In CIT v. Shraddha & S S Kale, the Bombay High Court held that amendment to Section 40(a)(ia) of the Income Tax Act by Finance Act, 2010 w.e.f. 1st April 2010, is retrospective. Earlier, the ITAT had held that the amendment has retrospective effect and therefore is applicable from 01.04.2005 onwards.
The Tribunal was of the view that any amount of tax deducted at source should be deposited with the state exchequer on/ or before the due date of filing of return of income, as prescribed under Section 139(1) of the Income Tax Act, to ensure that the claim of expenditure is not disallowed.
Before the High Court, the Revenue urged that the amendment to Section 40(a)(ia) extending the period of TDS payment up to the due date under section 139 (1) made vide, Finance Act, 2010 has prospective effect only.
The bench noticed the decisions of the Delhi, Calcutta, Gujarat and Karnataka High courts, wherein these Courts had expressed a view that the amendment to Section 40(a)(ia) of the Act by Finance Act, 2010 w.e.f. 1st April 2010, is retrospective.
Relying on these decisions, Justice SC Gupte and Justice M.S Sanklecha said that “this particular, in view of the fact that the Courts have taken a view that the provision being a machinery provision, the retrospective effect being given to it, is appropriate.”
Dismissing the departmental appeal, the bench said that Revenue was not able to point out any reason as to why the views of Calcutta, Gujarat, Delhi, and Karnataka High Courts should be departed from. “In the above view, as the various High Courts have already taken a view on this very issue and in the absence of any reasons to take a different view, we see no reason to discard the same. Thus, the amendment to Section 40 (a)(ia) of the Income Tax Act by Finance Act, 2010 is retrospective with effect from 1st April 2005 as held by various High Courts.”
Read the full text of the Order below.
