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Issues: Whether the amendment to section 40(a)(ia) applies retrospectively so as to permit deduction of expenditure where tax deducted at source was remitted to the Government before the due date for filing the return of income under section 139(1), and thereby prevent disallowance.
Analysis: The assessee had deducted tax from contract payments during the relevant previous year and deposited the tax before the due date for filing the return. The dispute turned on whether the later amendment to section 40(a)(ia), extending the time for payment of tax deducted at source up to the due date under section 139(1), was merely prospective or was intended to remove hardship and operate retrospectively. The Tribunal followed the line of decisions holding that the amendment is curative in nature and gives relief where the tax has been deposited before the return-filing date, even if not within the earlier time limit. On that basis, the statutory disallowance could not survive once the tax deduction and remittance requirements were satisfied before the return due date.
Conclusion: The amendment to section 40(a)(ia) was held to be retrospective in operation, and no disallowance was warranted where the tax deducted at source was paid before the due date under section 139(1). The issue was decided in favour of the assessee.
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