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2018 (7) TMI 2276 - ITAT BANGALOREDisallowance u/s 40(a)(ia) - Scope of second proviso to Sec.40(a)(ia) - assessee submitted that the recipient of payment from the assessee has included the amount received from assessee in the return of income - scope of amendment to the provisions of section 201(1) and section 40(a)(ia) of the Act by Finance Act, 2012 w.e.f. 1.7.2012 and 1.4.2013 by insertion of first proviso and third proviso respectively - HELD THAT:- The Hon’ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (I) Pvt.Ltd., [2015 (9) TMI 79 - DELHI HIGH COURT] has taken the view that the insertion of the second proviso to Sec.40(a)(ia) of the Act is retrospective and will apply from 1.4.2005. Similar view has also been taken by the Hon’ble Calcutta High Court in the case of M/s.Tirupati Construction [2016 (8) TMI 1310 - CALCUTTA HIGH COURT] Therefore the Assessee is entitled to the benefit of 2nd proviso to Sec.40(a)(ia) - Assessee has filed certificate as is necessary under the 2nd proviso to Sec.40(a)(ia) of the Act and the AO in the remand report after verification has not drawn any adverse inference against the claim of the Assessee. It is thus clear that the recipient of payment from the Assessee has filed return of income for the relevant previous year within time allowed u/s.139(1) and also included the sum received from the Assessee in their return of income. Since the recipients have included the receipts paid by the assessee in their respective returns of income and also paid taxes on the same, no disallowance u/s.40(a)(ia) of the Act should be made. In our view the CIT(A) was fully justified in allowing the relief to the Assessee. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As admitted factual position in the present case is that there was no dividend income or other exempt income earned by the assessee during the relevant previous year - thus no disallowance of expenses u/s 14A of the Act, if there is no exempt income earned during the relevant previous year - Seef M/s UB Infrastructure Projects Ltd. [2017 (12) TMI 1749 - ITAT BANGALORE] - Thus we are of the view that the disallowance of expenditure u/s 14A of the Act was rightly deleted by the CIT(A). We find no grounds to interfere with the order of the CIT(A).
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