M/S Ace Fire Services, Bangalore V. ACIT, Bangalore

CO 94/BANG/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 9028 (ITAT-BANGALORE)
• Duration Of Justice: 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: L V BHASKARA REDDY JT
• Assessee Lawyers: G SATYANARAYANA
• Keywords: Retrospective amendment; Non-deduction of tax
• Section: 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.352/BANG/2013 ASSESSMENT YEAR : 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3(1), BANGALORE. VS. M/S. ACE FIRE SERVICES, NO.126/18, 2 ND FLOOR, 8 TH CROSS, WILSON GARDEN, BANGALORE 560 027. PAN: AAJFA 3296P APPELLANT RESPONDENT CO NO.94/BANG/2013 (IN ITA NO.352/BANG/2013) ASSESSMENT YEAR : 2009- 10 M/S. ACE FIRE SERVICES, NO.126/18, 2 ND FLOOR, 8 TH CROSS, WILSON GARDEN, BANGALORE 560 027. PAN: AAJFA 3296P VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3(1), BANGALORE. APPELLANT RESPONDENT REVENUE BY : SHRI L.V. BHASKARA REDDY, JT.CIT (DR) ASSESSEE BY : SHRI G. SATYANARAYANA, C.A. DATE OF HEARING : 12.11.2013 DATE OF PRONOUNCEMENT : 12.11.2013 ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 2 OF 14 O R D E R PER BENCH ITA NO.352/BANG/13 IS AN APPEAL BY THE REVENUE AG AINST THE ORDER DATED 15.01.2013 OF THE CIT(A)-II, BANGALORE RELATI NG TO A.Y. 2009-10. IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) WHEREBY THE CIT(A) DELETED AN ADDITION OF RS.29,18,873 MADE BY THE AO INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME-T AX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] FOR THE ASSESSEES FAILUR E TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE OF RS.28,19,607, RS.74,266 & RS.25,00 0/- IN RESPECT OF PAYMENTS TOWARDS CONTRACT, COMMISSION AND PROFESSIO NAL FEE. 2. THE ASSESSEE HAS FILED A CROSS OBJECTION WHICH I S PURELY SUPPORTIVE OF THE ORDER OF CIT(A) AND THEREFORE NOT MAINTAINAB LE AND LIABLE TO DISMISSED AS SUCH. 3. THE FACTUAL DETAILS WITH REGARD TO THE APPEAL A RE AS FOLLOWS. THE ASSESSEE IS A PARTNERSHIP FIRM. THE ASSESSEE MANUFA CTURES FIRE EXTINGUISHERS IN THE COURSE OF ASSESSMENT PROCEEDIN GS THE AO NOTICED FROM THE TAX AUDIT REPORT FILED U/S.44AB OF THE ACT THAT THE ASSESSEE DEDUCT TAX AT SOURCE ON PAYMENTS MADE OF RS.28,19,6 07, RS.74,266 & RS.25,000/- IN RESPECT OF PAYMENTS TOWARDS CONTRACT , COMMISSION AND PROFESSIONAL FEE. 4. THE ASSESSING OFFICER MADE AN ADDITION OF RS.29, 18,873 TO THE TOTAL INCOME BY THE AO INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 3 OF 14 THE ASSESSEES FAILURE TO DEDUCT TAX AT SOURCE ON P AYMENTS MADE REFERRED TO ABOVE. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE AT THE TIME OF MAKING PAYMENT BUT HAD DEPOSITED THE TAX SO DEDUCTED ONLY ON 26.9.2009 TO THE CREDIT OF THE CENTRAL GOVERNMEN T. ACCORDING TO THE AO AS PER THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT A S APPLICABLE TO AY 09-10 THE PAYMENTS TO THE CREDIT OF THE CENTRAL GOVERNMEN T HAVE TO BE MADE ON OR BEFORE 31.3.2009. THE AO FOLLOWED THE DECISION OF THE SPECIAL BENCH OF THE ITAT, MUMBAI, IN THE CASE OF BHARATI SHIPYARD ITA NO.2404/MUM/2009 DATED 9.9.2011 . THE SPECIAL BENCH HAD TO CONSIDER THE HISTORY OF THE PROVISIONS OF SEC.40(A) (IA) OF THE ACT. THE SAME WAS ANALYSED BY THE SPECIAL BENCH. SECTION 40 HAS CERTAIN CLAUSES PROVIDING FOR THE AMOUNTS WHICH ARE NOT DEDUCTIBLE. SUB-CLAUSE (IA) OF CLAUSE (A) OF SECTION 40 WAS INSERTED BY THE