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| The Tax Publishers2020 TaxPub(DT) 2754 (Bang-Trib) INCOME TAX ACT, 1961
Section 40(a)(ia), Second proviso
Second proviso to section 40(a)(ia) was applicable retrospectively and, therefore, if payees had included respective income in their returns and paid taxes as pleaded by assessee, no disallowance could be made under section 40(a)(ia) even if no tax was deducted by assessee at the time of related payment during concerned asst.yr. 2012-13.
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Business disallowance under section 40(a)(ia) - Non-deduction of tax at source - Retrospective applicability of second proviso to section 40(a)(ia) -
Assessee claimed deduction of certain expenses paid by it without TDS. AO disallowed deduction invoking section 40(a)(ia). Assessee's case was that payees had included respective income in their return and had paid taxes and, therefore, no disallowance could be made in view of second proviso to section 40(a)(ia). AO rejected this on the ground that second proviso to section 40(a0(ia) introduced by Finance Act, 2012 with effect from 1-4-2013 was not applicable during the concerned year. Held: Amendment of a provision which is aimed at removing unintended conseqences with intention to make the provision operative should be treated as retrospective no matter whether same has been given effect prospectively. Accordingly, `second proviso to section 40(a)(ia) was applicable retrospectively and, therefore, matter was remanded back to AO for adjudication afresh.
REFERRED :
FAVOUR : Matter remanded.
A.Y. : 2012-13
IN THE ITAT, BANGALORE BENCH
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