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2016 (10) TMI 1038 - AT - Income TaxDisallowance u/s. 40(a)(ia) - retrospectivity - Whether the second proviso to section 40(a)(ia) inserted by Finance Act, 2012, is applicable retrospectively or w.e.f. 01-04-2013? - Held that:- It is a well settled law that where two divergent views are possible and both the views are equally convincing, the view in favour of the assessee must be adopted. Thus, applying the ratio laid down by the Hon'ble Supreme Court of India in the case of CIT Vs. Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court ) we accept the contentions of the assessee and hold that the second proviso to section 40(a)(ia) inserted by Finance Act, 2012 is applicable retrospectively w.e.f. 01-04-2005. Jurisdiction by CIT Tax u/s. 263 of the Act - payment of rent without tds deduction - Held that:- We find that the Assessing Officer during the assessment proceedings has failed to consider the payment of rent without deduction of tax at source and/or without ascertaining the fact whether the tax has been paid by the recipient of the rent. The ld. AR has placed on record a copy of Form No. 26A at pages 20 to 22 of the paper book to show that M/s. Elpro International Ltd. has paid tax on rental income received from the assessee. However, this fact requires verification. Therefore, we deem it appropriate to modify the impugned order and direct the Assessing Officer to pass fresh order after considering the fact that rent payment has been made by the assessee to M/s. Elpro International Ltd. without deducting tax at source and its implications under the provisions of the Act. The Assessing Officer shall pass assessment order in accordance with law, after affording sufficient opportunity of hearing to the assessee.
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