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Issues: Whether the amendment to section 40(a)(ia) of the Income-tax Act, 1961, allowing deduction where tax deducted at source is paid on or before the due date under section 139(1), applies retrospectively so as to delete the disallowance made in the present year.
Analysis: The assessee had deducted tax on the relevant expenditure and deposited it before the due date for filing the return under section 139(1). The Court followed the view that the amendment made by the Finance Act, 2010 to section 40(a)(ia) is retrospective in operation and is remedial and curative in nature. On that basis, the disallowance could not be sustained where the tax deducted at source had been paid within the time permitted for filing the return.
Conclusion: The disallowance under section 40(a)(ia) was unsustainable and had to be deleted, in favour of the assessee.
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