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TMI Blog2016 (1) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to deletion of disallowance made u/s.40(a)(ia) of the I.T.Act, 1961 on the reason that the expenditure is covered u/s.28 and not covered under sections 30 to 38. 3. The cross-objection filed by the assessee is in supportive of the order of the Commissioner of Income-tax(Appeals) . 4. The facts of the case are that the assessee has made the payments to M/s. Vasantham Cargo Agencies of Rs. 14,90,640/- towards freight charges, M/s. S.K.Leathers of Rs. 12,72,881/- and to M/s. Vignesh Leathers of Rs. 61,980/-, totalling Rs. 3,34,861/- towards machinery charges. The AO disallowed the above expenditure citing the reason that the assessee failed to deduct TDS. Aggrieved, the assessee went in appeal before the CIT(Appeals). 5. On appeal, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not on the amounts paid during the relevant year. Learned D.R. did not raise any objection to the additional ground. Such additional ground is admitted being a pure question of law. 10. We have considered both the averments of the assessee. Insofar as reliance placed on the decision of Teja Constructions (supra) is concerned, there the books of accounts of the assessee were rejected and estimation of income was done on percentage basis. The main reason why the Tribunal held invocation of Section 40(a)(ia) was not called for, was that it would result in double jeopardy. As per the Tribunal, once the books were rejected, there was no question of further invocation of Section 40(a)(ia) of the Act. It was, in such circumstances, Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that finding. 7. To support the deletion of addition by the CIT(Appeals), the ld. AR submitted that in view of the judgment of the Delhi High Court in the case of CIT v. Ansal Land Mark Township (P) Ltd. in ITA Nos. 160 & 161/2015 dated 26.8.2015, second proviso to sec.40(a)(ia) of the Act is declaratory and curative in nature and has retrospective effect from 1st April, 2005. According to the assessee's counsel, as long as payee filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, the assessee would not be treated as a person in default. Considering this argument also, we find that there is no material before us to show that the payee has fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of filing the return of income. However, the CIT(Appeals) allowed the claim of the assessee as it was remitted before filing of return of income. 9. The ld. DR, relied on the judgment of the Delhi High Court in the case of CIT v. Aimil Ltd. (321 ITR 508). 10. We have heard both the parties and perused the material on record. We find that similar issue was considered by the Gujarat High Court in the case of CIT v. Gujarat State Road Transport Corporation (265 CTR 65), wherein their Lord-ships distinguished the decision of the Supreme Court in the case of CIT v. Alom Extrusions Ltd. (319 ITR 306) cited by the ld. AR, before us and observed as under: "7.07. Now so far as the reliance placed upon the decision of the Hon'blee Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith respect to employees' contribution. As stated above, the only controversy before the Hon'ble Supreme Court was with respect to amendment (deletion) of the Second Proviso to section 43(B) of the Income Tax Act, 1961 by the Finance Act, 1963 operates w.e.f. 1/4/2004 or whether it operates retrospectively w.e.f. 1/4/1988. Under the circumstances, the learned tribunal has committed an error in relying upon the decision of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. (supra) while passing the impugned judgement and order and deleting disallowance of the respective sums being employees' contribution to PF Account / ESI Account, which were made by the AO while considering the proviso to section section 36(1) (va) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the ESI Fund under the ESI Act. Consequently, all these appeals are allowed and the impugned judgement and orders passed by the tribunal in deleting the disallowances made by the AO are hereby quashed and set aside and the disallowances of the respective sums with respect to the Provident Fund / ESI Fund made by the AO is hereby restored. The questions raised in present appeal are answered in favour of the revenue. With this, all these appeals are allowed." Respectfully following the above order of the Tribunal, wherein, present author is also the author of that order, we are inclined to decide the issue against the assessee. 11. Since we have decided the issues raised by the Revenue regarding disallowance u/s.40(a)(ia) and employee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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