Applicability of section 40 (a) (ia)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 January 2010
Dear Members

I have a specific question regarding applicability of section 40(a)(ia)of IT act.

Facts of the case:
Fin Year : 2004-05
The assessee is a contracting company. There are some payments made to sub contractors in the year 2004-05.
The TDS on such sub contractor payments were deducted and remitted after the due date but before the due date of filing IT return.The date of remittance of TDS is 16th june 2005. The date of filing the return is 31st oct 2005.
The assessing officer has disallowed the sub contractor payments refering the section 40(a)(ia).

But my contention is this section is applicable wef 1.5.2005 so it is not applicable for the financial year 2004-05.
Refer Finance act 2008 which has modified 40(a)(ia).

In finance act 2004 the section40(a)(ia) states that this section is applicable from assessment year 2005-06.and the same was modified in the finance act 2008 which says it is applicable wef 1.4.2005.

I request the experts to correct me if I am wrong and advise accordingly.

Bimal Thacker

Bimal Thacker (Expert)
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12 January 2010 The A.O. is right. Section 40(a)(ia) is applicable from A.Y.2005-2006 relating to financial year 2004-2005.
In finance act 2008 some amendment has been made retroprospective which applicable from AY 2005-06. In your case if the expenses are of 1.4.2004 to 28.2.2005 then for claiming expenses allowable TDS must have deposited befor 31.3.2005. If in your case expenses/payments are relats to March 2005 and paid before due date of filling the return then it is allowable.