Though the issue as to whether disallowance u\/s 40(a)(ia) can be made only in respect of amounts that are \u201cpayable\u201d as at the end of the year or whether it can also be made for amounts \u201cpaid\u201d during the year has to be decided against the assessee (as the Special bench verdict in Merilyn Shipping and Transport Ltd. 136 ITD 23 (SB) has not been approved by some High Courts, the legal argument that the second proviso to section 40(a)(ia) of the Act (which was inserted by the Finance Act, 2012 w.e.f 01.04.2013 to provide that the disallowance u\/s 40(a)(ia) of the Act would not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the Act) is retrospective in nature as it has been introduced to eliminate unintended consequences which may cause undue hardships to the tax payers requires to be restored to the file of the Assessing Officer for consideration. <\/p>\n
The legal argument that the second proviso to section 40(a)(ia) of the Act (which was inserted by the Finance Act, 2012 w.e.f 01.04.2013 to provide that the disallowance u\/s 40(a)(ia) of the Act would not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the Act) is retrospective in nature as it has been introduced to eliminate unintended consequences which may cause undue hardships to the tax payers requires to be restored to the file of the Assessing Officer<\/p>\n