Judgment with a Difference : Disallowance @ 30% of expenditure u/s Sec. 40(a)(ia) towards TDS default is retrospective in Nature

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Judgment with a Difference : Disallowance @ 30% of expenditure u/s Sec. 40(a)(ia) towards TDS default is retrospective in Nature

 

Guwahati ITAT upholds disallowance u/s. 40(a)(ia) on account of non-deduction of TDS on consultancy charges citing assessee’s failure in filing the relevant details of the actual nature of expenditure for AY 200708.

ITAT , however has restricted the disallowance to 30% by stating that

“The Legislature has itself amended Section 40(a)(ia) vide the Finance Act, 2014 w.e.f. 01.04.2015 restricting a disallowance made u/s 40(a)(ia) from 100% to 30% only”;

It has relied on Kolkata ITAT ruling in case of Dipak Parui wherein it was held that the above amendment inserted vide proviso to sec. 40(a)(ia) is held to be a curative one and so have retrospective effect.

Accordingly, it direct ed the AO to restrict the impugned disallowance to the extent of 30% of expenditure only.

The interesting ruling was delivered by ITAT Gauhati bench consisting  of Shri S. S. Godara and Dr.A. L.Saini. Advocate Ramesh Goenka and Amit Goenka argued on behalf of the assessee, whereas Revenue was represented by Mr. A. K. Bhardwaj, Jayanta Mridha and Amitava Sen.

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