Calcutta High Court-section 40(a)ia) amendment retropecive

Recently, in an important decision of the Calcutta High Court in the case of CIT v. Virgin Creations,  the Court has held that amendment made in section 40(a)(ia) by Finance Act, 2010 is retrospective in nature and would apply from 01.04.2005. The said amendment provides that no disallowance under section 40(a)(ia) could be made where the TDS has been paid before the due date of filing of return of income. This is first ruling of any High Court on this issue.

Note: It is to be noted that recently the Special Bench of the Tribunal in the case of Bharati Shipyard Ltd. vs.DCIT: 141 TTJ 129 has, however, taken a contrary view whereby it held that the above amendment in section 40(a)(ia) is prospective in nature to be applied w.e.f. 01.04.2011 relevant to AY 2011-12.