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2022 (9) TMI 1358 - AT - Income TaxNon-deduction of TDS u/s 194C - Disallowance u/s 40(a)(ia) - nil tax liability of the payee - Scope of amendment to S. 40(ia) by Finance Act, 2010 by way of first proviso thereto - HELD THAT:- The Apex Court has in CIT vs. Calcutta Export Company [2018 (5) TMI 356 - SUPREME COURT] held the amendment to S. 40(ia) by Finance Act, 2010 by way of first proviso thereto as retrospective from the inception of the provision, i.e., w.e.f. AY 2005-06, being only toward mitigating a hardship to the tax payers and, thus, curative. Per the said proviso, the amount disallowed u/s. 40(a)(ia) shall be allowed for the year of payment, where it is deducted in a subsequent year, or where, though deducted, is paid after the due date specified u/s. 139(1). A second proviso was inserted by Finance Act, 2012, w.e.f. 01/4/2013, i.e., AY 2013-14 onwards, whereby the provision of sec. 40(a)(ia) shall not apply even where assessee fails to deduct or deposit tax deductible at source where the assessee is not deemed to be in-default under the first proviso to S. 201(1), which provision was simultaneously amended by insertion of the first proviso thereto, whereby the assessee, despite having failed to deduct tax at source in terms of Chapter-XVII would not be deemed to be in-default where the conditions listed therein are satisfied, being toward the satisfaction of his tax liability for the relevant year on the relevant sum by the payee-deductee. Assessee has before us made out a prima facie case by exhibiting nil tax liability of the payee, also claiming that the assessee has not claimed deduction in respect of the impugned sum for AY 2010-11, which becomes exigible in view of first proviso to S. 40(a)(ia). Regarding disallowace of 30% instead of 100% - HELD THAT:- A total relief is in any case more desirable and appropriate than a partial one. We, accordingly, consider it appropriate to restore the matter to the file of the AO to verify the facts and decide in accordance with law.
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