ITAT upholds CIT(A) decision on disallowance under section 40(a)(ia) for AY 2007-08. (A)

The ITAT upheld the CIT(A)'s decision to delete the disallowance under section 40(a)(ia) of the IT Act for the assessment year 2007-08. The appeal by the Revenue was dismissed, with the ITAT citing judicial precedents that TDS remitted before the due date of filing the return of income should be allowed. The order was pronounced on 28 August 2013.

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Issues involved:
Disallowance made under section 40(a)(ia) of the IT Act for assessment year 2007-08.

Analysis:

Issue 1: Disallowance under section 40(a)(ia) of the IT Act

The appeal filed by the Revenue was against the order of the CIT(A)-V, Hyderabad regarding the disallowance of &8377; 65,89,810 under section 40(a)(ia) of the IT Act. The Assessing Officer had disallowed this amount due to a delay in making payment of tax deducted at source. However, the assessee contended that TDS was deducted at applicable rates and remitted to the exchequer before the due date of furnishing the return of income for the assessment year. The assessee argued that the case fell under the amended provisions of section 40(a)(ia) with retrospective effect. The CIT(A) referred to relevant decisions and held that since the TDS was remitted before the due date of filing the return of income, no disallowance could be made under section 40(a)(ia) of the Act. The CIT(A) directed the Assessing Officer to delete the addition made under section 40(a)(ia).

Issue 2: Judicial precedents and retrospective effect

The ITAT Hyderabad, after hearing both parties and considering the orders of the authorities below, referred to judgments by the Delhi High Court and the jurisdictional High Court regarding the retrospective nature of the amendment to section 40(a)(ia). The High Courts held that remittance of TDS to the Central Government account before the due date of filing the return of income under section 139(1) should be allowed. In line with these judgments, the ITAT upheld the decision of the CIT(A) to delete the addition made under section 40(a)(ia) in the present case. The ITAT dismissed the appeal of the Revenue, affirming the CIT(A)'s order.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the disallowance made under section 40(a)(ia) of the IT Act for the assessment year 2007-08. The appeal of the Revenue was dismissed, and the order was pronounced in the open court on 28 August 2013.

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