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2016 (2) TMI 153

Head Note:
Disallowance u/s 40(a)(ia) - prospective or retrospective effect of amendment of provisions of Sec.40(a)(ia) - Held that:- Reasoning of the Hon’ble Supreme Court in the case of Alom Extrusions Ltd (2009 (11) TMI 27 - SUPREME COURT ) will equally to the amendment to Sec.40(a)(ia) of the Act whereby a second proviso was inserted in sub-clause (ia) of clause (a) of Section 40 by the Finance Act, 2012, w.e.f. 1-4-2013. The provisions are intended to remove hardship. It was argued on behalf of the revenue that the existing provisions allow deduction in the year of payment and to that extent there is no hardship. We are of the view that the hardship in such an event would be taxing an Assessee on a higher income in one year and taxing him on lower income in a subsequent year. To the extent the Assessee is made to pay tax on a higher income in one year, there would still be hardship.

It is of the view that the order of CIT(A) on the issue challenged in this appeal should be set aside and the matter be remanded to the AO for fresh consideration for the limited purpose of the receipts from the assessee after declaring the same received from the assessee in their return of income. The plea of the assessee is supported by the decision referred to by the ld. Counsel for the assessee. AO shall afford adequate opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.


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