ITO, NEW DELHI vs. M/S. WESTERN INDIA SHIPYARD LTD., GOA

This appeal by the Revenue arises out of the order passed by the CIT(A) on 10.12.2012 in relation to the assessment year 2009-10.

The only issue raised in this appeal is against the deletion of addition of Rs.1,18,43,587/- made by the AO by invoking the provisions of section 40(a)(ia) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’).

Briefly stated, the facts of the case are that the assessee made payments of Rent, Professional charges and Contract relating to the months of January and February, 2009, which were liable to deduction of tax at source. The tax was, in fact, deducted but, was deposited on 16.4.2009. The AO invoked the provisions of section 40(a)(ia) of the Act and made the disallowance for the amount of such rent and professional charges etc. The ld. CIT(A) deleted the disallowance.

We have heard the ld. DR and perused the relevant material on record. There is no appearance from the side of the assessee despite notice. It is obvious that the assessee, in fact, deducted tax at source from the payments, but, deposited such tax in the exchequer beyond the due date under the relevant sections, but, before the due date for filing the return u/s 139(1) of the Act. Sub-clause (ia) of section 40(a), as substituted by the Finance Act, 2010, clearly provides for allowing deduction where the amount of tax withheld is paid before the due date specified in section 139(1). The Hon’ble Delhi High Court in CIT vs. Naresh Kumar (2014) 326 ITR 256, has held such amendment to be retrospective and applicable to earlier years as well. In view of the enunciation of law by the Hon’ble Delhi High Court in the afore-noted case read along with the mandate of section 40(a)(ia), we hold that the ld. CIT(A) was justified in deleting the disallowance.

In the result, the appeal of the Revenue stands dismissed.