with effect from 1-4-2010 is retrospective from 1-4-2005 or prospective from the date specified. Unless stated otherwise, the provisions of the Finance Act, 2010 would have applied w.e.f. 1-4-2011 i.e. assessment year 2011-12. The provision in question has been specifically given retrospective effect from assessment year 2010-11. Now the case of the assessee is that the amendment made by the Finance Act, 2010 should be given retrospective effect from 1-4-2005, being the date from which sub-clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. In order to find answer to this question it would be relevant to note down the legislative history of the provision. 8. Section 40 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been paid before the expiry of the time prescribed under sub-section (1) of section 200 and in accordance with the other provisions of Chapter XVII-B. It is also proposed to provide that where in respect of payment of any sum, tax has been deducted under Chapter XVII-B or paid in any subsequent year, the sum of payment shall be allowed in computing the income of the previous year in which such tax has been paid. The proposed amendment will take effect from 1st day of April, 2005 and will, accordingly, apply in relation to the assessment year 2005-06 and subsequent years. [Clause 11] [Emphasis supplied] 10. At this juncture it would be relevant to note that clause (a) of section 40 provides that in the case of any assessee (i) any interest, royalty, fees for technical services or other sum chargeable under this Act, which is payable outside India; or in India to a non-resident, not being a company or to a foreign company on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o similar. In nutshell, the insertion of sub-clause (ia) is nothing but expansion of the existing sub-clause (i) to the residents. 12. The Taxation Laws (Amendment) Act, 2006 widened the scope of this provision with effect from 1st day of April, 2006 with which we are not concerned in the instant appeal. 13. Thereafter the Finance Act, 2008 made amendment to clause (a) in sub-clause (ia) in section 40 with retrospective effect from 1st April, 2005. The section as amended by the Finance Act, 2008 read as under:- (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been paid,- (A) in a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in sub-section (1) of section 139; or (B) in any other case, on or before the last day of the previous year. Provided that wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilure of the assessee to pay tax deducted during the previous year, or in the subsequent year before the expiry of the time prescribed under section 200(1). Sub-section (1) of section 200 provides that any person deducting any sum in accordance with the provisions of this Chapter shall pay within the prescribed time the sum so deducted to the credit of the Central Government or as the board directs. Rule 30 of the Income-tax Rules, 1962 prescribes time for payment to Government account of the tax deducted at source. Different time limits have been prescribed for depositing tax deducted at source under various sections. In some cases such tax deducted at source is required to be deposited on the same day, in others on or before 7 days from the end of the month in which the deduction is made etc. Hence in no case the time limit for depositing the amount of tax deducted at source during the financial year is beyond 30th April, of the next financial year. This is the mandate of section 200(1) read with Rule 30. Reverting to section 40(a)(ia) as originally inserted, any tax deducted at source during the previous year relevant to assessment year 2005-06 was obliged to be paid either upto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous year in which such tax has been paid. 19. Then came the amendment to section 40(a)(ia) by the Finance Act, 2010 with retrospective effect from 1st April, 2010. The provision so amended, now reads as under:- (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or; after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139 : Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. 20. From the above provision as amended by the Finance Act, 2010 with retrospective effect from 1st April, 2010 it can be seen that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction in the year of incurring the expenditure. Still further, the mandate of proviso consequently providing the remedial relief by granting deduction in the subsequent year in which tax has been paid, also exists. 22. Having seen the ambit of section 40(a)(ia) right from its insertion up to the amendment made by the Finance Act, 2010, now we proceed to examine as to whether such amendment to Finance Act, 2010 is retrospective from 1st April, 2005 as contended by the assessee or retrospective from 1st April, 2010 by which date this provision has been substituted. At this stage it would be relevant to consider the Notes on clauses and Memorandum explaining the provision while introducing Finance Bill, 2010 as under :- Notes on clauses Clause 12 of the Bill seeks to amend section 40 of the Income-tax Act relating to amounts not deductible. Under the existing provisions contained in sub-clause (ia) of clause (a) of the aforesaid section, non-deduction of tax or non-payment of tax after deduction on payment of any sum by way of interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident or amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of section 201(1A) of the Act, a person is liable to pay simple interest at one per cent for every month or part of month in case of failure to deduct tax or payment of tax after deduction. With a view to discourage the practice of delaying the deposit of tax after deduction, it is proposed