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Issues: Whether disallowance under section 40(a)(ia) was attracted when tax was deducted in the last month of the previous year and deposited before the due date for filing the return under section 139(1).
Analysis: The expenditure related to payments on which tax was deducted during the last month of the previous year, and the tax was paid before the due date prescribed for filing the return. The decision relied on the view that the amended provision operates to permit deduction where TDS deducted in the last month is remitted before the return-filing due date. The Tribunal also followed the non-jurisdictional High Court ruling that took the same view and held that, in the absence of any contrary High Court authority, that precedent had to be followed over an adverse Tribunal view.
Conclusion: Disallowance under section 40(a)(ia) was not warranted, and the deletion of the addition was upheld in favour of the assessee.
Ratio Decidendi: Where tax deducted at source during the last month of the previous year is paid before the due date under section 139(1), the corresponding expenditure cannot be disallowed under section 40(a)(ia).
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