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TMI Blog2012 (10) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... upta, Advocate Ms. Sonali Aggarwal, Ca Shri Tarun Kumar, Advocate. Respondent by: Mrs. Shumona Sen, Sr. DR O R D E R PER U.B.S. BEDI, JUDICIAL MEMBER This appeal of the assessee is directed against the order passed by the learned Commissioner of Income-tax (Appeals)-XIX, New Delhi, dated 05-01-2012 relevant to the Assessment Years 2008-09 whereby confirmation of action of the Assessing Officer in disallowing the amount of Rs.73,65,220/- under sec. 40(a)(ia) of the Income-tax Act, 1961 (the Act) has been challenged. 2. Facts indicate that the Assessing Officer noticed from the Tax Audit Report that the assessee has not deducted TDS on an amount of Rs.73,65,220/- and disallowances were not taken into consideration in computation of the income. When the counsel of the assessee was asked by the AO to explain, he submitted that out of total amount of Rs.73,65,220/- shown in the Annexure to Tax Audit Report, the assessee has deducted TDS on amount excluding the interest income of Rs.7,53,294/- and the amount so deducted was deposited on 4-08-2008. He further submitted that the entire TDS on the aforesaid amount has been paid before the due date of filing of the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed in the year of payment without prejudice to our right to claim the same in the year under appeal in case the above judgment of Hon ble Special Bench is reversed by Hon ble Bombay High Court in future. 5. The learned CIT(A) while considering and not accepting the plea of the assessee in this regard, has concluded to confirm the action of the AO as per Para 6 7 of his order which read as under:- 6. I have gone through the assessment order and the written submissions filed by the AR in this regard. 7. It is seen from the Audit Report (Annexure-K) that TDS was not deducted on the following items of expense: Nature Amount Interest 314465 Contractor 5650780 Fees 366586 Rent 612560 INTERSET (GTF) 420829 Total 7365220 The AR admitted that the tax deducted was paid on 04.08.2008 beyond the due date prescribed u/s 40(a)(ia). The AR contended that since the amounts were paid before the due date for filing return of income, the same are to be allowed in the light of the following decisions: Kanubhai Ramjibhai Makwana vs. ITO (Ahd.-ITAT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deducted TDS on an amount of Rs.66,29,926/- out of deductible amount of Rs.73,65,220/- and paid the same on 4th of August, 2009 which is well within the due date for filing of the return as provided under sec. 139(1) of the Act. Hon ble Calcutta High Court in its decision dated 23rd November, 2011 in the case of CIT vs. Virgin Creations (supra) has held that the amendment with respect to sec. 40(a)(ia) has retrospective effect and such decision of the Hon ble High Court has been followed by the Mumbai Bench `C in the case of Shri Piyush C. Mehta vs. ACIT (supra) and relevant portion of said order from Page 8 onwards is reproduced as under:- 8. We have heard the rival submissions. The legislative history of the provisions of Sec.40(a)9ia) of the Act have to be first seen. Section 40 has certain clauses providing for the amounts which are not deductible. Sub-clause (ia) of clause (a) of section 40 was inserted by the Finance (No.2) Act,2004 with effect from 1st April, 2005 reading as under:- 40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computed the income chargeable under the head `Profits and gains of busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 1st day of April, 2005 and will, accordingly, apply in relation to the assessment year2005- 2006 and subsequent years. [Clause 11] 10. Thereafter the Finance Act, 2008 made amendment to clause (a) in sub-clause (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 subcontractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been paid,- (A) in a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in subsection (1) of section 139 ; or (B) in any other case, on or before the last day of the previous year. Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted- (A) during the last month of the previous year but paid after the said due date ; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect 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 deposit of tax before the close of the previous year in case of deduction during the first eleven months, as a pre-condition for the grant of deduction in the year of incurring expenditure, has been altered. The hitherto requirement of the assessee deducting tax at source during the first eleven months of the previous year and paying it before the close of the previous year up to 3 1st March of the previous year as a requirement for grant of deduction in the year of incurring such expenditure, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the provisions of Sec.40(a)(ia) has to be held to be retrospective w.e.f. 1-4-2005. The ITAT Kolkata Bench by its order dated 15.12.2010, held as follows: 8. After hearing the rival submissions and on careful perusal of the materials available on record, keeping in view of the fact that though the Ld.D.R. submitted that the decisions of the Coordinate Benches are not binding and the Kolkata benches may take a different view, since Mumbai Bench after analyzing the provisions of Sec.40(a)9ia) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully 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 the assessee had deducted tax at source from the paid charges between the period April 1, 2005 and April 28, 2006 and the same were paid by the assessee in July and August 2006, i.e. well before the due date of filing of the return of income for the year under consideration. This factual position was undisputed. Moreover, the Supreme Court, as has been recorded by the learned Tribunal, in the case of Allied Motors Pvt. Ltd. and also in the case of Alom Extrusions Ltd., has already decided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the appeal by the Assessee. 9. Therefore, following the aforesaid decision in the case of Shri Piyush C. Mehta (supra), we direct to delete the addition of Rs.66,29,926/- as made by the Assessing Officer under sec. 40(a)(ia) and confirmed by the CIT(A) in view of the fact that TDS amount in relation to the said amount has been paid undisputedly by the assessee on 04-08-2008 which is before the due date of filing of the return under sec.139(1) of the Act. 10. In the result, the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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