to increase the rate of interest for non-payment of tax after deduction from the present one per cent to one and one-half per cent for every month or part of month. This amendment is proposed to take effect from 1st July, 2010. [Emphasis supplied] 24. The Finance Bill proposed to amend the section for providing that no disallowance will be made if after deduction of tax during the previous year, the same has been paid on or before the due date of filing of return of income specified in sub-section (1) of section 139 of the Act. 25. It can thus be noticed that the amendment to section 40(a)(ia) by the Finance Act, 2010 has been specifically made retrospectively applicable from the assessment year 2010-11. It has no where been expressly set out that the amendment is curative or merely declaratory of the previous law. The intention of the legislature as gathered from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sections 234B and 234C was also taken into consideration, then liability fastened upon the assessee as a consequence of non-deduction of tax at source at 1 per cent would come to around 45 per cent of the amount of expenditure itself. He invited our attention towards certain representations made to the Hon'ble Finance Minister as Pre-budget memorandum urging the Hon'ble Minister to delete section 40(a)(ia) or to bring some suitable amendment to help the assessees in losing genuine deduction on this account. The learned A.R. stated that the Hon'ble Finance Minister, taking into consideration all such pre-budget representations, has given the relaxation in the terms indicated above. To further strengthen his case, the ld. AR also submitted that the due deduction of tax at source coupled with a little late deposit should be viewed as substantial compliance with the TDS provisions inasmuch as the Government's interest was not affected in any manner as the tax was deducted and paid to it even though a bit belatedly. He relied on certain judgments in support of the contention that the amendment by the Finance Act, 2010 be considered as retrospective from the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision introduced later to depict the real intention of the legislature is not specifically made retrospective by the statute. Notwithstanding the fact that such amendment to the substantive provision has been given prospective effect, nonetheless the judicial or quasi judicial authorities, on a challenge made to it, can justifiably hold such amendment to be retrospective. The justification behind giving retrospective effect to such amendment is to apply the real intention of the legislature from the date such provision was initially introduced. The intention of the legislature while introducing the provision is gathered, inter alia, from the Finance Bill, Memorandum explaining the provision of the Finance Bill. 29.a Now we will espouse the cases relied on by both the sides to bolster their respective points of view on the retrospective or prospective operation of the amendment made by the Finance Act, 2010 to section 40(a)(ia). The first case relied by the learned A.R. in support of his contention about the amendment having retrospective effect from assessment year 2005-06 is the judgment of the Hon'ble Supreme Court in the case of Allied Motors (P.) Ltd. v. CIT [1997] 224 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on account of sales-tax etc. shall be made if it is actually paid on or before the due date applicable for furnishing return under section 139(1) of the Act. The question before the Hon'ble Supreme Court was whether such proviso inserted by the Finance Act, 1987 which came into effect from 1st April, 1988 is prospective or retrospective from assessment year 1984-85, being the year of insertion of section 43B. The Hon'ble Supreme Court observed that the proviso was inserted to cure unintended consequences and make the section workable and hence was retrospective. 29.b. It can, therefore, be easily seen that the amendment to section 43B by the Finance Act, 1987 has been held to be retrospective on the ground that it was made to remove unintended consequences of the section and to make it workable, notwithstanding the fact that such proviso was inserted with effect from 1st April, 1988. 29.c. The next judgment relied by the learned A.R. is that of the Hon'ble Supreme Court in CIT v. Alom Extrusions Ltd. [2009] 319 ITR 306. There was second proviso to section 43B which provided that no deduction shall be allowed in respect of clause (b), namely, any sum payable by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 43B for the purpose of granting deduction. It was claimed that the amendment so made by omitting second proviso should be given retrospective effect. The Hon'ble Supreme Court in this case considered all the aspects of this amendment and observed that : The second proviso resulted into implementation problems, which have been mentioned hereinabove, and which resulted into enactment of Finance Act, 2003, deleting the second proviso and bringing about uniformity in the first proviso by equating tax, duty, cess, and fee with contributions to welfare funds. Once this uniformity is brought about in the first proviso, then, in our view, the Finance Act, 2003, which is made applicable by Parliament only with effect from April 1, 2004, would become curative in nature, hence, it would apply, retrospectively, with effect from April 1, 1988 . On page 315 of the report, the Hon'ble Supreme Court further noted that if the Departmental contention about giving prospective effect to the amendment was given effect to it would result into hardship and invidious discrimination `as certain assessees will be denied deduction for all times and they would lose the benefit of deduction ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 124 (SC). Explanation 2 to section 40(b) was introduced with effect from 1st April, 1985 providing that where an individual is a partner in a firm otherwise than as partner in representative capacity, interest paid by the firm to such individual shall not be taken into account for the purposes of clause (b) to section 40. The Hon'ble Supreme Court in the case of Brij Mohan Das Laxman Das v. CIT [1997] 223 ITR 825 held this insertion to be declaratory in nature and hence retrospective. In this case it was held that the interest paid by the firm to a partner on his individual deposits is not hit by section 40(b), if the person is a partner not in his individual capacity but as representing HUF. The same view was taken in Suwalal Anandilal Jain v. CIT [1997] 224 ITR 753 (SC). However in Rashik Lal Co. v. CIT [1998] 229 ITR 458 (SC), somewhat contrary view was expressed. That is how the matter came up before the Larger Bench of the Hon'ble Supreme Court in Kanji Shivji Co.'s case (supra). In this case it has been held that Explanation 2 to section 40(b) is declaratory and retrospective in operation by affirming the judgments in the cases of Brij Mohan Das Laxman Das (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment of later year i.e. 1960-61 the assessee claimed that the unabsorbed loss should be brought forward and set off against the business income of the current year. It was contended on behalf of the assessee that by virtue of section 24(2)(iii) of the Indian Income-tax Act, 1922 as it stood before its amendment with effect from 1st April, 1957, the assessee had acquired a vested right to have the unabsorbed loss carried forward from year to year until it was completely set off and the subsequent amendment limiting the period of carrying forward the loss to eight years could not divest the assessee of the vested right which had accrued to him. In other words, it was submitted that the amendment effected in 1957 was not retrospective in operation. When the matter finally came up before the Hon'ble Supreme Court, the assessee's contention was repelled by holding that the loss incurred in assessment year 1950-51 could not be set off against the income of assessment year 1960-61 as the law to be applied is that in force in the relevant assessment year and the law as existing in assessment year 1960-61 has restricted the carry forward up to eight years only. 32.c From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a view to ascertain as to whether that provision without the aid of amendment is capable of taking within it what was subsequently included after the amendment. Applying this test, the Hon'ble Court held that cinema houses could not be construed as exempt from wealth-tax as per earlier provision. 33. The principle which can be deduced from these cases discussed in paras 29 to 32 is that any amendment to the substantive provision is ordinarily prospective except expressly stated otherwise or it comes out so by necessary implication. Unless the amendment is made applicable with retrospective effect, such amendment to the substantive provision is to be regarded as prospective barring out cases in which it is explanatory or clarificatory on one hand or it aims at removing the unintended consequences. 34. It is the sole prerogative of the legislature to enact, modify and repeal any law and also to introduce any amendment as retrospective or prospective. All provisions of the Act are brought out with a particular object in mind. Soft provisions, in the shape of incentives etc., are usually aimed at specific growth, like that of a particular industry or particular area. On the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instances in which the legislature has reinforced its intention by way of amendment setting aside the contrary judicial interpretation. 35. From the above discussion it is crystal clear that retrospective effect to a provision cannot be ordinarily given by judicial or quasi judicial authorities unless it is expressly given by the legislature. There may be certain situations requiring the giving of retrospective effect. The scope for the courts to validly give retrospective effect to a provision, despite not being clearly given so by the legislature, is limited. It extends to cases where the legislative intent has later been made explicit which was earlier implicit in the provision or the existing provision led to the unintended consequences and made the intention of the legislature unworkable. Any amendment which has not been given retrospective effect by the legislature, can't be construed as retrospective on the solitary ground that the original provision caused some hardship to the assessees. The relevant criteria to be taken into consideration for arriving at the decision about the retrospective or prospective effect of a later provision, is to unearth the intention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the clarificatory amendments are always retrospective irrespective of the date from which effect has been given to them by the legislature. 37. The second category includes the cases in which there was no ambiguity in the language of the provision at the time of its introduction and the object sought was fully attainable. But while making the provision workable, besides the desired results, certain unintended consequences also crop up. In other words, the section was introduced originally with a particular purpose but while giving effect to the provision in the attainment of that purpose, certain outcomes which were never desired or intended by the legislature, also follow. Any amendment to remove such unintended effects, is also always considered to be retrospective from the date of the insertion of the main provision. 