No TDS Disallowance if Payee has paid tax

Second proviso to Sec. 40(a)(ia) inserted w.e.f. 1.4.2013 should be treated as retrospectively applicable from 1.4.2005 and no dis allowance for want of TDS can be made if payee has paid tax thereon. Assessee must be given opportunity to file Form 26A. As per this newly inserted proviso, the assessee is required to file Form No. 26A as per rule 31ACB of the Income Tax Rules, 1962 so as not to be held as an assessee in default as per the proviso to section 201 of the Act. As held in the decision of the co-ordinate bench in the case of S.M. Anand vs. ACIT (supra), since the assessee in the period under consideration i.e. assessment year 2005-06, could not have contemplated that such a compliance was to be made, we also in the case on hand, remit the matter to the file of the Assessing Officer for affording the assessee adequate opportunity to file Form No.26A and verification of whether the said payee has reflected the payment/receipt in his books of account and offered the same to tax in the period under consideration.