M/s. Alpha Projects Society P. Ltd vs. DCIT (ITAT Ahmedabad) In AY 2005-06, the assessee made payments to contractors & for professionals & technical services. Though TDS was deducted, it was paid after the end of the FY but before filing the ROI. The assessee pleaded that s. 40(a)(ia), as amended by the FA 2010 w.e.f. 1.4.2010 to provide that no disallowance should be made if the TDS was paid before the due date of filing the ROI should be held to be retrospective. However, the AO & CIT (A), rejected the claim by relying on Bharati Shipyard Ltd 132 ITD 53 (Mum) (SB). On appeal to the Tribunal, HELD allowing the appeal:
40(a)(ia)
Piyush Mehta v ACIT (ITAT Mumbai) For AY 2005-06, the AO made a disallowance of expenditure incurred by the assessee on the ground that the assessee had made the TDS payments u/s 194C after the end of the year. Before the Tribunal, the assessee claimed that as the TDS had been paid before the due date of filing the ROI, no disallowance could be made as per s. 40(a)(ia) amended by the FA 2010 w.e.f. 1.4.2010. The assessee relied on Virgin Creations and claimed that it had to be followed in preference to the contrary ruling of the Special Bench in Bharati Shipyard Ltd 132 ITD 53 (Mum). HELD by the Tribunal:
S. 40(a)(ia): Amendment by FA 2010 w.e.f 1.4.2010 is retrospective
Rajamahendri Shipping & Oil Field Services Ltd vs. ACIT (ITAT Vizag) For AY 2005-06, the AO disallowed Rs. 47.26 lakhs u/s 40(a)(ia) on the ground that the TDS had not been paid in time. The assessee claimed that the amendment to s. 40(a)(ia) by the Finance Act 2010 w.e.f. 1.4.2010 to provide that no disallowance could be made if the TDS was paid on or before the due date specified in s. 139(1) was retrospective in nature as held in CIT vs. Virgin Creations and that the contrary ruling of the Special Bench in Bharti Shipyard Ltd vs. DCIT 132 ITD 53 (Mum) could not be followed. HELD by the Tribunal:
S. 40(a)(ia): Non-jurisdictional High Court prevails over Special Bench
M/s. Merilyn Shipping & Transports vs. ACIT (ITAT Visakhapatnam Special Bench) The assessee incurred brokerage expenses of Rs.38.75 lakhs and commission of Rs.2.43 lakhs without deducting TDS. Of this only Rs. 1.78 lakhs was payable and the rest was paid. The AO disallowed the entire expenditure u/s 40(a)(ia). Before the CIT (A), it was argued that disallowance u/s 40(a)(ia) could be made only of the amount “payable” and not of that which had already been “paid” though it was rejected. On appeal to the Tribunal, the matter was referred to the Special Bench. HELD by the Special Bench:
S. 40(a)(ia) TDS Disallowance applies only to amounts “payable” as at 31st March and not ...
Bapushaeb Nanasaheb Dhumal vs. ACIT (ITAT Mumbai) The assessee made payments to sub-contractors during the previous year and though s. 194C requires TDS at the stage of payment/credit, did not do so. The tax was, however, deducted on 31st March and paid over in Sept before the due date for filing the return. The AO took the view that while the payment made to the sub-contractor for March was allowable, the payments for the earlier months was disallowable u/s 40(a)(ia). This was confirmed by the CIT (A). On appeal by the assessee, HELD allowing the appeal: