Section 40(a)(ia) of Income Tax Act, 1961— In the instant case, appeal is filed by revenue against the order passed by ITAT. The substantial question arises for our consideration is as follows—
Whether the second proviso to Section 40(a)(ia) of the Act inserted by Finance Act, 2012 is clarificatory and retrospective in nature and disallowance under Section 40(a)(ia) of the Act by the Tribunal is justifiable where the recipient of the amount has already discharged his tax liability therein?”

Held that— we hold that the insertion of second proviso to section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from April 1, 2005.
Accordingly, we answer the substantial question of law against the Revenue and in favour of the assessee.[THE COMMISSIONER OF INCOME TAX BELAGAUM, THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-I, BIJAPUR VERSUS SHRI S.M. ANAND] [2019] 16 ITCD Online (38) [KARNATAKA HIGH COURT]