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2014 (3) TMI 1024 - AT - Income TaxDisallowance u/s 40(a)(ia) - Held that:- Admittedly, the assessee is liable to deduct and pay tax on the royalty paid to Sea Food Exporters Association of India. It is also an admitted fact that the assessee has not deducted tax while making the payment. The assessee now claims that the recipient of the amount, viz. Sea Food Exporters Association of India has paid the tax, therefore, there cannot be any disallowance u/s 40(a)(ia) of the Act in view of Second Proviso to section 40(a)(ia) which was introduced by Finance Act, 2012 with effect from 01-04-2013. The Kerala High Court in M/s Prudential Logistics And Transports vs ITO [2015 (2) TMI 847 - KERALA HIGH COURT] while examining the provisions in Second Proviso to section 40(a)(ia) found that the benefits conferred by Proviso to section 40(a)(ia) is not available for the assessment year 2007-08. In other words, Second Proviso to section 40(a)(ia) operates prospectively and not retrospectively. In view of this judgment of the Kerala High Court in M/s Prudential Logistics and Transports (supra), this Tribunal is of the considered opinion that the benefits extended by Parliament by Finance Act, 2012 with effect from 01-04-2013 by Second Proviso to section 40(a)(ia) cannot be applicable to the assessee for the assessment year under consideration. Therefore, we do not find any infirmity in the order of the lower authority. Accordingly, the same is confirmed. - Decided partly in favour of assessee
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