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2019 (11) TMI 1373 - ITAT CUTTACKAddition u/s 40(a)(ia) - whether the amendment is having the retrospective effect or not? - AR before us submitted that the above proviso inserted in the Act to be a curative one having retrospective effect and the assessee is entitled the benefit of 30% disallowance as against 100% disallowance made by the AO and confirmed by the CIT(A)? - HELD THAT:- On careful perusal of the amendment brought to the Section 40(a)(ia) of the Act by the Finance Act, 2014 w.e.f. 01.04.2015, it is clear that the intent of legislature to reduce the hardship, it is proposed that in case of non-deduction or non-payment of TDS on payments made to residents as specified in section 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the amount of expenditure claimed. The Hon’ble Supreme Court in the case of Allied Motors (P) Ltd. [1997 (3) TMI 9 - SUPREME COURT] has held that amendment was remedial in nature, designed to eliminate unintended consequences which may cause undue hardship to the assessee and which made the provision unworkable or unjust in a specific situation. Finally, after considering various case laws, the Hon’ble Supreme Court held that the purpose of amendment would not serve its object in such a situation unless, it is construed as retrospective. We direct the AO to restrict the 100% disallowance confirmed by the CIT(A) to the extent of 30% only taking into account the actual claim of the assessee in its profit and loss account. We order accordingly. Thus, the sole ground of appeal of the assessee is partly allowed.
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