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The Tax Publishers2020 TaxPub(DT) 1197 (Ctk-Trib) : (2020) 203 TTJ 0229 INCOME TAX ACT, 1961
Section 40(a)(ia)
On careful perusal of the amendment brought to section 40(a)(ia) by Finance (No.2) Act, 2014 with effect from 1-4-2015, it became clear that the intent of legislature was to reduce the hardship, accordingly said amendment had to be given retrospective effect and AO was, therefore, directed to restrict the 100 per cent disallowance to the extent of 30 per cent only.
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Business disallowance under section 40(a)(ia) - Non-deduction of tax at sources - 100% or 30% disallowance - dispute as regards restrospective applicability of amended provisions of section 40(a)(ia) vide Finance Act, 2014 with effect from 1-4-2015
Assessee claimed deduction of labour charges paid by it. AO disallowed deduction of 100% labour charges for want of TDS. Assessee took plea of amended provisions of section 40(a)(ia) vide Finance Act, 2014 with effect fromn 1-4-2015. AO's case was that amendment was with effect from 1-4-2015, therefore, benefit of 30 per cent disallowance as against 100 per cent disallowance could not be granted in favour of assessee giving effect retrospectively. Held: On careful perusal of the amendment brought to section 40(a)(ia) by Finance Act, 2014 with effect from 1-4-2015, it became clear that the intent of legislature was to reduce the hardship, accordingly said amendment had to be given retrospective effect and AO was, therefore, directed to restrict the 100 per cent disallowance to the extent of 30 per cent only.
Followed:Allied Motors (P) Ltd. Etc. v. CIT (1997) 224 ITR 677 (SC) : 1997 TaxPub(DT) 1147 (SC).
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2014-15
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