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TMI Blog2012 (12) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-7-2012 - SHRI. N. BARATHVAJA SANKAR AND SHRI. N. V. VASUDEVAN, JJ. Appellant by : Shri. H. N. Khincha, CA Respondent by : Shri. Saravanan. V, JCIT ORDER PER N. BARATHVAJA SANKAR, VICE PRESIDENT : This is an appeal preferred by the assessee, M/s. Manmandir Enterprises, Bangalore, for the assessment year 2005-06, against the appellate order dated.14.09.2011 of the CIT(A)-II, Bangalore. 02. The assessee has taken the following grounds : i) The learned AO had erred in passing the impugned order u/s.154 of the IT Act, 1961 and the learned CIT had erred in confirming the same. ii) There was no mistake apparent from record needing rectification. The order passed is bad in law and is liable to be quashed. iii) In any case and without prejudice, the authorities below have erred in holding that the provisions of Section 40(a)(ia) of the IT Act, 1961 are attracted to the case of the appellant. On the facts and circumstances of the case, disallowance u/s.40(a)(ia) is not voluntarily and the addition as made and confirmed is to be deleted. 03. The brief facts of the case are that the assessee is a partnership firm engaged in the business of textile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No.717/Bang/2011, dt.10.05.2012, for the assessment year 2008-09 and submitted that similar issue was considered by the said order of the Tribunal and the Departmental appeal was dismissed. 06. We have also heard the learned DR and considered the facts of the case on record, including the decision of the Tribunal cited supra. In the said decision, the Tribunal has dismissed the Revenue s appeal by observing as under : 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 retrospective operation and upheld the order of the ITAT in the case of CIT v. Virgin Creations, ITA No.302 of 2011, judgment dated 23.11.2011, copy of which is placed at pages 15 and 16 of the assessee s compilation, by observing as under:- The learned Tribunal on fact found that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 and section 194C under Chapter XVII-B are relevant only for purposes of ascertaining deductibility of tax on payment. Once, the nature of payment is falling under the provisions of Chapter XVII/VII-B then disallowance under section 40(a)(ia) shall be as per condition as provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 onClauses and the Memorandum Explaining the Provisions of theFinance 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 taken a different view in the case of CIT v. Virgin Creations (supra) and the issue stands decided against the revenue. Therefore considering the precedent in the judicial hierarchy, we are bound to follow the decision of the Hon ble Calcutta High Court because it is the only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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