2019 (4) TMI 1889 - AT - Income Tax

Tribunal Reduces Disallowance Under Income-tax Act to 30%, Following Precedent; Partial Relief Granted for AY 2006-07.

M/s. Siddi Vinayak Sarees Versus Income-tax Officer, Wd-45 (3), Kolkata

M/s. Siddi Vinayak Sarees Versus Income-tax Officer, Wd-45 (3), Kolkata - TMI Issues: Disallowance under section 40(a)(ia) of the Income-tax Act, 1961 for Assessment Year 2006-07.Analysis:1. The appeal was filed against the order of Ld. CIT(A)-13, Kolkata for AY 2006-07, specifically challenging the disallowance under section 40(a)(ia) of the Income-tax Act, 1961.2. The main contention was the disallowance of a sum of Rs. 8,96,450 under section 40(a)(ia) by the AO, which was affirmed by the Ld. CIT(A).3. The appellant argued that the disallowance should have been restricted to 30% due to the retrospective effect of the amendment to section 40(a)(ia) brought in by the Finance Act No. 2 w.e.f. 01.04.2015.4. The appellant relied on a previous decision by the Chandigarh Bench of the Tribunal in the case of DCIT Vs. Punjab Infrastructure & Development Board Ltd., where it was held that the amendment to section 40(a)(ia) is curative and retrospective in nature.5. After considering the submissions, the Tribunal noted that the AO disallowed the expenditure claimed by the assessee for non-deduction of TDS based on the vouchers submitted. The Ld. CIT(A) upheld this decision.6. The Tribunal, following the precedent set by the Chandigarh Bench, granted partial relief to the assessee by restricting the disallowance to 30% of the amount.7. The Tribunal dismissed the last ground of appeal, which was of a general nature, and partly allowed the appeal of the assessee by granting relief in accordance with the direction given.8. The order was pronounced on 3rd April 2019, with the appellant partially succeeding in challenging the disallowance under section 40(a)(ia) for the Assessment Year 2006-07.