FINANC E (NO.2) ACT, 2004 WITH EFFECT FROM 1 ST APRIL, 2005 READING AS UNDER:- 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SE CTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMP UTED THE INCOME CHARGEABLE UNDER THE HEAD `PROFITS AND GAINS OF BUS INESS OR PROFESSION. .. (IA) ANY INTEREST, COMMISSION OR BROKERAGE, FEES FO R PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABO UR FOR CARRYING OUT ANY WORK), ON OR, AFTER DEDUCTION, HAS NOT BEEN PAI D DURING THE PREVIOUS YEAR, OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 20 0 : ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 4 OF 14 PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR, HAS BEEN DEDUCT ED IN THE PREVIOUS YEAR BUT PAID IN ANY SUBSEQUENT YEAR AFTER THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 20 0, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME O F THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. EXPLANATION. FOR THE PURPOSES OF THIS SUB-CLAUSE, - (I) COMMISSION OR BROKERAGE SHALL HAVE THE SAME MEANING AS IN CLAUSE (I) OF THE EXPLANATION TO SECTION 194H; (II) FEES FOR TECHNICAL SERVICES SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9; (III) PROFESSIONAL SERVICES SHALL HAVE THE SAME MEANING AS IN CLAUSE (A) OF THE EXPLANATION TO SECTION 194J; (IV) WORK SHALL HAVE THE SAME MEANING AS IN EXPLA NATION III TO SECTION 194C; 5. THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL EXPLAINED THE RATIONALE OF THE INSERTION OF THE NEW PROVISION IN FOLLOWING WORDS :- WITH A VIEW TO AUGMENT COMPLIANCE OF TDS PROVISIONS, IT IS PROPOSED TO EXTEND THE PROVISIONS OF SECTION 40(A)( I) TO PAYMENTS OF INTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESS IONAL SERVICES OR FEES FOR TECHNICAL SERVICES TO RESIDENTS, AND PAYME NTS TO A RESIDENT CONTRACTOR OR SUB-CONTRACTOR FOR CARRYING OUT ANY W ORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHI CH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION, HAS NOT BEEN PAID BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200 AND IN ACCORDANCE WITH THE OTHER PROVISIONS OF CHAP TER XVII-B. IT IS ALSO PROPOSED TO PROVIDE THAT WHERE IN RESPECT OF P AYMENT OF ANY SUM, TAX HAS BEEN DEDUCTED UNDER CHAPTER XVII-B OR PAID IN ANY SUBSEQUENT YEAR, THE SUM OF PAYMENT SHALL BE ALLOWE D IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX H AS BEEN PAID. ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 5 OF 14 THE PROPOSED AMENDMENT WILL TAKE EFFECT FROM 1ST DA Y OF APRIL, 2005 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASS ESSMENT YEAR 2005- 2006 AND SUBSEQUENT YEARS. [CLAUSE 11] 6. THEREAFTER THE FINANCE ACT, 2008 MADE AMENDMENT TO CLAUSE (A) IN SUB-CLAUSE (IA) IN SECTION 40 WITH RETROSPECTIVE EF FECT FROM 1 ST APRIL, 2005. THE SECTION AS AMENDED BY THE FINANCE ACT, 2008 REA D AS UNDER:- (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB -CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPP LY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX 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, ON OR B EFORE 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. PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCT ED- (A) DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE SAID DUE DATE ; OR (B) DURING ANY OTHER MONTH OF THE PREVIOUS YEA R BUT PAID AFTER THE END OF THE SAID PREVIOUS YEAR, SUCH SUM SHALL