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2016 (3) TMI 922 - AT - Income TaxDisallowance of interest u/s 40a(ia) - retrospectivity - whether any TDS has been deducted and deposited to the Central Government Account? - Held that:- In view of the dicta valid down in CIT Vs. Ansal Land Mark Township [P] Ltd [2015 (9) TMI 79 - DELHI HIGH COURT]the insertion of second proviso to section 40(a)(ia) of the Act is declaratory and curative in nature and it has retrospective effect from 1.4.2005 being the date from which sub-clause (ia) of section 40(a) was inserted by the Finance Act [No. 2] 2004. From the operative para 6.7 of the first appellate order, it is apparent that the ld. CIT(A) upheld the disallowance by holding that the proviso, inserted by Finance Act 2012, w.e.f 1.4.2014 is not applicable to A.Y 2009-10. But in view of proposition rendered by the Hon'ble High Court of Delhi, it is settled that the proviso to section 40(a)(ia) of the Act being declaratory and curative is applicable from 1.4.2005 which is the date of insertion of sub-section (ia) of section 40(A) of the Act. Hence, view taken by the AO for making disallowance and basis on which the same was upheld by the ld. CIT(A) is not sustainable in view of the dicta of Hon'ble Jurisdictional High Court. Thus, we are inclined to hold that the benefit of the proviso to section 40(a)(ia) of the Act is available for the assessee for A.Y 2009-10 as the AO could not controvert the fact supported by the certificate of the payee M/s Kotak Mahindra Pvt. Ltd stating that the payee has enclosed the said amount in its income in the return filed u/s 139 of the Act and has paid tax due on its income declared in the return. In this factual matrix the proviso to section 40(a)(ia) of the Act having retrospective effect from 1.4.2005 come into play to rescue the defaulter assessee and thus disallowance made by the AO and upheld by the ld. CIT(A) is demolished. - Decided in favour of assessee
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