38. The second category of cases are to be differentiated from the first category. In both these categories, there is no difficulty in implementing the provision as such. Whereas, the first category refers to the cases in which the intention of the legislature behind the provision was not properly understood, the second refers to the cases in which while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent amendment is reduction in the intended hardship and not the removal of unintended hardship. 40. On the contrary where the amendment is carried out to the provision with the purpose of adding some additional burden or reducing the existing burden of the assessees, it is always prospective unless expressly stated to be retrospective or falling within the exceptions discussed above such as clarificatory or to remove the unintended hardship. The case of Reliance Jute Industries Ltd. (supra) deals with a situation in which the amendment was carried out to the substantive provision taking away certain benefit to the assessees in terms of extended period for setting off of the brought forward losses. The case of Varadaraja Theatre (P.) Ltd. (supra) is based on facts in which the subsequent amendment granted a benefit to the assessee which was not available as per the earlier provisions. Thus we have noticed that in both types of cases in which the later provision has taken away some right which was earlier available or granted some benefit which was not earlier available, such amendments have been held to be prospective from the dates of insertion as these were neither clarifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 271C etc. by which the assessee is treated as in default, becomes liable to pay interest and also suffers penalty. These provisions were also applicable prior to insertion of section 40(a)(ia). It shows that the duty of the payer to deduct tax at source was always there in the Act. With the insertion of section 40(a)(ia) by the Finance (No.2) Act, 2004 non-deduction of tax at source from the items of expenses specified or failure to pay such tax after deduction, results into one more adverse consequence in the shape of disallowance of the amount of expenditure in the year of incurring it. Simultaneous with the disallowance, proviso provides that the deduction of the expenditure shall be allowed in the subsequent year when the deducted tax is paid. To put it simply if there is no deduction of tax at source or after deduction it is paid beyond the previous year or within the time specified under section 200(1), the income of the first year increases but at the same time the income of the subsequent year is reduced on the payment of tax. It is well-known that each year is a separate and independent unit of assessment. The potential deduction in a later year cannot be allowed to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 004 has been held to be constitutionally valid. 43. The view canvassed on behalf of the assessee, in favour of retrospectivity of the amendment by the Finance Act, 2010 was that the unamended provision caused undue hardship to the assessees, which has been removed. Our attention was invited towards various pre-budget representations made to the Hon'ble Finance Minister impressing upon him either to delete this provision or make it workable. The sum and substance of the submission of the ld. AR was that the relaxation given by the Finance Act, 2010 has mitigated the unintended hardship which was earlier caused to the assessee and hence it should be given retrospective effect from the date of insertion of the provision. 44. We do not find any force in this contention. The reason is that there is no doubt that some intended difficulty has been caused by the Finance Act, 2004 on the introduction of section 40(a)(ia). We are calling it hardship to the assessee from a different angle as with the insertion of this provision the expenditure otherwise deductible has become non-deductible in the year of incurring on its failure to deduct tax at source or pay such tax after deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the specified time of the first category. Except for that there is no change in the overall structure of the provision. Non-deduction of tax at source from the specified payments still warrants disallowance under section 40(a)(ia) as was there under the Finance (No. 2) Act, 2004 and the Finance Act, 2008. Further the disallowance per se has also been maintained in the provision in its current form, where the assessee, after deduction of tax at source, fails to pay it within the specified time. Still further, the prescription of the proviso providing for the remedial relief in the subsequent year in which tax has been paid, also exists. 45. We are unable to appreciate the contention raised on behalf of the assessee that the undue hardship caused to the assessee has been relaxed by the legislature with the amendment carried out by the Finance Act, 2010. The so called hardship as caused with the insertion of section 40(a)(ia) with effect from 1st April, 2005 is still continuing as such. The effect of amendment by the Finance Act, 2010 is limited only to extending the time available for deposit of tax in the second category of cases from the last day of the previous year to the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is deducted in February 2009 but is paid in July 2009. It was argued that addition will be made in assessment year 2009-10 by considering the earlier provision, as per which tax deducted at source is not paid on or before the last date of the previous year i.e. 31st March, 2009. As per his contention, the deduction should have been allowed in assessment year 2010-11 on account of payment made by the assessee in July 2009 as