BE AL LOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS Y EAR IN WHICH SUCH TAX HAS BEEN PAID. ; 7. THE FINANCE ACT, 2008 BROUGHT OUT AMENDMENT TO S ECTION 40(A)(IA) W.R.E.F. 1.4.2005 BY RELAXING EARLIER POSITION TO S OME EXTENT. IT MADE TWO CATEGORIES OF DEFAULTS CAUSING DISALLOWANCE ON THE BASIS OF THE PERIOD OF ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 6 OF 14 THE PREVIOUS YEAR IN WHICH TAX WAS DEDUCTIBLE. THE FIRST CATEGORY OF DISALLOWANCES INCLUDED THE CASES IN WHICH TAX WAS D EDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT THERE WAS FAILURE TO PAY SUCH TAX ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 OF THE ACT. IN OTHER WORDS, IF ANY AMOU NT ON WHICH TAX WAS DEDUCTIBLE DURING LAST MONTH OF THE PREVIOUS YEAR, THAT IS MARCH 2005, BUT WAS PAID BEFORE 31 ST OCTOBER, 2005, BEING THE DUE DATE U/S 139(1), THE DEDUCTIBILITY OF THE AMOUNT WAS KEPT INTACT. THE SE COND CATEGORY INCLUDED CASES OTHER THAN THOSE GIVEN IN CATEGORY FIRST. TO PUT IT SIMPLY, IF TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE FIRST ELE VEN MONTHS OF THE PREVIOUS YEAR, THAT IS, UP TO FEBRUARY, 2005, THE D ISALLOWANCE WAS TO BE MADE IF THE ASSESSEE FAILED TO PAY IT BEFORE 31 ST MARCH, 2005. 8. THEN CAME THE AMENDMENT TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2010. THE PROVISION SO AMENDED, NOW READS AS UNDER :- (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB -CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPP LY 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 O R; AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE D ATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCT ED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS A DEDU CTION IN ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 7 OF 14 COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. 9. FROM THE ABOVE PROVISION AS AMENDED BY THE FINAN CE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2010 IT CAN BE SEEN THAT THE ONLY DIFFERENCE WHICH THIS AMENDMENT HAS MADE IS DISPENS ING WITH THE EARLIER TWO CATEGORIES OF DEFAULTS AS PER THE FINANCE ACT, 2008, AS DISCUSSED IN THE EARLIER PARA, CAUSING DISALLOWANCE ON THE BASIS OF THE PERIOD OF THE PREVIOUS YEAR DURING WHICH TAX WAS DEDUCTIBLE. THE FIRST CATEGORY OF DISALLOWANCES INCLUDED THE CASES IN WHICH TAX WAS D EDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT THERE WAS FAILURE TO PAY SUCH TAX ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139. THE FINANCE ACT, 2010 HAS NOT TINKERED WITH THIS POSITION. THE SECOND CATEGORY OF THE FINANCE ACT, 2008 WHICH REQU IRED THE DEPOSIT OF TAX BEFORE THE CLOSE OF THE PREVIOUS YEAR IN CASE OF DE DUCTION DURING THE FIRST ELEVEN MONTHS, AS A PRE-CONDITION FOR THE GRANT OF DEDUCTION IN THE YEAR OF INCURRING EXPENDITURE, HAS BEEN ALTERED. THE HITHER TO REQUIREMENT OF THE ASSESSEE DEDUCTING TAX AT SOURCE DURING THE FIRST E LEVEN MONTHS OF THE PREVIOUS YEAR AND PAYING IT BEFORE THE CLOSE OF THE PREVIOUS YEAR UP TO 3 1 ST MARCH OF THE PREVIOUS YEAR AS A REQUIREMENT FOR GRA NT OF DEDUCTION IN THE YEAR OF INCURRING SUCH EXPENDITURE, HAS BEEN EASED TO EXTEND SUCH TIME FOR PAYMENT OF TAX UP TO DUE DATE U/S 139(1) OF THE ACT . AS PER THE NEW AMENDMENT, THE DISALLOWANCE WILL BE MADE IF AFTER D EDUCTING TAX AT SOURCE, THE ASSESSEE FAILS TO PAY THE AMOUNT OF TAX ON OR B EFORE THE DUE DATE ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 8 OF 14 SPECIFIED IN SUBSECTION (1) OF SECTION 139 OF THE A CT. THE EFFECT OF THIS AMENDMENT IS THAT NOW THE ASSESSEE DEDUCTING TAX EI THER IN THE LAST MONTH OF THE PREVIOUS YEAR OR FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR SHALL BE ENTITLED TO DEDUCTION OF THE EXPENDITURE IN THE YEA R OF INCURRING IT, IF THE TAX SO DEDUCTED AT SOURCE IS PAID ON OR BEFORE THE DUE DATE U/S 139(1). THIS IS THE ONLY DIFFERENCE WHICH HAS BEEN MADE BY THE FINA NCE ACT, 2010. 10. THE QUESTION AS TO WHETHER THE AMENDMENT BY TH E FINANCE ACT, 2010 AS AFORESAID IS PROSPECTIVE OR RETROSPECTIVE F ROM 1.4.2005 CAME UP FOR CONSIDERATION BEFORE THE MUMBAI SPECIAL BENCH I TAT IN THE CASE OF BHARATI SHIPYARD LTD (SUPRA). BEFORE THE SPECIAL BENCH IT WAS ARGUED THAT THE AMENDMENT WAS MADE WITH A VIEW TO REMOVE T HE UNNECESSARY HARDSHIP CAUSED TO THE ASSESSEE BY THE EARLIER PROV ISION. THE SPECIAL BENCH BY ITS ORDER DATED 9.9.2011 HOWEVER HELD THAT THE AMENDMENT CARRIED OUT BY THE FINANCE ACT, 2010 WITH RETROSPEC TIVE EFFECT FROM ASSESSMENT YEAR 2010- 2011 CANNOT BE HELD TO BE RET ROSPECTIVE FROM ASSESSMENT YEAR 2005-2006. THE SPECIAL BENCH HELD T HAT THE AMENDMENT BROUGHT OUT BY THE FINANCE ACT, 2010 TO SECTION 40( A)(IA) W.E.F. 01.04.2010, IS NOT REMEDIAL AND CURATIVE IN NATURE. 11. THE AO FOLLOWING THE DECISION OF THE SPECIAL BE NCH IN THE CASE OF BHARATI SHIPYARD (SUPRA) DISALLOWED A SUM OF RS. RS.29,18,873 INVOK ING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 9 OF 14 12. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREF ERRED APPEAL BEFORE CIT(A). THE CIT(APPEALS) DELETED THE ADDITION MADE BY THE AO FOLLOWING THE DECISION OF THE ITAT BANGALORE BENCH IN THE CAS E OF ACIT V. M.K. GURUMURTHY, ITA NO.717/BANG/2011 REPORTED IN [2012] 52 SOT 84 (BANG-TRI] . IN THE CASE OF M.K.GURUMURTHY (SUPRA), THE ITAT BANGALORE BENCH ON THE ISSUE OF DISALLOWANCE U/S.40 (A)(IA) OF THE ACT FOLLOWED THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS IN ITA NO. 302 OF 2011 GA 3200/2011 DECIDED ON 23.11.2011. 13. PRIOR TO THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BHARATI SHIPYARD ( SUPRA ), IDENTICAL ISSUE WHETHER THE AMENDMENT TO SEC.40( A)(IA) OF THE ACT BY THE FINANCE ACT, 2010 WAS PROSPECTIVE OR RETROSPECTIVE HAD COME UP FOR CONSIDERATION BEFORE THE ITAT KOLKATA B ENCH IN THE CASE OF VIRGIN CREATIONS VS. ITO, WARD 32(4), KOLKATA ITA N O. 267/KOL/2009 FOR AY 05-06. THE ISSUE THAT AROSE FOR CONSIDERATION WAS DISALLOWANCE OF EXPENSES U/S.40(A)(IA) CLAIMED AS D EDUCTION WHILE COMPUTING INCOME FROM BUSINESS BEING EMBROIDERY CHA RGES, DYEING CHARGES, INTEREST ON LOAN AND FREIGHT CHARGES WITHO UT DEDUCTING TAX AT SOURCE. THE EMBROIDERY CHARGES WERE PAID BETWEEN 2 2 ND MAY, 2004 TO 30.11.2004. TAX HAD BEEN DEDUCTED AT SOURCE BUT WE RE PAID TO THE GOVERNMENT ONLY ON 28.10.2005 AND NOT WITHIN THE TI ME CONTEMPLATED BY ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 10 OF 14 SECTION 200(1) OF THE ACT. THE DYEING CHARGES WERE PAID BETWEEN 5.4.2004 TO 20.8.2004. TAX WAS DEDUCTED AT SOURCE BUT WAS PAID TO THE GOVERNMENT ONLY ON 28.10.2005. FREIGHT OUTWARD CHA RGES WERE PAID WITHOUT DEDUCTION OF TAX AT SOURCE. INTEREST ON LO ANS WERE CREDITED TO THE CREDITORS ACCOUNT ON 31.3.2005 TO THE EXTENT THEY W ERE PAID AFTER THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT, THE