Tribunal: Section 40(a)(ia) does not apply retroactively. Verify claim. Interest under sections 234B & 234C is consequential.

The Tribunal held that section 40(a)(ia) of the Act does not apply to payments already made by the end of the previous year. The AO was directed to verify the claim of the assessee accordingly, and the appeal was treated as allowed for statistical purposes. The judgment emphasized that interest under sections 234B and 234C of the Act is consequential. The decision was pronounced on 26th February 2014.

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Issues:
Disallowance under section 40(a)(ia) of the Act for transportation charges, export freight charges, and export freight paid to Indian agents of foreign shipping companies.

Analysis:
The appeal pertains to the assessment year 2007-08 where the AO disallowed certain expenses under section 40(a)(ia) of the Act. The AO and CIT(A) held that non-deduction of tax at source attracts the provisions of section 40(a)(ia), adding the amounts paid by the assessee as income for the year. The assessee argued that section 40(a)(ia) does not apply to amounts already paid, relying on decisions of ITAT Chennai Benches and the Allahabad High Court. The Chennai Bench held that section 40(a)(ia) is not attracted for payments already made by the assessee. The D.R. failed to provide any contrary judgment on this issue, leading to the conclusion that there is no opposing decision.

The Tribunal, without delving into other aspects not argued by either party, ruled that section 40(a)(ia) is not applicable to payments already made by the end of the previous year. The AO was directed to verify the claim of the assessee in line with this decision. The judgment highlighted that interest under sections 234B and 234C of the Act is consequential and need not be considered independently. Consequently, the appeal filed by the assessee was treated as allowed for statistical purposes. The order was pronounced on 26th February 2014.

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