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2023 (11) TMI 758 - DELHI HIGH COURTScope of Second proviso to Section 40(a)(ia) - retrospective or prospective effect - HELD THAT:- The purpose of Section 40(a)(ia) of the Act is to disincentivize non-deduction of tax at source by disallowing, as deduction, the amount paid to the resident/payee. The second proviso appended to it, however, relaxes the rigour of the said provision by making its application dependent on the assessee being declared as ‘assessee in default’ under Section 201(1) of the Act. It is not in dispute that, in this case, no adverse findings were returned by the AO concerning fulfilment of conditions stipulated in the first proviso appended to Section 201(1) of the Act; an aspect which is noted both by the CIT(A) and the Tribunal. As to the retrospective applicability of the second proviso to Section 40(a)(ia) and first proviso to section 201, the court in the Ansal Land Mark Township Pvt. Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] is of the view that the above reasoning of the Agra Bench of ITAT Rajiv Kumar Agarwal [2014 (6) TMI 79 - ITAT AGRA] as regards the rationale behind the insertion of the second proviso to Section 40(a) (ia) of the Act and its conclusion that the said proviso is declaratory and curative and has retrospective effect from 1st April 2005, merits acceptance.
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