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2019 (4) TMI 830 - ITAT DELHIDisallowance u/s 40(a)(ia) - default u/s 201(1) - scope of amendment - whether second proviso to Section 40(a)(ia) is prospective in application or is to be applied retrospectively? - HELD THAT:- We have the benefit of guidance from the order of Hon’ble Delhi High Court, in the case of CIT vs. Ansal Land Mark Township (P.) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] in which held that second proviso to Section 40(a)(ia) of I.T. Act is declaratory and curative and it has retrospective effect from 01.04.2005. Revenue’s Special Leave Petition against this order of Hon’ble Delhi High Court has been dismissed by Hon’ble Supreme Court in CIT vs. Ansal Landmark Township (P.) Ltd. [2016 (8) TMI 1281 - SUPREME COURT OF INDIA] The view that second proviso of Section 40(a)(ia) of I.T. Act is declaratory and curative in nature and has retrospective effect from 01.04.2005 was also taken in Rajeev Kumar Agarwal vs. Addl. CIT [2014 (6) TMI 79 - ITAT AGRA] and and Hindustan Plywood Company vs. ITO [2016 (3) TMI 1062 - ITAT DELHI]. The issue in question is squarely covered in favour of the assessee, in view of these precedents. Thus second proviso to Section 40(a)(ia) of I.T. Act is curative in nature and has retrospectively. Accordingly, in the fitness of things, and also as both sides agree, the disputed addition U/s 40(a)(ia) of I.T. Act is remanded to the Assessing Officer for fresh order on this limited issue after necessary verification, having regard to Section 40(a)(ia) of I.T. Act, read with first proviso to Section 201(1) of I.T. Act and also read with Rule 31 ACB of Income Tax Rules, 1961 (“I.T. Rules”, for short). - Appeal of the assessee is allowed for statistical purposes.
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