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TMI Blog2017 (12) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of Profits reworked for Meerut sub project. 3. The Ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 1,26,46,909/- being know how fee surrendered. 4. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 3. The grounds raised in Revenue's ITA No. 238/Del/2015 (AY 2011- 12) read as under:- "1. The Ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 19,66,17,000/- on account of Profit reworked for Ghaziabad sub-project plotted. 2. The Ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 35,000/- on account of Profits reworked for Meerut sub-project plotted. 3. The Ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 35,000/- on account of Profits reworked for Meerut sub-project built-up. 4. The Ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 1,09,000/- on account of profits reworked for Karnal sub project plotted. 5. The Ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 40,000/- on account of profits reworked for Karnal sub project g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act, 1961. We further note that the Ld. CIT(A) in the present year i.e. AY 2010-11 while passing the impugned order has thus observed that since there is no reason for him to differ from the findings of his Predecessor on this issue. Therefore, in order to maintain the Rule of consistency, respectfully following the decision of the Ld. CIT(A) in the AY 2008-09, the issue in hand was decided in favour of the assessee and AO was rightly directed to delete the addition of Rs. 19,34,53,000/-, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the addition in dispute and reject the ground no. 1 raised by the Revenue. 10. Apropos ground no. 2 relating to deletion of addition of Rs. 4,37,87,000/- on Rs. 16,97,000/- and Rs. 9,65,000/- on account of Profits reworked for Meerut sub project is concerned, we find that AO has made the addition in dispute on the basis of addition made in AY 2008-09 and Ld. CIT(A) has deleted the addition made during the year 2008-09. However, in the assessment year 2009-10 the AO has accepted the order of the Ld. CIT(A) of AY 2008-09 and hence, no such addition was made in the AY 2009-10 in the order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure to deduct TDS or deposit TDS results in loss of revenue and may deprive the Government of the tax due and payable " (Emphasis by underlining supplied by us)". Having noted the underlying objectives, Their Lordships also put in a word of caution by observing that, " the provision should be interpreted in a fair, just and equitable manner". Their Lordships thus recognized the bigger picture of realization of legitimate tax dues, as object of Section 40(a)(ia), and the need of its fair, just and equitable interpretation. This approach is qualitatively different from perceiving the object of Section 40(a)(ia) as awarding of costs on the. "assessees who fail to comply with the relevant provisions by considering overall objective of boosting TDS compliance". Not only the conclusions arrived at by the special bench were disapproved but the very fundamental assumption underlying its approach, i.e. on the issue of the object of Section 40(a)(ia), was rejected too. In any event, even going by Bharti Shipyard decision (supra), what we have to really examine is whether 2012 amendment, inserting second proviso to Section 40(a)(ia), deals with an "intended consequence" or with an "unintended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be treated as an "intended consequence" of Section 40(a)(ia). If it is not an intended consequence i.e. if it is an unintended consequence, even going by Bharti Shipyard decision (supra), "removing unintended consequences to make the provisions workable has to be treated as retrospective notwithstanding the fact that the amendment has been given effect prospectively". Revenue, thus, does not derive any advantage from Special bench decision in the case Bharti Shipyard (supra). 9. On a conceptual note, primary justification for such a disallowance is that such a denial of deduction is to compensate for the loss of revenue by corresponding income not being taken into account in computation of taxable income in the hands of the recipients of the payments. Such a policy motivated deduction restrictions should, therefore, not come into play when an assessee is able to establish that there is no actual loss of revenue. This disallowance does deincentivize not deducting tax at source, when such tax deductions are due, but, so far a s the legal framework is concerned, this provision is not for the purpose of penalizing for the tax deduction at source lapses. There are separate pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome is duly brought to tax. That will be going much beyond the obvious intention of the section. Accordingly, we hold that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1 st April, 2005, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No.2) Act, 2004." 11.1 We further note that ITAT Hyderabad 'A' Bench in the case of ACIT vs. PLR Projects Pvt. Ltd. in ITA No. 1079/HYD/2013 for A.Y. 2007-08 vide their order dated 12.3.2014 has held that the second proviso to Section 40(a)(ia) of the Act inserted by the Finance Act, 2012 w.e.f. 1.4.2013 is clarificatory in nature and hence the benefit of the same should be applied retrospectively. We further find that the Pune Bench of the ITAT in the case of DCIT, Cir-3, Pune Vs. Bhandari Associates in ITA no. 1129 vide their order dated 19.5.2014 has held that the second proviso to Section 40(a)(ia) was clarificatory in nature. The Bench referred to the decision of ITAT Cochin Bench in the case of Antony D. Mundackal vs. the ACIT vide ITA No. 38/COCH/2013 dated 29.11.2013 for A.Y. 2009-10. 11.2 Therefore, Ld. CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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