2012 (4) TMI 764 - AT - Income Tax

Assessee wins appeal for expenses disallowance under Income Tax Act

M/s. Designer Exports Versus Deputy Commissioner of Income-tax, Circle-34, Kolkata

M/s. Designer Exports Versus Deputy Commissioner of Income-tax, Circle-34, Kolkata - TMI Issues involved: Disallowance of expenses paid to DHL Express without deduction of tax u/s 40(a)(ia) of the Income Tax Act, 1961.The judgment pertains to an appeal by the assessee against the order of CIT(A)-XX, Kolkata regarding the disallowance of expenses paid to DHL Express without deduction of tax u/s 40(a)(ia) of the Income Tax Act, 1961 for Assessment Year 2007-08.The only issue in the appeal was the disallowance of expenses paid to DHL Express without deduction of tax, as confirmed by the CIT(A). The assessee contended that the tax deducted in February 2007 should have been deposited before March 31, 2007, but was actually deposited in May 2007.The Assessing Officer disallowed the expenses under section 40(a)(ia) of the Act, noting that the tax deducted in February 2007 was deposited in May 2007, which was not in compliance with the provisions. The CIT(A) upheld this decision.The Tribunal referred to a decision of the Hon'ble Calcutta High Court in a similar case, where it was held that the amendment in section 40(a)(ia) by the Finance Act, 2010 was remedial and curative in nature. The Tribunal, following this precedent, allowed the assessee's appeal as the TDS was paid before the due date of filing the return u/s 139(1) of the Act.The Tribunal's decision was further supported by the Hon'ble Calcutta High Court, which emphasized the retrospective application of the provisions and dismissed the appeal. Consequently, the Tribunal allowed the claim of the assessee, ruling in favor of the assessee.In conclusion, the appeal of the assessee was allowed based on the retrospective application of the provisions and compliance with the TDS payment timeline.