As the assessee was unable to produce any documentary evidence with respect to deposit of interest payments made on its borrowings, such amount was disallowed by the AO, and it was upheld by the Tribunal.

The AO further observed that the assessee has made certain interest payments but did not deduct TDS as per section 194. The question before the Tribunal was whether proviso to section 40(a)(ia) by the Finance Act, 2012 is prospective or retrospective in nature. The ITAT observed that Assessee has furnished Certificates from Chartered Accountant (CA) in Annexure-A to Form 26A in respect of interest payment to NBFCs which was not disputed by the lower authorities, however they denied the benefit of second proviso to section 40(a)(ia). Following the precedent laid down by the Delhi High Court in CIT v. Ansal Landmark Township where it has held that second proviso to Section 40(a)(ia) is declaratory and curative and has retrospective effect from 1st April 2005, i.e. when sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004, the ITAT allowed the benefit of such proviso to the assessee for the transactions and payment made by it during financial year 2011-12. (AY. 2012-13)