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TMI Blog2016 (3) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... he proviso, inserted by Finance Act 2012, w.e.f 1.4.2014 is not applicable to A.Y 2009-10. But in view of proposition rendered by the Hon'ble High Court of Delhi, it is settled that the proviso to section 40(a)(ia) of the Act being declaratory and curative is applicable from 1.4.2005 which is the date of insertion of sub-section (ia) of section 40(A) of the Act. Hence, view taken by the AO for making disallowance and basis on which the same was upheld by the ld. CIT(A) is not sustainable in view of the dicta of Hon'ble Jurisdictional High Court. Thus, we are inclined to hold that the benefit of the proviso to section 40(a)(ia) of the Act is available for the assessee for A.Y 2009-10 as the AO could not controvert the fact supported by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng heard. 3. That in any case and in any view of the matter action of the ld. CIT(A) has erred in law and on the facts in making the impugned addition is bad in law and against the facts and circumstances of the case. 3. Briefly stated, the facts of the case are that during the course of assessment proceedings, it came to the notice of the AO that the assessee has debited an amount of ₹ 2,08,953/- on account of interest payment made to Kotak Mahindra. Further, the ARs of the assessee was asked to ascertain whether any TDS has been deducted and deposited to the Central Government Account. The ARs of the assessee has submitted the ledger account of the interest. However, it is seen that no TDS has been deducted and deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had submitted all details of expenses at the time of appellate proceedings which were submitted before the AO and explained how these expenses were incurred in relation to its business. Per contra the ld. DR supported the orders of the authorities below. 6. We have heard the arguments of both the sides and carefully perused the relevant material placed on record before us. We find that the decision of the Hon'ble High Court at New Delhi in the case of CIT Vs. Ansal Land Mark Township [P] Ltd in ITA No. 160 161/2015 vide order dated 26th August 2015 is relevant to the case in hand. Paras 13 to 16 of this order is reproduced hereinbelow: 13. Turning to the decision of the Agra Bench of ITAT in Rajiv Kumar Agarwal v. ACI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equence to disallow the expenditure, due to non deduction of tax at source, even in a situation in which corresponding income is brought to tax in the hands of the recipient. The scheme of Section 40(a)(ia), as we see it, is aimed at ensuring that an expenditure should not be allowed as deduction in the hands of an assessee in a situation in which income embedded in such expenditure has remained untaxed due to tax withholding lapses by the assessee. It is not, in our considered view, a penalty for tax withholding lapse but it is a sort of compensatory deduction restriction for an income going untaxed due to tax withholding lapse. The penalty for tax withholding lapse per se is separately provided for in Section 271 C, and, section 40(a)(ia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 2) Act, 2004. 14. The Court is of the view that the above reasoning of the Agra Bench of ITAT as regards the rationale behind the insertion of the second proviso to Section 40(a) (ia) of the Act and its conclusion that the said proviso is declaratory and curative and has retrospective effect from 1st April 2005, merits acceptance. 15. In that view of the matter, the Court is unable to find any legal infirmity in the impugned order of the ITAT in adopting the ratio of the decision of the Agra Bench, ITAT in (Rajiv Kumar Agarwal v. ACIT). 16. No substantial question of law arises in the facts and circumstances of the present case. The appeal is dismissed. In view of the dicta valid down by the Hon'ble Jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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