Tribunal rules in favor of assessee on belated TDS payments

The Tribunal upheld the AO's order and set aside the CIT's order under section 263 of the Income Tax Act, 1961. The appeal was allowed in favor of the assessee, determining that belated TDS payments made before the due date of filing the return are not subject to disallowance under section 40(a)(ia). The Tribunal relied on the decision of the Calcutta High Court, emphasizing its retrospective operation.

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Issues involved:
The appeal challenges the order passed u/s 263 of the Income Tax Act, 1961 regarding the disallowance of belated TDS payment.

Summary:

Issue 1: Validity of Notice u/s 263
The CIT issued a notice u/s 263 based on belated TDS payment. The assessee argued that the notice was void as per the decision of the Hon'ble Calcutta High Court, which held that section 40(a)(ia) has retrospective operation even if TDS is paid before the due date. The AO's order was in line with this decision, and the Tribunal also supported this view in a previous case.

Issue 2: Merits of Disallowance u/s 40(a)(ia)
The CIT sought to disallow the belated TDS payment under section 40(a)(ia). However, the Tribunal, citing the Calcutta High Court's decision, ruled that payments made before the due date of filing the return are not subject to disallowance under this section. The Tribunal favored following the High Court's judgment over a conflicting decision by the Mumbai Special Bench.

Decision:
The Tribunal found no error in the AO's order and canceled the CIT's order u/s 263. The appeal was allowed in favor of the assessee. The order was pronounced on 13-07-2012.

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