DISALLOWANCE WAS MADE U/S.40(A)(IA) OF THE ACT. BEFORE THE TRIBUNAL , THE ASSESSEE CONTENTED THAT THE AMENDMENT BY THE FINANCE ACT, 2010 WITH RE TROSPECTIVE EFFECT FROM 1 ST APRIL, 2010 WHEREBY AMOUNT OF TAX DEDUCTED AT THE T IME OF MAKING PAYMENT IN RESPECT OF EXPENDITURE REFERRED TO IN SE C.40(A)(IA) OF THE ACT, IF PAID TO THE GOVERNMENT ON OR BEFORE THE DUE DATE FO R FILING THE RETURN OF INCOME DUE DATE U/S 139(1) OF THE ACT SHOULD BE ALL OWED AS A DEDUCTION. IN OTHER WORDS, IT WAS ARGUED THAT THE AMENDMENT BY THE FINANCE ACT, 2010 TO THE PROVISIONS OF SEC.40(A)(IA) HAS TO BE HELD T O BE RETROSPECTIVE W.E.F. 1- 4-2005. THE ITAT KOLKATA BENCH BY ITS ORDER DATED 15.12.2010, HELD AS FOLLOWS: 8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAR EFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT THAT THOUGH THE LD.D.R. SUBMITTED THAT THE DECISIONS OF THE COORDINATE BENCHES ARE NOT BINDING AND THE KOLKATA BENCHES MAY TAKE A DIFFERENT VIEW, SINCE MUMBAI BENCH AFTER ANALYZING THE PROVISIONS OF SEC.40(A)9IA) SINCE ITS INCEPTION AND VARIOUS AMENDMENTS MADE TO THE SAME INCLUDING THE SUGGESTIO N MADE BY THE INDUSTRY IN THE FORM OF REPRESENTATION IN THEIR PRE-BUDGET MEMORANDUM TO THE HONBLE FINANCE MINISTER AND BY A PPLYING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF ALOM EXTRUSIONS LTD., HAS OBSERVED THAT THE PROVISIONS OF SECTION 40(A)(IA) AS STOOD PRIOR TO THE AMENDMENTS MADE BY THE FINANCE ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 11 OF 14 ACT 2010 THUS WERE RESULTING INTO UNINTENDED CONSEQ UENCES AND CAUSING GRAVE AND GENUINE HARDSHIPS TO THE ASSESSES WHO HAD SUBSTANTIALLY COMPLIED WITH THE RELEVANT TDS PROVIS IONS BY DEDUCTING THE TAX AT SOURCE AND BY PAYING THE SAME TO THE CREDIT OF THE GOVERNMENT BEFORE THE DUE DATE OF FILING OF THEIR RETURNS U/S.139(1). IN ORDER TO REMEDY THIS POSITION AND T O REMOVE THE HARDSHIPS WHICH WAS BEING CAUSED TO THE ASSESSEE BE LONGING TO SUCH CATEGORY, AMENDMENTS HAVE BEEN MADE IN THE PRO VISIONS OF SECTION 40(A)(IA) BY THE FINANCE ACT, 2010. THE SA ID AMENDMENTS, IN OUR OPINION, THUS ARE CLEARLY REMEDI AL/CURATIVE IN NATURE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS PVT. LTD. (SUPRA) AND MOM EXTRUSIONS LTD. (SUPRA) AND THE SAME THEREFORE WOULD APPLY RETROSPECTIVELY W.E.F. 1 ST APRIL, 2005. IN THE CASE OF R.B. JODHA MAL KUTHIAL A 82 ITR 570, IT WAS HELD BY THE HONBLE SUPREME COURT THAT A PRO VISO WHICH IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO M AKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED AS RETRO SPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CAN B E GIVEN TO THE SECTION AS A WHOLE. IN THE PRESENT CASE, THE AMOUN T OF TAX DEDUCTED AT SOURCE FROM THE FREIGHT CHARGES DURING THE PERIOD 01/04/2005 TO 28/02/2006 WAS PAID BY THE ASSESSEE IN THE MONTH OF JULY AND AUGUST 2006 I.E., WELL BEFORE THE DUE D ATE OF FILING OF ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON. THIS BEING THE UNDISPUTED POSITION, WE HOLD THAT THE DISALLOWA NCE MADE BY THE A.O. AND CONFIRMED BY THE LEARNED CIT(A) ON ACC OUNT OF FREIGHT CHARGES BY INVOKING THE PROVISIONS OF SECTI ON 40(A)(IA) IS NOT SUSTAINABLE AS PER THE AMENDMENTS MADE IN THE S AID PROVISIONS BY THE FINANCE ACT, 2010 WHICH, BEING REMEDIAL/CURATIVE IN NATURE, HAVE RETROSPECTIVE APP LICATION, WE FIND NO REASON TO DEVIATE FROM THE DECISIONS OF THE ITATS MUMBAI BENCH AND AHMEDABAD BENCH, IN THE ABSENCE OF A CONTRARY VIEW, EXCEPT THE OTHER BENCHES DECISIONS O R ANY OTHER HIGH COURT. