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2022 (4) TMI 1067 - AT - Income TaxDisallowance u/s 40(a)(ia) - assessee's claim for deduction of construction expense that were payable by the assessee whether or not the "2nd proviso" to Section 40(a)(ia) of the Act is to be given a retrospective effect? - disallowing the construction expenses on the ground that no taxes were deducted at source from contractual payments related to said expenses despite the fact that the partnership firm which received the said payments (i) had furnished its return of income for the year u/s. 139(ii) had taken into account aforesaid payment in the computation of income in such return and (iii) had paid tax due on the income declared by it in the said return - HELD THAT:- We find that the issue is settled in PERFECT CIRCLE INDIA PVT LTD [2019 (1) TMI 1532 - BOMBAY HIGH COURT] held as the insertion of the "2nd proviso" to section 40(a)(ia) of the Act was declaratory and curative in nature, therefore, the same would have a retrospective effect from 01.04.2005 i.e., the date of insertion of Section 40(a)(ia) - even in absence of the "2nd proviso" to Section 40(a)(ia) of the Act, had held, that where a payee had already paid the tax, then, in such circumstances, the payer/deductor can only be asked to pay the interest qua the delay in depositing of the tax - See M/S. HINDUSTAN COCA COLA BEVERAGE PVT. LTD VERSUS COMMISSIONER OF INCOME TAX [2007 (8) TMI 12 - SUPREME COURT] As in the present case before us, the payee, viz. M/s. BRED had duly included the aforementioned amount in its return of income that was filed within the stipulated time period and had paid the taxes on the same, therefore, the said amount could not have been disallowed under section 40(a)(ia) in the hands of the assessee. In order to support her claim that having cumulatively satisfied the conditions contemplated in the "1st proviso" to Section 201(1) of the Act, she could not be held as an assessee-in-default, the assessee had placed on our record a certificate dated 29.11.2017 in "Form No. 26A" from a Chartered Accountant, evidencing the fact that the payee, viz. M/s. BRED had included the aforementioned amount of ₹ 29,00,838/- (supra) in its return of income for the year under consideration that was e-filed on 15.09.2012 and had paid the corresponding taxes on the same. Thus we are of the considered view, that the assessee having cumulatively satisfied the conditions contemplate in the "1st proviso" to Section 201(1) of the Act, thus, could not have been held as an assessee-in-default, and resultantly, the aforesaid amount in question could not have been disallowed under Section 40(a)(ia) - Decided in favour of assessee.
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