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2015 (12) TMI 1839 - AT - Income TaxAdditions u/s 40(a)(ia) - Whether disallowances on the basis of a deeming fiction, thereby causing great hardships to various tax payers even in some genuine cases? - HELD THAT:- Assessee should be provided with full opportunity to explain its case, before final tax liability is determined against it applying such deeming provisions. It is noted that second proviso was inserted to section 40(a)(ia) to mitigate hardships of the tax payers. The said proviso has been inserted to avoid the unintended consequences created by section 40(a)(ia). Under these circumstances, its benefit should be given to all the assessee irrespective to the fact that at what stage their cases are pending. It is further worth noting that in the case of CIT vs. Ansal Land Mark Township (P) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] has discussed this entire issue at length, and held that second proviso is declaratory and curative and has retrospective effect from 1st April 2005. In view of this major legal development, we find that the assessee deserves another opportunity. We send this issue back to the file of AO with the direction that he shall exercise his requisite powers under the law to call for requisite information from the concerned payees. The assessee shall also extend full cooperation to the AO by furnishing all the documents and details in the form of names and address, PAN nos. place of assessment and confirmations etc., to the extent as feasible for the assessee. Needless to add, the AO shall give adequate opportunity of hearing to the assessee. Thus, these grounds are allowed for statistical purposes. Prior period expenses - HELD THAT:- We find that the claim of the assessee should not have been denied in this manner by the lower authorities. We send this issue back to the file of the AO to consider this claim after verification of requisite facts taking cognizance of the revised computation filed by the assessee during the course of assessment proceedings. Thus, this ground is allowed for statistical purposes. Claim on account of contribution to PF and ESIC - HELD THAT:- As already held that the claim has been rightly allowed by the CIT(A), therefore, following our order as has been given in the asessee’s appeal, we uphold the order of Ld. CIT(A) on this issue, rejecting the grounds raised by the Revenue.
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