9911796707
TMI Blog2021 (10) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... e incurred by the assessee on which admittedly income-tax was deducted at source under Chapter XVII-B by the assessee , which stood deposited late beyond the time prescribed u/s 200(1), but admittedly the same was deposited before the due date of filing of return of income u/s 139(1) - HELD THAT:- Recently, Hon ble Madras High Court in the case of CIT v. Western Agencies (Madras) Private Limited, [ 2021 (4) TMI 1029 - MADRAS HIGH COURT] has held by following the aforesaid decision of Hon ble Supreme Court in the case of Calcutta Export Company [ 2018 (5) TMI 356 - SUPREME COURT] , that amendment made by Finance Act, 2010 to provisions of Section 40(a)(ia) is curative in nature and shall apply retrospectively since when Section 40(a)(ia) was inserted viz. ay: 2005-06. Presently, we are concerned with ay:2005-06 , and Respectfully following aforesaid judgments, we hold that the assessee will be entitled for claiming deduction u/s 40(a)(ia) , in case income tax deducted at source under Chapter XVII-B during the year under consideration, was deposited by assessee to the credit of Central Government on or before the due date of filing of return of income u/s 139(1) of the 1961 Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax income from sale of prospectus to the tune of ₹ 8,48,800/-, vide assessment order dated 20.12.2017 passed by AO u/s 143(3) of the 1961 Act. Aggrieved, the assessee filed first appeal and learned CIT(A) was pleased to uphold additions to the tune of ₹ 50,000/- on account of income from sale of prospectus having escaped assessment. While granting substantial relief to the assessee, the ld. CIT(A) observed that it is not necessary that every student who registered for the course must have purchased the prospectus. The ld. CIT(A) further considered the submissions of the ld. Counsel for the assessee that no incriminating material is brought on record by the AO that every student who enrolled has purchased the prospectus, nor the AO verified this fact from any center. That is how the substantial relief was granted by ld. CIT(A) and additions to the tune of ₹ 50000/- was confirmed by ld. CIT(A) on the grounds that some old /used prospectus must have been sold as waste/scrap. Still aggrieved, the assessee has filed an appeal with tribunal. It is not brought to our notice by either of the Rival parties that Revenue being aggrieved by substantial relief granted by ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 47,38,176/- during the year under consideration which stood disallowed by AO , and the income-tax deducted at source was admittedly deposited by assessee to the credit of Central Government , on 30.06.2005 as is emerging from the records. The AO has reproduced the complete chart in page number 5-9 of the assessment order. The AO disallowed the entire amount of the expenditure to the tune of ₹ 47,38,176/- , which stood added to the income of the assessee. The ld. CIT(A) while adjudicating first appeal filed by the assessee held that income-tax which was deducted in the month of March, 2005 and deposited before the due date for filing of return of income u/s 139(1) is entitled for deduction during the year under consideration , while the remaining amount to be allowed in subsequent assessment year viz. 2006-07 in which the amount was deposited. Still aggrieved, the assessee has filed an appeal with tribunal. Both the parties were heard by Division Bench through video conferencing mode through virtual Court. The issue is no more res integra. The decision of Hon ble Supreme Court in the case of CIT v. Calcutta Export Company reported in (2018) 93 taxmann.com 51(SC) is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e commission amount from the total income. The Assessing Officer revised the total income to ₹ 4,58,99,999/- with the requirement to pay the additional tax amount of ₹ 23,88,832/- by the Respondent. (b) Being aggrieved by the order dated 12.10.2009, the Respondent preferred an appeal before the Commissioner of Income tax (Appeals). Learned CIT (Appeals), vide order dated 01.08.2011, allowed the appeal while holding that the commission amount is eligible for deduction under the said Assessment Year. (c) Being aggrieved, the Revenue preferred an appeal being ITA No. 1487/Kol/2011 before the Tribunal which came to be dismissed on 29.02.2012. (d) Being aggrieved by the order dated 29.02.2012, the Revenue preferred an appeal before the High Court. The High Court, vide judgment and order dated 03.09.2012, had dismissed the appeal. (e) Aggrieved by the judgment and order dated 03.09.2012, the Revenue has preferred this appeal before this Court. 4. Heard learned senior counsel for the parties and perused the factual matrix of the case. Point(s) for consideration:- 5. Whether the amendment made by the Finance Act, 2010 in Section 40(a)(ia) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Delhi High Court in CIT v. Ansal Land Mark Township (P.) Ltd. [2015] 234 Taxman 825/61 taxmann.com 45. 11. Learned senior counsel further submitted that the amendments of curative nature have to be applied retrospectively and hence the amendment made in 2010 to the existing provisions of Section 40(a)(ia) should be given retrospective effect from the date of insertion and in support of this contention learned senior counsel relied on a decision of this Court in Allied Motors (P.) Ltd v. CIT, Delhi - [1997] 224 ITR 677/91 Taxman 205. 