per the mandate of the proviso before amendment. He stated that with the amendment by the Finance Act, 2010 with retrospective effect from 1st April, 2010, the deduction of expenditure can be allowed only in the year of its incurring if the tax has been deducted and paid on or before the due date under section 139(1) and further the proviso applies to cases in which the same is paid beyond the due date under section 139(1) so as to allow deduction in computing the income of the previous year in which such tax has been paid. He submitted that the assessee's case will fall outside the prescription of the proviso to section 40(a)(ia) as amended by the Finance Act, 2010 as the amount is actually paid in July 2009 which is not beyond but before the due date under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n tax is paid. To put it simply, the proviso is only an enabling provision in the subsequent year, of the disabling provision of the main part of the section 40(a)(ia) in an earlier year of incurring such expenditure. When a particular amount of expenditure is disallowed in the first year for failure to deduct tax at source or to pay tax thereon after such deduction as per the main provision of sub-clause (ia), then such amount of expenditure wins deduction on the payment of tax in the later year. 49. It is the complete provision of section 40(a)(ia) together with its proviso as prevailing in a particular year which governs the non-deductibility of expenditure in one year and then its deductibility in the later year. Because of the thread of 'such sum' in the language of proviso, it becomes impermissible to look at the main provision as amended by the Finance Act, 2008 for making disallowance of expenditure and then at the proviso as amended by the Finance Act, 2010 for allowing expenditure in the subsequent year of payment. The situation would have been otherwise, if the expression 'any sum' had been used in the language of the proviso instead of 'such sum&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 40(a)(ia), as contended by the ld. AR, that the amendment is retrospective from 1-4-2005. On the other hand the Finance Minister's speech is one more additional reason for holding amendment of the Finance Act, 2010 as not retrospective from assessment year 2005-06. The relevant para of the speech is as under:- 137. Relaxing the current provisions on disallowance of expenditure, I propose to allow deduction of such expenditure, if tax has been deducted at any time during the financial year and paid before the due date of filing the return. This will allow most deductors additional time up to September of the next financial year. At the same time, I propose to increase the interest charged on tax deducted but not deposited by the specified date, from 12 per cent to 18 per cent per annum. [Emphasis supplied] 52. A careful perusal of the above para of the speech indicates that it has two components. First is the partial relaxation in the time limit for deposit of tax as discussed above in this order and the second is the simultaneous increase in the interest rate. Use of the words 'At the same time' after the relaxation of the time limit for depositing the tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing provision, cannot be given retrospective effect, in our considered opinion the amendment to section 40(a)(ia) also cannot be held retrospective from assessment year 2005-06. 53. The learned A.R. emphatically focused on the contention that the expenditure so incurred by the assessee was genuine and by depositing the tax deducted at source a little late, it substantially complied with the provisions of section 40(a)(ia). It was further submitted that there was no logic in disallowing expenditure and causing loss at around 45 per cent of the expenditure in the shape of tax and interest etc. for a mere non-deduction of tax at the rate of 1 per cent of the contract payments. The ld. AR further put forth that the loss caused to the assessee by making disallowance in the current year could not be made good by allowing deduction in the subsequent year on payment of such tax as, in certain cases, it may take several years to absorb the loss caused by the heavy deduction granted in the subsequent year without there being corresponding income. In the backdrop of these submissions, it was vigorously argued that the retrospective effect to the amendment made by the Finance Act, 2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it still mean that the assessee has substantially complied with the provision so as to escape the mischief of section 40(a)(ia)? The answer is in negative. The Finance Act, 2010 has extended the time limit for depositing tax deducted at source by the due date under section 139(1) of the Act from the earlier lesser time available for compliance. If the tax is deposited by the due date, it would mean escape from the clutches of section 40(a)(ia) for assessment year 2010-11, but if it is deposited even the next day beyond the due date, natural consequences would follow and it would call for disallowance under section 40(a)(ia) in the year of incurring the expenditure. In the like manner, in the year under appeal, if the tax deducted at source up to February, 2005 had been deposited up to 31st March, it would have amounted to compliance of the provision, but the late deposit even on 1st April, 2005 would amount to non-compliance warranting interference by section 40(a)(ia) entailing disallowance of expenditure in the assessment year 2005-06. However the fact that the assessee deposited it beyond the prescribed period, would amount to compliance of the prescription of the proviso, ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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