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| The Tax Publishers2020 TaxPub(DT) 2847 (Mum-Trib) : (2020) 206 TTJ 0769 INCOME TAX ACT, 1961
Section 40(a)(ia) read with section 201(1)
Second proviso of section 40(a)(ia) read with section 201(1) is retrospective in operation and therefore, assessee herein being a payer could not be treated as an assessee in default and consequently, no disallowance under section 40(a)(ia) could be made in its hands.
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Business Disallowance under section 40(a)(ia) - Validity - Second proviso of section 40(a)(ia) read with section 201(1) whether retrospective in nature -
Issue was as regards disallowance of exhibition expenses paid by assessee without deduction of tax at source. Assessee contended that subject mentioned transaction was duly considered in income tax returns of payee, thus, no disallowance under section 40(a)(ia), could be made in hands of assessee-payer. Held: Second proviso of section 40(a)(ia) read with section 201(1) was held to be retrospective in operation in case of CIT v. Ansal Landmark Housing Development Ltd However, in case of Thomas George Muthoot, issue was decided against assessee, wherein second proviso to section 40(a)(ia) read with section 201(1) was held to be prospective in operation. There are divergent views taken by different non-jurisdictional High Courts. Supreme Court in case of Vegetable Products held that construction that is favourable to assessee should have to be considered. Accordingly, it was held that assessee herein being a payer could not be treated as an assessee in default and consequently, no disallowance under section 40(a)(ia) could be made.
Followed:CIT-1 v. Ansal Land Mark Township (P) Ltd. (2015) 377 ITR 635 (Del) : 2015 TaxPub(DT) 3482 (Del-HC)Provision applied:CIT, West Bengal I v. Vegetable Products Limited (1973) 88 ITR 192 (SC) : 1973 TaxPub(DT) 0421 (SC)
REFERRED : Shri. Thomas George Muthoot v. The CIT 2015 TaxPub(DT) 3322 (Ker-HC)
FAVOUR : In assessee's favour
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 194C
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