2012 (11) TMI 228 - AT - Income Tax

Non deduction of TDS - disallowance u/s 40(a)(ia) - Held that - For the part amount of Rs.32,18,58,199/- TDS was deposited by the assessee in the Government account latest by 24.08.2005 which is before the due date for filing the return of income and as per the judgment of COMMISSIONER OF INCOME TAX, KOL-XI, KOL Versus VIRGIN CREATIONS (2011 (11) TMI 348 - CALCUTTA HIGH COURT) amendment in section 40(a)(ia) was held as retrospective and therefore, no disallowance is called for TDS deposited by the assessee in the government account before the due date for filing of return of income - in favour of assessee. For the rest part as decided in Merilyn Shipping & Transports Versus ACIT, Range-1, Visakhapatnam 2012 (4) TMI 290 - ITAT VISAKHAPATNAM section 40(a)(ia) is applicable only to expenditure which is payable as on 31st March of every year and cannot be invoked to disallow the amounts which are already been paid during the previous year, without deducting tax at source Decided in favor of assessee - confirm the disallowance of only Rs.2,30,59,781/- being the amount payable by the assessee to the creditors for labour work as on 31.03.2005 - partly in favour of assessee.

Summary

Issues:
1. Disallowance of TDS under section 40(a)(ia) of the Income Tax Act.
2. Applicability of retrospective amendment in section 40(a)(ia).
3. Disallowance of interest charged under section 234B.

Analysis:
1. Disallowance of TDS under section 40(a)(ia):
- Two appeals filed by different assessees for the same assessment year were heard together.
- Dispute regarding disallowance made by the Assessing Officer (AO) under section 40(a)(ia) of Rs.36,81,88,846.
- Tribunal noted that TDS was deposited by the assessee before the due date for filing the return of income.
- Citing a judgment of the Hon'ble Calcutta High Court, the Tribunal held that if TDS is deposited before the due date, no disallowance is justified.
- Disallowance of Rs.32,18,58,199 was deleted as TDS was deposited before the due date.
- Disallowance of Rs.4,63,30,647 was partly confirmed based on the amount payable as on the last day of the previous year.

2. Applicability of retrospective amendment in section 40(a)(ia):
- Ld. CIT(A) confirmed the addition of Rs.2,93,46,430 under section 40(a)(ia) for a different assessee.
- Tribunal referred to a judgment of the Hon'ble Calcutta High Court holding the amendment in section 40(a)(ia) as retrospective.
- As the entire TDS amount was paid by the assessee before the due date for filing the return of income, disallowance under section 40(a)(ia) was held not sustainable.
- Tribunal deleted the balance disallowance and allowed the appeal partly.

3. Disallowance of interest charged under section 234B:
- Issue of charging interest under section 234B was considered consequential with no separate adjudication required.
- Tribunal did not provide a detailed analysis as it was considered a consequential issue.

Conclusion:
- Both appeals of the assessees were partly allowed based on the Tribunal's findings regarding the disallowance of TDS under section 40(a)(ia) and the applicability of the retrospective amendment in the same section. The issue of interest charged under section 234B was deemed consequential without separate adjudication.