9911796707
TMI Blog2012 (4) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... n tax deduction has taken place and thus there was no violation of provisions of sec. 194C. (c) The learned CIT(A) failed to consider the amended provisions of sec.40(a)(ia) w.e.f. from 1.4.2005 which held that if tax deducted has been paid before the due date of return u/s. 139(1), no disallowance can be made. 4. The appellant craves leave to add, amend, alter or cancel any Ground or Grounds before or at the time of hearing of the appeal. 2. The assessee is an individual engaged in the business of building repairs, labour & construction works contracts as Prop. "Constructive Concrete Constructions". In the course of assessment proceedings for AY 05-06, the AO on going through the details filed noticed that the assessee has not paid the TDS deducted on the labour charges/ advances paid to M/s Vaibhav Enterprises within the time stipulated u/s 200(1). The assesses had made payments / advances to Vaibhav Enterprises throughout the year but has deposited the TDS only on 31.5.05 i.e., beyond the stipulated time. The assessee submitted that Vaibhav enterprises was working as a liaison partner cum subcontractor for the assessee for his construction project of Bhopal. The amounts wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credited the concerned persons only on 31/3/2005 and has deducted tax on 31/3/05 and deposited the same on 31/5/05. In terms of provisions of sec. 200(1) the assessee was required to deduct TDS from the advances / payments made on account on the dates the payments were made. However this has not been done so. Hence, in terms of provisions of sec. 40(a)(ia) the advance payments of Rs. 5,02,500/- paid to Vijay Yadav, Rs. 6,89,000 paid to Parshuram Rs. 4,80,500 paid to Tejuli Shaikh Rs. 2,50,000 paid to Khatri Rs. 2,37,000/- paid to Ganesh Singh, which though in the nature of sub-contractual payments / advances towards contract have been shown as loans and advances given by the assessee were disallowed and added back to the assessee's total income. 6. Accordingly total disallowance out of the sub-contractual payments in terms of provisions of sec. 40(a)(ia) was Rs. 1,41,40,044/- (Rs. 1,12,38,889/- + 7,42,155 + 5,02,500 + 6,89,000 + 4,80,500 + 2,50,000 + 2,37,000). 7. On appeal by the Assessee against the aforesaid disallowances, the CIT(A) confirmed the order of the AO, giving raise to the present appeal by the Assessee before the Tribunal. 8. We have heard the rival submissions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not been deducted or after deduction, has not been paid before the expiry of the time prescribed under sub-section (1) of section 200 and in accordance with the other provisions of Chapter XVII-B. It is also proposed to provide that where in respect of payment of any sum, tax has been deducted under Chapter XVII-B or paid in any subsequent year, the sum of payment shall be allowed in computing the income of the previous year in which such tax has been paid. The proposed amendment will take effect from 1st day of April, 2005 and will, accordingly, apply in relation to the assessment year 2005- 2006 and subsequent years. [Clause 11]" 10. Thereafter the Finance Act, 2008 made amendment to clause (a) in subclause (ia) in section 40 with retrospective effect from 1st April, 2005. The section as amended by the Finance Act, 2008 read as under:- "(ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been paid on or before the due date specified in sub-section (1) of section 139 Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid." 13. From the above provision as amended by the Finance Act, 2010 with retrospective effect from 1st April, 2010 it can be seen that the only difference which this amendment has made is dispensing with the earlier two categories of defaults as per the Finance Act, 2008, as discussed in the earlier para, causing disallowance on the basis of the period of the previous year during which tax was deductible. The first category of disallowances included the cases in which tax was deductible and was so deducted during the last month of the previous year but there was failure to pay such tax on or before the due date specified in sub-section (1) of section 139. The Finance Act, 2010 has not tinkered with this position. The second category of the Finance Act, 2008 which required the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n loan and freight charges without deducting tax at source. The Embroidery charges were paid between 22nd may, 2004 to 30.11.2004. Tax had been deducted at source but were paid to the Government only on 28.10.2005 and not within the time contemplated by Section 200(1) of the Act. The dyeing charges were paid between 5.4.2004 to 20.8.2004. Tax was deducted at source but was paid to the Government only on 28.10.2005. Freight outward charges were paid without deduction of tax at source. Interest on loans were credited to the creditors account on 31.3.2005 to the extent they were paid after the due date for filing return of income u/s.139(1) of the Act, the disallowance was made u/s.40(a)(ia) of the Act. Before the Tribunal, the Assessee contented that the amendment by the Finance Act, 2010 with retrospective effect from 1st April, 2010 whereby amount of tax deducted at the time of making payment in respect of expenditure referred to in Sec.40(a)(ia) of the Act, if paid to the Government on or before the due date for filing the return of income due date u/s 139(1) of the Act should be allowed as a deduction. In other words it was argued that the amendment by the Finance Act, 2010 to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. and confirmed by the learned CIT(A) on account of freight charges by invoking the provisions of Section 40(a)(ia) is not sustainable as per the amendments made in the said provisions by the Finance Act, 2010 which, being remedial/curative in nature, have retrospective application", we find no reason to deviate from the decisions of the ITAT's Mumbai Bench and Ahmedabad Bench, in the absence of a contrary view, except the other benches decisions or any other High Court. Therefore, respectfully following the decision of the Coordinate Benches (supra), we allow the ground nos. I to 3 of the assessee's appeal. 16. As against the aforesaid decision the Revenue preferred appeal before the Hon'ble Calcutta High Court. The Hon'ble Calcutta High Court in ITA No. 302 of 2011 GA 3200/2011 decided on 23.11.2011, held as follows: "We have heard Mr. Nizamuddin and gone through the impugned judgment and order. We have also examined the point formulated for which the present appeal is sought to be admitted. It is argued by Mr. Nizamuddin that this court needs to take decision as to whether section 40(A)(ia) is having retrospective operation or not. The learned Tribunal on fact found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority higher than this Tribunal has expressed its esteemed views on a an issue, normally, the decision of the higher judicial authority is to be followed. The Bench has further held that the fact that the judgment of the higher judicial forum is from a nonjurisdictional High court does not really alter this position, as laid down by the Hon'ble Bombay High Court in the case of CIT v. Godavaridevi Saraf 113 ITR 589(Bom). 19. In view of the above, we hold following the decision of the Hon'ble Calcutta High Court that Amendment to the provisions of Sec.40(a)(ia) of the Act, by the Finance Act, 2010 is retrospective from 1.4.2005. Consequently, any payment of tax deducted at source during previous years relevant to and from AY 05-06 can be made to the Government on or before the due date for filing return of income u/s.139(1) of the Act. If payments are made as aforesaid, then no deduction u/s.40(a)(ia) of the Act can be made. Admittedly in the present case the Assessee had deposited the tax deducted at source on or before the due date for filing return of income u/s.139(1) of the Act and therefore the impugned disallowance deserves to be deleted. We order accordingly and allow th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
