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TMI Blog2016 (11) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... to the credit of Central government before the due date of filing of return u/s 139(1) of the Act, no disallowance u/s. 40(a)(ia) of the Act is called for . The decisions relied upon by the assessee supports the claim of the assessee, we hold that the assessee having made payment of tax deducted at source in the first eleven month of financial year ending 31-03-2007 to the credit Central Government before the due date of filing of return of income u/s. 139(1) of the Act, no disallowance can be made u/s 40(a)(ia) of the Act and accordingly we delete the disallowance made by the A.O. by holding that the amendment made by the Finance Act, 2010 to Section 40(a)(ia) of the Act is retrospective - Decided against revenue - I.T.A. No.6965/Mum/2014 - - - Dated:- 19-9-2016 - SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Revenue : Shri A. Ramachandran For The Assessee : Shri Subodh Ratnaparkhi ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the Revenue, being ITA No. 6965/Mum/2014, is directed against the appellate order dated 18th August, 2014 passed by learned Commissioner of Income Tax (Appeals)- 23, Mumba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of CIT v. Virgin Creations (GA 3200/2011) vide orders dated 23.11.2011 as well decision of Tribunal, Mumbai in Piyush C. Mehta v. ACIT in ITA 321/Mum/2009 vide orders dated 11.04.2012 held that amendment to Section 40(a)(ia) of the Act is retrospective in nature. The A.O. observed from the record that the assessee had deducted TDS on following payments during the first eleven months of the financial year 2006- 07 and deposited the TDS to the credit of Central Government on the dates as mentioned in the following table:- S No. TDS deducted(In Rs) Amount of payment(In Rs) Due date of remittance Date of payment to Government Account CONTRACTORS 1 5021 223752 07.01.2006 24.05.2007 2 10669 475446 07.11.2006 21.05.2007 3 8100 360963 07.12.2006 21.05.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 40(a)(ia) of the Act which is reproduced 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-contractors, 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 deducted or after deduction. [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, or or before the due date specified in sub-section (1) of section 139; or (B) in any other case, on or before the last day of the previous year:] The A.O. observed that as per the un-amended provisions of Section 40(a)(ia), the TDS which has been deducted for payments made during the year for the first eleven months should have been deposited to the credit of Central Government account before the end of the financial year i.e. 31st March, 2007 which the assessee has failed to comply as per the un-amended provisions of section 40(a)(ia) of the Act and thus attracts disallowance u/s. 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of the A.O. whereby it can be concluded that the income has escaped assessment and it is only from the facts on record that the AO came to the conclusion that the income has escaped assessment which is merely a change of opinion. The assessee relied upon the following decisions:- 1. CIT v. Kelvinator of India Ltd., 256 ITR 1 (Affirmed by Hon ble Supreme Court in 320 ITR 561 (SC)). 2. Asian Paints Ltd. v. DCIT,(2009) 308 ITR 195 (Bom) 3. NDT Systems v. ITO, 255 CTR 113 (Bom) The ld. CIT(A) rejected the contentions of the assessee on the ground that the A.O. clearly recorded that the assessee has deducted TDS on amount of ₹ 1,29,63,647/- paid for contractors , professionals and brokerage in the first eleven months of the financial year 2006-07 and tax deducted at source on the said payment of ₹ 1,29,63,647/- was required to be deposited before 31st March, 2007 and since the same was deposited only after the expiry of financial year although before the due date of filing of return u/s. 139(1) of the Act, the A.O. disallowed the same u/s 40(a)(ia) of the Act as existing in the statute at that relevant time. The learned CIT(A) observed that the issue was not e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue date for filing the return as per provisions of section 139(1) of the Act which is reflected in the chart given in the assessment order which has been reproduced in preceding para s of this order. The assessee contended that undisputedly the entire TDS amount have been deposited before the due date of filing return of income u/s 139(1) of the Act and hence no disallowance is required to be made u/s 40(a)(ia) of the Act. The assessee in this regard relied upon the decision of Hon ble Calcutta High Court in the case of CIT v. Virgin Creations (GA 3200/2011) dated 23.11.2011 whereby the amendment made to section 40(a)(ia) of the Act by Finance Act 2010 were held to be retrospective. The assessee also submitted that the Mumbai Tribunal in the case of Piyush C. Mehta v. ACIT (2012) 52 SOT 27 (Mumbai) considered the decision of the Special Bench in the case of Bharati Shipyard(supra) holding that the amendment by Finance Act , 2010 to Section 40(a)(ia) of the Act to be prospective and also decision of Hon ble Calcutta High Court in the case of Virgin Creations(supra) holding the same to be retrospective , and the Mumbai Tribunal in Piyush C. Mehta(supra) , thereafter , held that in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Hon ble Calcutta High Court in Virgin Creation(supra) being higher judicial forum decision to hold that amendment by Finance Act , 2010 to the provisions of Section 40(a)(ia) of the Act is retrospective in nature, which decision of Hon ble Calcutta High Court in the case of Virgin Creations(supra) was also followed by the ITAT Bangalore Bench in the case of Santosh Kumar Shetty v. ACIT in IT Appeal No. 1194 (Bang) of 2012 for the assessment year 2008-09 whereby the appeal of the assessee was allowed. Accordingly, the learned CIT(A) directed the A.O. to delete the disallowance of ₹ 1,29,63,647/- made u/s 40(a)(ia) of the Act as the tax deducted at source was deposited to the credit of Central Government by the assessee before the due date of filing of return of income u/s. 139(1) of the Act , vide appellate order dated 18-08-2014 wherein the assessee appeal was allowed on merits with respect to this ground. 6. Aggrieved by the appellate order dated 18-08-2014 passed by the ld. CIT(A), the Revenue is in appeal before the Tribunal. 7. The ld. D.R. submitted that amendment to section 40(a)(ia) of the Act by Finance Act 2010 is prospective in nature. The ld. D.R. als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income u/s 139(1) of the Act. It is an undisputed position that the assessee has duly paid the taxes deducted at source under Chapter XVII-B of the Act during the first eleven months of the financial year ended 31-03-2007 before the due date of filing of return u/s. 139(1) of the Act . Section 40(a)(ia) was amended by Finance Act, 2010 whereby under the amended provisions, the tax deducted at source under Chapter XVII-B of the Act if paid to the credit of Central government before the due date of filing of return u/s 139(1) of the Act, no disallowance u/s. 40(a)(ia) of the Act is called for . The decisions relied upon by the assessee supports the claim of the assessee, we hold that the assessee having made payment of tax deducted at source in the first eleven month of financial year ending 31-03-2007 to the credit Central Government before the due date of filing of return of income u/s. 139(1) of the Act, no disallowance can be made u/s 40(a)(ia) of the Act and accordingly we delete the disallowance made by the A.O. by holding that the amendment made by the Finance Act, 2010 to Section 40(a)(ia) of the Act is retrospective as held in the decisions relied upon by the assessee and c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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