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2019 (5) TMI 1697 - AT - Income TaxDisallowance u/s 40(a)(ia) - expenditure under various heads and to the payment of share of commission (paid to VAV Air conditioning) - HELD THAT:- In this case the assessee has not deducted and deposited the tax either during the current financial year or up to the date of filing of the return but tax was deducted and deposited in the assessment year i.e. 2013-14. We find merit in the contentions of the assessee that as per the amended provision of section 40(a)(ia) which is a retrospective in nature, the disallowance has to be made equal to 30% of the total disallowance as has been held in the case of M/s. Asphalt India Corporation vs. DCIT [2017 (5) TMI 1705 - ITAT MUMBAI] In the context of the insertion of 2nd proviso to section 40(a)(ia), held that though it has been stated in the 2nd proviso to section 40(a)(ia) of the Act that the same is inserted from 01.04.2013 but the same has retrospective application as the insertion of 2nd proviso is declarative and curative in nature and would be effective from the date of main proviso to section 40(a)(ia). We, therefore, respectfully following the ratio laid down in the above decisions, direct the AO to restrict the disallowance equal to 30% of the total expenses Disallowance of trade discount and commission paid to VAV Air Conditioning a proprietary concern of the assessee’s husband - HELD THAT:- We are of the view that the entire amount is paid to the sister concern without any deduction of TDS during the year and therefore as has been held by us in the ground No.1A (supra) the disallowance has to be restricted to 30% of the said expenditure. We are not convinced with the arguments of the ld DR that the genuineness of payments are in doubt as the payments were made to the related parties without proving the nature of services rendered. DR also stressed the point that reasonability of the payments is not the issue in this case but the allowability of the expenses u/s 37 is doubted by the AO on the ground of non rendering of services. However, we observe that the AO has not brought any materials on record to rebut the submissions of the assessee that the proprietary concern was a leading contractor and has been providing the information as to the requirements of the customers in that field on HVAC and air conditioning. So we are not in agreement with the conclusion of the ld CIT(A) on this issue. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to make the disallowance @ 30% as the assessee has not deducted tax at source on the same lines as decided by us in ground no. 1A supra.
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