Retrospective TDS disallowance relief applies when tax is paid by the return-filing due date, subject to verification.

The amendment to section 40(a)(ia) by the Finance Act, 2010 was treated as clarificatory and remedial, so the relaxed rule applied retrospectively from the insertion of the provision. On that basis, no disallowance arises where tax deducted at source is deposited on or before the due date for filing the return under section 139(1). The controlling factual issue was whether the assessee had actually made payment within that deadline, and the matter was sent back for verification of the payment dates and fresh determination.

---

---

Issues: Whether disallowance under section 40(a)(ia) of the Income-tax Act, 1961 was warranted where tax deducted at source was stated to have been deposited before the due date under section 139(1), and whether the amended provision applied retrospectively.

Analysis: The Tribunal followed its earlier view that the amendment to section 40(a)(ia) brought by the Finance Act, 2010 was clarificatory and remedial in nature, intended to remove unintended hardship and make the provision workable. It treated the amended requirement, namely that no disallowance arises if tax deducted at source is paid on or before the due date for filing the return, as applicable retrospectively from the date when section 40(a)(ia) was inserted. On that basis, the crucial factual question was whether the assessee had in fact deposited the tax within the due date under section 139(1), and the Tribunal directed verification of the actual dates of payment.

Conclusion: Disallowance under section 40(a)(ia) was not to be sustained where the tax deducted at source had been deposited before the due date for filing the return, and the matter was restored to the Assessing Officer for verification and fresh decision.

---