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCHES (SUPRA), WE ALLOW THE GROUND NOS . I TO 3 OF THE ASSESSEES APPEAL. 14. AS AGAINST THE AFORESAID DECISION THE REVENUE P REFERRED APPEAL BEFORE THE HONBLE CALCUTTA HIGH COURT. THE HONBL E CALCUTTA HIGH COURT ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 12 OF 14 IN ITA NO. 302 OF 2011 GA 3200/2011 DECIDED ON 23.11.2011 , HELD AS FOLLOWS: WE HAVE HEARD MR. NIZAMUDDIN AND GONE THROUGH THE IMPUGNED JUDGMENT AND ORDER. WE HAVE ALSO EXAMINED THE POINT FORMULATED FOR WHICH THE PRESENT APPEAL IS SOUGHT TO BE ADMITT ED. IT IS ARGUED BY MR. NIZAMUDDIN THAT THIS COURT NEEDS TO TAKE DEC ISION AS TO WHETHER SECTION 40(A)(IA) IS HAVING RETROSPECTIVE O PERATION OR NOT. THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSE E HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PER IOD APRIL 1, 2005 AND APRIL 28, 2006 AND THE SAME WERE PAID BY T HE ASSESSEE IN JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE D ATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON. THIS FACTUAL POSITION WAS UNDISPUTED. MOREOVER, THE SUPREME COUR T, AS HAS BEEN RECORDED BY THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT. LTD. AND ALSO IN THE CASE OF ALOM EXTRU SIONS LTD., HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HA S RETROSPECTIVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME COURT HELD THAT THE PROVISION, WHICH HAS IN SERTED THE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DED UCTION CAN BE GIVEN TO THE SECTION AS WELL. IN VIEW OF THE AUTHOR ITATIVE PRONOUNCEMENT OF THE SUPREME COURT, THIS COURT CANN OT DECIDE OTHERWISE. HENCE WE DISMISS THE APPEAL WITHOUT ANY ORDER AS TO COSTS. 15. FOLLOWING THE DECISION OF THE HONBLE CALCUTTA HIGH COURT, THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF M.K. GURUMURTHY (SUPRA) HAD HELD THAT TAX DEDUCTED AT SOURCE, IF IT IS PAID ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME, WILL NOT ATTRACT DISAL LOWANCE U/S. 40(A)(IA) OF THE ACT. IN OTHER WORDS, IT WAS HELD THAT THE AMENDMEN T BY THE FINANCE ACT, 2010 WAS RETROSPECTIVE FROM 01.04.2005. ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 13 OF 14 16. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE REVENUE HAS PREFERRED THE APPEAL BEFORE THE TRIBUNAL. 17. BEFORE US IT WAS SUBMITTED BY THE LD. DR THAT T HE DEPARTMENT HAS ALREADY FILED AN APPEAL BEFORE THE HONBLE HIGH COU RT ON THE ISSUE AND THEREFORE THE REVENUE HAS FILED THE PRESENT APPEAL TO KEEP THE ISSUE ALIVE. 18. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE DEC ISION RENDERED BY THE TRIBUNAL IN THE CASE OF M.K. GURUMURTHY (SUPRA) , THE ORDER OF THE CIT(A) HAS TO BE UPHELD. WE MAY ALSO ADD THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF RAJINDER KUMAR IN ITA NO.65/2013 DATED 01.07.2013 , HAS ALSO TAKEN A SIMILAR VIEW. THEREFORE, WE ARE OF TH E VIEW THAT THE ORDER OF THE CIT(APPEALS) DOES NOT CALL FOR ANY INTERFERENCE . 19. IN THE RESULT, THE APPEAL AS WELL AS THE CROSS OBJECTION IS DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF NOVEMBER, 2013. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 12 TH NOVEMBER, 2013. /D S/ ITA NO.352/BANG/2013 & CO 94/BANG/2013 PAGE 14 OF 14 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.