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2017 (11) TMI 1050 - AT - Income TaxDisallowance under section 40(a)(ia) - assessee in default - Insertion of second proviso w.e.f. 01.04.2013 to section 40(a)(ia) - prospectivity OR retrospectivity - Held that:- As in the case of Aditya Construction Company India Pvt. Ltd. [2014 (11) TMI 1150 - ITAT HYDERABAD] the Tribunal has considered the decision of the hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage P. Ltd. v. CIT [2007 (8) TMI 12 - SUPREME COURT OF INDIA ] wherein it was held that if the payees have admitted the receipt of income, there is no need for the payee to deduct the TDS and in such circumstances, the assessee cannot be treated as "as assessee-in-default" and consequently the second proviso to section 40(a)(ia) also comes into operation even though the said proviso was introduced from April 1, 2013. Thus we deem it fit and proper to admit the additional ground of appeal and remand the issue to the file of the Assessing Officer for verification as to whether the recipient of the legal fee has offered the income in its return of income for the respective financial year. Thus, grounds of appeal 5, 9 and 10 are treated as allowed for statistical purposes. Whether the provisions of section 40(a)(ia) would apply to the expenditure which is payable as on 31st March of every year and not to the amounts which is already paid during the previous year? - Held that:- This Ground is rejected in view of the judgment of the hon'ble Supreme Court in the case of Palam Gas Service v. CIT [2017 (5) TMI 242 - SUPREME COURT] dated May 3, 2017 wherein, the hon'ble court has held that section 40(a)(ia) covers not only those cases where the amount is payable but also when it is paid.
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