The Tax Publishers2020 TaxPub(DT) 1254 (Ahd-Trib)

INCOME TAX ACT, 1961

Section 40(a)(ia)

Section 11 of Finance Act 2004 by which clause (ia) was added to section 40 does not provide that the same was to become effective from the assessment year 2005-06. It merely said it would become effective on 1-4-2005, which should mean to refer to financial year. There is, as such, no scope for any ambiguity nor is there any scope for confusion. Accordingly section 40(a)(ia) was not applicable in assessment year 2005-06 and, therefore, no disallowance could be made.

Business disallowance under section 40(a)(ia) - Non-deduction of tax at source - Applicability of section 40(a)(ia) during assessment year 2005-06 -

Assessee claimed deduction of freight expenses paid by it. AO disallowed deduction under section 40(a)(ia) for want of TDS. Held: Section 11 of Finance Act 2004 by which clause (ia) was added to section 40 does not provide that the same was to become effective from the assessment year 2005-06. It merely said it would become effective on 1-4-2005, which should mean to refer to financial year. There is, as such, no scope for any ambiguity nor is there any scope for confusion. Accordingly section 40(a)(ia) was not applicable in assessment year 2005-06 and, therefore, no disallowance could be made.

REFERRED : CIT v. Vatika Township Pvt. Ltd. (2014) 367 ITR 466 (SC) : 2014 TaxPub(DT) 3934 (SC),CIT v. Hindustan Electro Graphites Ltd. (2000) 243 ITR 48 (SC) : 2000 TaxPub(DT) 1316 (SC), Piu Ghosh v. Dy. CIT &Ors. [ITA No.191 of 2009] : 2016 TaxPub(DT) 3826 (Cal-HC), CIT v. BMS. Projects Pvt. Ltd. (2014) 48 Taxmann.com 13 (Guj) 2014 TaxPub(DT) 0712 (Guj-HC), CIT v. Omprakash R. Chaudhary 2015 TaxPub(DT) 484 (Guj-HC), CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. (2013) 361 ITR 192 (Guj) : 2013 TaxPub(DT) 2222 (Guj-HC), CIT v. Sikandar Khan N.Tunvar (2013) 357 ITR 312 (Guj) : 2013 TaxPub(DT) 1379 (Guj-HC),CIT v. United Rice Land Ltd. (2010) 322 ITR 594 (P&H) : 2010 TaxPub(DT) 104 (P&H-HC),CIT v. Poompuhar Shipping Corporation Ltd. (2006) 282 ITR 3 (Mad) : 2006 TaxPub(DT) 1237 (Mad-HC),CIT v. Ess Kay Construction Co. (2004) 267 ITR 618 (P&H) : 2004 TaxPub(DT) 0825 (P&H-HC),Dy. CIT v. Kataria Movers&Ors. [1988/Ahd/2012 with CO 227/Ahd/2012, 1990/Ahd/2012 with CO 228/Ahd/2012, 2004/Ahd/2012 with CO 229/Ahd/2012, dt. 6-10-2016], Asstt. CIT v. Amir Traders [ITA No.563/Ahd/2009, CO No.171/Ahd/2011, dt. 23-1-2015],Ismailhai I. Gandhi v. ACIT [ITA No. 3445/Ahd/2009, dt. 26-10-2012],Merilyn Shipping &Transports&Ors. v. Asstt. CIT (2012) 16 ITR (Trib.) 1 (Visakh) : 2012 TaxPub(DT) 1009 (Visakh-Trib),Kuldeep Kumar Sharma v. ITO [ITA No.5672/Del/10] : 2012 TaxPub(DT) 2880 (Del-Trib),KanubhaiRamjibhai Makwana v. ITO (2011) 44 SOT 264 (Ahd-Trib.) : 2011 TaxPub(DT) 689 (Ahd-Trib) and Mythri Transport Corporation. v. Asstt. CIT (2010) 124 ITD 40 (Visakh-Trib) : 2010 TaxPub(DT) 0293 (Visakh-Trib).

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