12. Learned counsel for the Respondent finally submitted that the decision of the High Court is well within the parameters of law and requires no interference. Discussion:- 13. The dispute in the present case revolves around the fact that whether the amendment made by the Finance Act, 2010 to the provisions of Section 40 (a) (ia) of the IT Act is retrospective in nature so as to apply to the present case or not. If it is so, then the tax duly paid by the assessee on 01.08.2005 is well in accordance with law and the assessee is allowed to claim deduction for the tax deducted and paid to the government, in the previous year in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Chapter XVII-B. 16. The purpose is very much clear from the above referred explanation by the memorandum that it came with a purpose to ensure tax compliance. The fact that the intention of the legislature was not to punish the assessee is further reflected from a bare reading of the provisions of Section 40(a)(ia) of the IT Act. It only results in shifting of the year in which the expenditure can be claimed as deduction. In a case where the tax deducted at source was duly deposited with the government within the prescribed time, the said amount can be claimed as a deduction from the income in the previous year in which the TDS was deducted. However, when the amount deducted in the form of TDS was deposited with the government after the expiry of period allowed for such deposit then the deductions can be claimed for such deposited TDS amount only in the previous year in which such payment was made to the government. 17. However, it has caused some genuine and apparent hardship to the assesses especially in respect of tax deducted at source in the last month of the previous year, the due date for payment of which as per the time specified in Section 200 (1) of IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted that tax during the last month of the previous year and two; those who have deducted the tax in the remaining eleven months of the previous year. It was provided that in case of assessees falling under the first category, no disallowance under Section 40(a) (ia) of the IT Act shall be made if the tax deducted by them during the last month of the previous year has been paid on or before the last day of filing of return in accordance with the provisions of Section 139(1) of the IT Act for the said previous year. In case, the assessees are falling under the second category, no disallowance under Section 40(a)(ia) of IT Act where the tax was deducted before the last month of the previous year and the same was credited to the government before the expiry of the previous year. The net effect is that the assessee could not claim deduction for the TDS amount in the previous year in which the tax was deducted and the benefit of such deductions can be claimed in the next year only. 21. The amendment though has addressed the concerns of the assesses falling in the first category but with regard to the case falling in the second category, it was still resulting into unintended c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsy surrounding the above amendment was whether the amendment being curative in nature should be applied retrospectively i.e., from the date of insertion of the provisions of Section 40(a)(ia) or to be applicable from the date of enforcement. 26. TDS results in collection of tax and the deductor discharges dual responsibility of collection of tax and its deposition to the government. Strict compliance of Section 40(a)(ia) may be justified keeping in view the legislative object and purpose behind the provision but a provision of such nature, the purpose of which is to ensure tax compliance and not to punish the tax payer, should not be allowed to be converted into an iron rod provision which metes out stern punishment and results in malevolent results, disproportionate to the offending act and aim of the legislation. Legislature can and do experiment and intervene from time to time when they feel and notice that the existing provision is causing and creating unintended and excessive hardships to citizens and subject or have resulted in great inconvenience and uncomfortable results. Obedience to law is mandatory and has to be enforced but the magnitude of punishment must not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso ensured reasonable interpretation and retrospective effect would serve the object behind the enactment. The aforesaid view has consistently been followed by this Court in the following cases, viz., Whirlpool of India Ltd., v. CIT [2000] 245 ITR 3, CIT v. Amrit Banaspati Co. Ltd.[2002] 255 ITR 117/[2002] 123 Taxman 74 (SC) and CIT v. Alom Enterprises Ltd. [2009] 319 ITR 306/185 Taxman 416 (SC). 30. Hence, in light of the forgoing discussion and the binding effect of the judgment given in Allied Moters (P.) Ltd. case (supra), we are of the view that the amended provision of Sec 40(a)(ia) of the IT Act should be interpreted liberally and equitable and applies retrospectively from the date when Section 40(a)(ia) was inserted i.e., with effect from the Assessment Year 2005-2006 so that an assessee should not suffer unintended and deleterious consequences beyond what the object and purpose of the provision mandates. As the developments with regard to the Section recorded above shows that the amendment was curative in nature, it should be given retrospective operation as if the amended provision existed even at the time of its insertion. Since the assessee has filed its return ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
