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TMI Blog2017 (2) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... be appropriate that the A.O. examines the figures with relation to the exact claim of payments toward the raw materials. The AO would examine, if necessary, the returns and relative documents pertaining to the payee M/s Aakriti Creation Pvt. Ltd. With these observations, the matter is remanded for reconsideration; in the event the A.O. is satisfied that the claim towards the payment does not include any income component but in fact constitutes reimbursement, the question of application of Section 40(a)(ia) would not arise. - ITA 436/2016 - - - Dated:- 24-1-2017 - MR. S. RAVINDRA BHAT MR. NAJMI WAZIRI JJ. Appellant: Through: Mr. Zoheb Hossain, Advocate. Respondent: Through: Mr. Kapil Goel and Mr. Mukul Gupta, Advs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is income, the entire meaning of tax collection would be thrown into disarray. It was submitted that the ITAT failed to take note of the fact that the second proviso to Section 40(a)(ia) was introduced only w.e.f. 01.04.2013 by way of an amendment and that the grant of relief in the circumstances of the case virtually made the statute prospective. The learned counsel for the assessee relied upon the previous rulings of this Court particularly upon Commissioner of Income Tax v. Dr. Jaideep Kumar Sharma, ITA 95/2015, decided on 19.11.2015; Commissioner of Income Tax v. Ansal Land Mark Township (P) Ltd., ITA 160/2015, decided on 26th August, 2015. 4. In Ansal Land Mark Township (P) Ltd. (supra), the Court elaborately considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed view, a penalty for tax withholding lapse but it is a sort of compensatory deduction restriction for an income going untaxed due to tax withholding lapse. The penalty for tax withholding lapse per se is separately provided for in Section 271C, and , section 40(a)(ai) does not add to the same. The provisions of Section 40(a)(ai), as they existed prior to insertion of second proviso thereto, went much beyond the obvious intentions of the lawmakers and created undue hardships even in cases in which the assessee s tax withholding lapses did not result in any loss to the exchequer. Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso, in cases such as the present one, where the AO can have easy access to the returns of the payee, in the larger interest of the assessee and the Revenue, it would be appropriate that the A.O. examines the figures with relation to the exact claim of payments toward the raw materials. The AO would examine, if necessary, the returns and relative documents pertaining to the payee M/s Aakriti Creation Pvt. Ltd. 6. With these observations, the matter is remanded for reconsideration; in the event the A.O. is satisfied that the claim towards the payment of ₹ 3,19,66,460/- does not include any income component but in fact constitutes reimbursement, the question of application of Section 40(a)(ia) would not arise. 7. The appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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