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TMI Blog2017 (4) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... the submission on behalf of the Assessee are of the view that it would be sufficient if the order of the CIT(A) is set aside and the issue remanded to the AO for verification as to whether payees have included the receipts from the Assessee in their returns of income in terms of the decisions referred to above. In case the payees are not cooperating in providing details, the AO should call for the information u/s. 133(6) or 131 of the Act, for verification of the same. In this regard the Assessee should furnish all the details of assessment particulars of the recipients of payment from the Assessee to the AO to ensure that he does not have any difficulty in making the required verification. The other issues raised by the Assessee in its appeal are therefore left open without adjudication, for the present. - Appeal of the Assessee allowed for statistical purpose. - I.T.A No. 2077/Kol/2013 - - - Dated:- 12-8-2016 - Sri N.V.Vasudevan, JM Dr.Arjun Lal Saini, AM For The Appellant : Shri Somnath Ghosh, Advocate For The Respondent : Shri Rajat Kumar Kureel, JCIT.Sr.DR. ORDER Per N.V.Vasudevan, JM This is an appeal by the Assessee against the order dated 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claim of deduction for ₹ 16,35,970/- in respect of its expenditure towards payment of labour contractor (amalgamated with under the head of expenditure construction materials, direct expenses and development expenses incurred during the year for ₹ 51,25.279.75 as shown in P L account for the year ended 31st March 2006) is disallowed for failure to comply with the TDS provision and added to its total income for the financial year 2005-06 relevant to the assessment year 2006-07 by applying provision of section 40(a)(1a) of the I.T.Act 1961. 4. On appeal by the Assessee, the CIT(A) confirmed the order of the AO. 5. Aggrieved by the order of the CIT(A), the Assessee has preferred the present appeal before the Tribunal. 6. We have heard the rival submissions. The learned counsel for the Assessee made a prayer before us at the time of hearing that without adjudicating on the issue whether the disallowance u/s.40(a)(ia) of the Income Tax Act, 1961 (Act) could have been made in the facts and circumstances of the present case, this appeal can be decided, if a direction is given by the Tribunal to the AO to verify if the payees have declared the receipt from the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this effect from an accountant in such form as may be prescribed: 8. Memorandum explaining the provisions while introducing Finance Bill, 2012 provides the justification of the amendment to section 40(a)(ia) in the following words:- In order to rationalise the provisions of disallowance on account of nondeduction of tax from the payments made to a resident payee, it is proposed to amend section 40(a)(ia) to provide that where an assessee makes payment of the nature specified in the said section to a resident payee without deduction of tax and is not deemed to be an assessee in default under section 201(1) on account of payment of taxes by the payee, then, for the purpose of allowing deduction of such sum, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee. 9. The provisions of Sec.40(a)(ia) of the Act are meant to ensure that the Assessee s perform their obligation to deduct tax at source in accordance with the provisions of the Act. Such compliance will ensure revenue collection without much hassle. When the object sought to be achieved by those provisions are found to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income and necessary evidence of such payment was enclosed with the return of income. In other words, if contribution stood paid after the date for filing of the return, it stood disallowed. This resulted in great hardship to the employers. They represented to the Government about their hardship and, consequently, pursuant to the report of the Kelkar Committee, the Government introduced Finance Act, 2003, by which the second proviso stood deleted w.e.f. 1st April, 2004, and certain changes were also made in the first proviso by which uniformity was brought about between payment of fees, taxes, cess, etc., on one hand and contribution made to Employees' Provident Fund, etc., on the other. 11 . According to the Department, the omission of the second proviso giving relief to the assessee(s) [employer(s)] operated only w.e.f. 1st April, 2004, whereas, according to the assessee(s)-employer(s), the said Finance Act, 2003, to the extent indicated above, operated w.e.f. 1st April, 1988 (retrospectively). The Hon ble Supreme Court held that the deletion of the second proviso was retrospective w.e.f.1.4.2004. The Court considered the scheme of the Act and the historical bac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. However, as stated above, the second proviso resulted in implementation problems, which have been mentioned hereinabove, and which resulted in the enactment of Finance Act, 2003, deleting the second proviso and bringing about uniformity in the first proviso by equating tax, duty, cess and fee with contributions to welfare funds. Once this uniformity is brought about in the first proviso, then, in our view, the Finance Act, 2003, which is made applicable by the Parliament only w.e.f. 1st April, 2004, would become curative in nature, hence, it would apply retrospectively w.e.f. 1st April, 1988. Secondly, it may be noted that, in the case of Allied Motors (P) Ltd. Etc. vs. CIT (1997) 139 CTR (SC) 364 : (1997) 224 ITR 677 (SC), the scheme of s. 43B of the Act came to be examined. In that case, the question which arose for determination was, whether sales-tax collected by the assessee and paid after the end of the relevant previous year but within the time allowed under the relevant sales-tax law should be disallowed under s. 43B of the Act while computing the business income of the previous year ? That was a case which related to asst. yr. 1984-85. The relevant accounting period end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited the contributions with the R.P.F.C. after 31st March (end of accounting year) but before filing of the Returns under the IT Act and the date of payment falls after the due date under the Employees' Provident Fund Act, they will be denied deduction for all times. In view of the second proviso, which stood on the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under s. 43B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right upto 1st April, 2004, and who pays the contribution after 1st April, 2004, would get the benefit of deduction under s. 43B of the Act. In our view, therefore, Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1st April, 1988, when the first proviso was introduced. It is true that the Parliament has explicitly stated that Finance Act, 2003, will operate w.e.f. 1st April, 2004. However, the matter before us involves the principle of construction to be placed on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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