Karnataka HC upholds ITAT
order, rules that expense disallowance u/s. 40(a)(ia) for TDS default cannot be
invoked in assessee-Trust’s case for AY 2006-07; Assessee-Trust was
running a hospital, during subject AY, assessee had failed to deduct TDS u/s.
194J on certain doctors payments and therefore AO had invoked Sec. 40(a)(ia);
HC observes that insertion of Explanation 3 to Sec. 11 vide Finance Act, 2018
“clearly indicates that the same would stand applicable only from 01.04.2019”;
Thus, HC upholds ITAT order that Sec. 40(a)(ia) cannot be invoked in present case;
Separately, applying the same analogy, HC holds that amendment to Sec. 11(6)
vide Finance (No. 2) Act, 2014 [restricting depreciation deduction where
cost of assets has already been allowed as application of income] is
prospective in nature. :HC
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