INCOME TAX ACT, 1961

Section 40(a)(ia)

Business disallowance under section 40(a)(ia) - Non deduction of TDS under section 194A - Default under section 201(1) - Scope of amendment

AO disallowed assessee's claim on interest expenses paid by it to M/s. G and made corresponding addition to assessee's income by invoking the section 40(a)(ia) on the ground that it had not deducted tax at source under section 194A. Assessee pleaded that effect of proviso inserted in section 201 by Finance Act, 2012 with effect from 1-7-2012 should be given retrospectively, which provides that any person, who fails to deduct the whole or any part of the tax on the sum paid to a resident shall not be deemed to be an assessee-in-default in respect of such tax. However, CIT(A) dismissed assessee's appeal. Held: High Court, in the case of CIT v. Ansal Land Mark Township (P.) Ltd. [2015 TaxPub(DT) 3482 (Del-HC)] had held that second proviso to section 40(a)(ia) is declaratory and curative and it has retrospective effect from 1-4-2005. Accordingly, in the fitness of things, disputed addition under section 40(a)(ia) was remanded to AO for fresh order on this limited issue after necessary verification and AO would give opportunity to assessee to furnish necessary materials in support of claim for benefit under second proviso to section 40(a)(ia).

Followed:CIT v. Ansal Landmark Township (P.) Ltd. (2016) 242 Taxman 5 (SC) : 2016 TaxPub(DT) 4054 (SC) CIT v. Ansal Land Mark Township (P) Ltd. (2015) 377 ITR 635 (Delhi) : [ITA Nos. 160/2015, 161/2015, dt. 26-8-2015] : 2015 TaxPub(DT) 3482 (Del-HC) Prudential Logistics and Transports v. ITO (2014) 364 ITR 689 (Kerala) : 2014 TaxPub(DT) 1927 (Ker-HC) Rajeev Kumar Agarwal v. Addl. CIT (2014) 149 ITD 363 (Agra-Trib.) : 2014 TaxPub(DT) 2460 (Agra-Trib)

REFERRED :

FAVOUR : In assessee's favour by way of remand

A.Y. :

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