MADHURI SURESH RUNGTA,MUMBAI vs. ACIT - CIRCLE- 26(2), MUMBAI

In ground no.1, the assessee has challenged validity of re– opening of assessment under section 147 of the Income-tax Act, 1961 (for short "the Act"). Whereas in ground no.2, the assessee has challenged the disallowance made under section 40(a)(ia) of the Act.

At the outset, I propose to deal with ground no.2, challenging the disallowance made under section 40(a)(ia) of the Act.

Brief facts are, the assessee is an individual. For the assessment year under dispute, the assessee filed her return of income on 29th September 2009, declaring total income of ` 33,03,490. In the course of assessment proceedings, the Assessing Officer while verifying the audit report found that an amount of ` 1,86,662, being TDS on payment of commission was paid to the Government account on 29th September 2009. On further verification of details of payment made by the assessee and tax deducted thereon, the Assessing Officer found that on commission payment of ` 14,27,668, though, the assessee had deducted tax at source but the TDS amount was not paid on/or before the due date. Accordingly, invoking the provisions of section 40(a)(ia) of the Act, he disallowed the commission payment of ` 14,27,6683

Though, the assessee challenged the aforesaid disallowance before learned Commissioner (Appeals), however, he also sustained the disallowance.

The learned Authorised Representative submitted, as per the Assessing Officer’s own admission, the TDS amount was paid to Government account on 29th May 2009, which is much before the due date of filing of return of income for the impugned assessment year.

Learned Departmental Representative agreed that the issue is covered by the decision of the Hon'ble Supreme Court.

I have considered rival submissions and perused material on record. It is evident, the Assessing Officer has made the impugned disallowance under section 40(a)(ia) of the Act, since, the assessee has paid the TDS amount on 29th May 2009, i.e., after the end of financial year relevant to the assessment year under dispute. However, the first proviso to section 40(a)(ia) of the Act which was brought to the statute by Finance Act, 2010, w.e.f. 1st April 2010, makes it clear that no disallowance under section 40(a)(ia) of the Act can be made if the TDS amount is paid to the Government account before the due date of filing of return of income for that assessment year as provided under section 139(1) of the Act. It is now well settled that the aforesaid amendment brought to section 40(a)(ia) of the Act will apply retrospectively. Even, in the decision of Calcutta Export Co. (supra), the Hon'ble Supreme Court has expressed the aforesaid view. That being the case, the disallowance made under section 40(a)(ia) of 4 Madhuri Suresh Rungta the Act deserves to be deleted. Accordingly, I do so. This ground is allowed.

In view of my decision in ground no.2, the issue raised in ground no.1, has become academic, hence, not required to be adjudicated.

In the result, appeal is partly allowed. Order pronounced in the open Court on 30.04.2019