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TMI Blog2012 (6) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing grounds have been raised in this appeal: 1. The order of the CIT(A) is contrary to the facts of the case. 2. The CIT(A) is not correct in deleting the addition of Rs.17,30,932/- made by the Assessing officer as the assessee had belatedly deducted tax from April 2007 to February, 2008 in the month of March 2008 and deposited the same before the due date for filing the return u/s.139(1) but not before the end of the previous year i.e. 31/03/2008. 3. The CIT(A)'s decision that Sec.40(a)(ia) is not attracted where tax has been deducted at source on an expenditure incurred or payment made in the month of the relevant previous year but deposited to the Govt. Account on or before the due date of filing of return is not acceptable. 4. The tax deductable during the period other than that of the last month of the year is covered by Proviso B of section 40(a)(ia), according to which, the due date for remitting the tax deducted would be the last day of the previous year in order to avoid disallowance u/s.40(a)(ia) of the Act. 5. For these and such other grounds that may be urged at the time of hearing of the appeal, the order of the learned CIT(A) may be set aside and that the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2008). Following table shows the details of such deductions and payments of TDS Name of contractor/ Professionals Amount credited to payees between Apr 08 & & Feb. 09 TDS Amount (Rs.) Date of deduction Date of TDS deposit to Govt. Sharma Moras & Co. 5,618 579 31/3/08 30/5/08 Anand Electrical Engineers 1,42,434 1,42,434 31/3/08 30/5/08 Ameer Cranes 2,72,600 24,949 31/3/08 30/5/08 Creative Diesel Services 48,735 502 31/3/08 30/5/08 Get it Biz list 1,18,630 1,222 31/3/08 30/5/08 G.R. Generators 71,380 1,470 31/3/08 30/5/08 RR Power Systems 3,42,405 7,054 31/3/08 30/5/08 Sri Lalitha Enterprises 4,65,561 9,591 31/3/08 30/5/08 Asian Power Controls Ltd. 21,349 440 31/3/08 30/5/08 TOTAL 17,30,932 54,355 31/3/08 30/5/08 From the above statement it is evident that all deductions have been made on the last month of the previous year and such TDS has been paid on or before the due date of filing the return; and accordingly as per sub-clause (A) of section 40(a)(ia), the assessee is entitled for deduction of the expenditure." The assessee placed the reliance on the following case laws:- (i) Bapusaheb Nanasaheb Dhumal v. ACIT, ITA.No. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf and provisions of Chapter - XVII and section 194C under chapter XVIIB at that relevant point of time are relevant only for the purposes of ascertaining the deductibility of the tax on the payment. Once the nature of payment is falling under the provisions of chapter - XVII/XVIIB then the disallowance u/s 40(a)(ia) shall be as per the conditions as provided under this section itself. The proviso to section 40(a)(ia) makes it further clear that even in the case when the tax has been deductible as per the provisions of Chapter-XVII but deducted in the subsequent year or deducted during the last month of previous year but paid after the due date u/s 139(1) or deducted during the other month of the previous year except last month but paid after the end of the said previous year then the said sum shall not be allowed as deduction in computing the income of the previous year but allowed in the previous year in which the said tax has been paid. If the condition of deduction and payment prescribed under Chapter XVII/XVIIB are applicable for disallowance of the deduction u/s 40(a)(ia) then the provisions of section 40(a)(ia) will be rendered as meaningless, absurdity and etios. As per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties below and further submitted that the issue was squarely covered in favour of the assessee by the following decisions of various Benches of the Tribunal:- (i) M/s. Alpha Projects Society P. Ltd. v. DCIT, ITA No.2869/Ahd/2011 (Ahd.) (ii) Shri Sureshbhai G Patel v. ITO, ITA No.673/Ahd/2010 (Ahd) (iii) Rajamahendri Shipping & Oil Field Services Ltd. v. Addl. CIT, ITA No.352/Vizag/2008 (Vizag.) 10. The ld. counsel for the assessee further submitted that there is a direct judgment of the Hon'ble Calcutta High court in favour of the assessee in the case of CIT v. Virgin Creations, ITA No.302 of 2011, order dated 23.11.2011, copy of the same is placed at pages No.15 & 16 of the assessee's paperbook. 11. We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it is not in dispute that that the assessee deducted TDS which was not paid to the account of Central Govt. within the prescribed time, however, it was paid before the due date of filing the return specified in section 139(1) of the Act. On a similar issue, the Hon'ble Calcutta High Court held that amendment in sec. 40(a)(ia) is having retrospect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the same as per the provisions of section 194C or the provisions of Chapter XVII as the case may be, the assessee had to face the consequences as provided under the said Chapter XVII of the Act by attracting the penalty or interest. The provisions of section 40(a)(ia) are in addition to the provisions of Chapter XVII as well as Chapter XXII to ensure the deduction and deposit of TDS. As per sub-clause (ia) of clause (a) of section 40 when tax is deductible at source on the payment under Chapter XVII and such tax has not been deducted or after deduction has not been paid then the said deduction is not allowable. As per clause (A) of proviso to clause (a)(ia), if the tax is deducted during the last month of previous year and paid on or before the due date of filing of return as per the provisions of section 139(1), then such sum shall be allowed as deduction. In the cases where the tax is deducted during previous year other than the last month of previous year but is deposited before the last day of previous year then it will be allowed as deduction. Therefore, the condition for allowability of deduction is prescribed under section 40(a)(ia) itself and provisions of Chapter XVII ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in the provisions by the Finance Act, 2010. Accordingly, the orders of the lower authorities were to be set aside and the claim of deduction of the assessee was to be allowed." 13. As regards to the decision of Special Bench Mumbai in the case of Bharti Shipyard Ltd. v. DCIT (132 ITD 53) relied by the ld. DR is concerned, although that decision may support the revenue's case, particularly the observations in para 25 of the decision which read as under:- "The amendment to s. 40(a)(ia) by the Finance Act, 2010 has been specifically made retrospectively applicable from the asst. yr. 2010-11. It has nowhere been expressly set out that the amendment is curative or merely declaratory of the previous law. The intention of the legislature as gathered from the Notes on Clauses and the Memorandum Explaining the Provisions of the Finance Bill does not particularly indicate any relaxation in the provision retrospectively from asst. yr. 2005-06 by providing that the expenditure on which due tax was deducted upto February, 2005 but paid before the due date specified in s. 139(1) shall not suffer any disallowance in the asst. yr. 2005-06." 14. However, the Hon'ble Calcutta High Court has ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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