INCOME TAX ACT, 1961

Section 40(a)(ia)

Business disallowance under section 40(a)(ia) - Non-deduction of TDS on interest payment - Interest paid by assessee has been included by respective payees in their respective income -

Assessee challenged the disallowance under section 40(a)(ia). With respect to the aforesaid disallowance, AO had noted that assessee was stated to have paid interest to India Bulls and interest to Reliance. On such interest payment, assessee had not deducted the TDS. Assessee was asked to explain as to why the aggregate amount was not be disallowed under section 40(a)(ia) on account of failure to deduct the TDS. AO noted that assessee had furnished a certificate stating that interest paid by assessee to India Bulls & Reliance was included by them in their respective income and therefore, no disallowance under section 40(a)(ia) was called for. AO did not accept the submissions made by assessee and proceeded to disallow the sum under section 40(a)(ia). Held: High Court in the case of CIT v. Ansal Land Mark Township (P) Ltd. (2015) 272 ITR 635 (Del) : 2015 TaxPub(DT) 3482 (Del-HC) has held that the second proviso to section 40(a)(ia) of the Act is declaratory and curative in nature and should be given retrospective effect from 1-4-2005. As long as the respective payee/resident has filed its return of income disclosing the payment received and in which income earned by it is embedded and had also paid tax on such income, then no disallowance can be made under section 40(a)(ia). Assessee had made the submission to effect that interest paid by the assessee has been included by respective payees in their respective income, but there was no finding of the lower authorities on the aforesaid contention. Therefore, matter was remanded back to AO to decide the issue afresh.

Followed:CIT v. Ansal Land Mark Township (P) Ltd. (2015) 272 ITR 635 (Del) : 2015 TaxPub(DT) 3482 (Del-HC)

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2009-10

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