INCOME TAX ACT, 1961

Section 40(a)(ia)

Business disallowance under section 40(a)(ia) - Non-deduction of TDS on payment of interest - Nature of second process -

Assessee was engaged as Builder and Developer. AO noticed that assessee had taken unsecured loan from a private company and had paid interest on which TDS was not deducted by assessee. AO was of the view that non-deduction of TDS on payment of interest attracts provisions of section 40(a)(ia) and accordingly, interest was liable to be disallowed. Assessee submitted that interest paid by assessee was considered by it in its Profit and Loss account in the return of income filed by it. The submission of assessee was not found acceptable to AO as he was of the view that the second proviso to section 40(a)(ia) came into effect from 1-4-2013 and not applicable. He accordingly disallowed interest expenses under section 40(a)(ia) Held: Decision of CIT v. Ansal LandMark Township Pvt. Ltd. (2015) 377 ITR 635 (Del) : 2015 TaxPub(DT) 3482 (Del-HC) held that insertion of second proviso to section 40(a)(ia) is declaratory and curative in nature and has retrospective effect from 01-04-2005. CIT(A) relying on the decision in this case had given a finding that assessee had paid tax on the amount of interest paid by it, therefore, appeal of Revenue was dismissed.

Followed:CIT v. Ansal Land Mark Township (P.) Ltd. (2015) 377 ITR 635 (Del) : 2015 TaxPub(DT) 3482 (Del-HC) Prudential Logistics and Transports v. ITO (2014) 51 Taxmann.com 426 (Ker) : 2014 TaxPub(DT) 1927 (Ker-HC) Asstt. CIT v. Bhavook Chandraprakash Tripathi, [ITA No.1372/PN/2013 dated 18-3-2015] : 2015 TaxPub(DT) 1971 (Pune-Trib)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2012-13

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