Dismissing the appeal of the revenue the Court held that, second proviso to S. 40(a)(ia) inserted by the Finance Act, 2012 is declaratory and curative in nature and it has retrospective effect from 1st April 2005, being the date from which sub-cl.(ia) of S. 40(a) was inserted. Accordingly no disallowance can be made for failure to deduct tax at source. (AY. 2005-06)
CIT v. S.M. Anand (2019) 182 DTR 153 (Karn.)(HC)
S. 40(a)(ia) : Amounts not deductible-Deduction at source-Second proviso to S.40(a)(ia) inserted by the Finance Act, 2012 is declaratory and curative in nature and it has retrospective effect from 1st April 2005, being the date from which sub-cl.(ia) of S. 40(a) was inserted–No disallowance can be made for failure to deduct tax at source. [S. 201(1), 271C]