M/S N. M. ROOF DESIGNERS LTD, JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX , JAIPUR

ITA 03/JPR/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9485 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 01-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA JCIT DHK
• Assessee Lawyers: N S VYAS
• Keywords: Retrospective amendment
• Section: 43B; 40(a)(ia)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S B, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 03/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2013-14 M/S N.M. ROOF DESIGNERS LTD., 467, ACHARAYA KRIPLANI MARG, NEAR MOTI DOONGRI POLICE STATION, 20 DUKAN, JAIPUR. CUKE VS. D.C.I.T., CIRCLE-2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACN 6388 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI N.S. VYAS (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI ASHOK KHANNA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20/12/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 20/12/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23/11/2017 OF LD. CIT(A)-I, JAIPUR FOR THE A.Y. 201 3-14. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE AUTHORITIES BELOW HAVE ERRED IN DISALL OWING U/S 40(A)(IA) OF THE IT ACT, 1961 OUT OF INTEREST EXPENSES AMOUNT ING TO RS. 37,15,215/-. 2. THAT THE AUTHORITIES BELOW HAVE FURTHER ERRED IN DISALLOWING U/S 40(A)(IA) OF THE IT ACT, 1961 OUT OF ADVERTISEMENT EXPENSES AMOUNT TO RS. 2,43,750/-. ITA 03/JP/2018_ M/S N.M. ROOF DESIGNERS VS. DCIT 2 3. THAT THE PENALTY SO IMPOSED BY THE AUTHORITIES B ELOW IS BAD IN LAW AS WELL AS ON FACTS. 4. THAT THE PETITIONER CRAVES TO ADD, ALTER OR AMEN D ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 2. GROUND NO. 1 OF THE APPEAL IS REGARDING DISALLOWA NCE OF INTEREST PAYMENT TO THE NON BANKING FINANCIAL CORPORATIONS ( NBFCS) U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR WANT OF TDS. THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE OF RS. 37,15,215/- TO NBFCS SINCE NO TDS WAS DEDUCTED BY THE ASSESSEE PRIOR TO THE PAYMENT OR CREDIT OF THE SAID INTEREST AMOUNT, THE ASSESSIN G OFFICER INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND MADE DISALLOWANCE OF THE SAID AMOUNT OF RS. 37,15,215/-. 3. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) AND SUBMITTED THAT SINCE THE PAYMENT WAS MADE TO THE NBFCS, WHO HAVE FURNISHED THE RETURN OF INCOME AND P AID THE TAX, THEREFORE, IN VIEW OF PROVISO TO SECTION 40(A)(IA) R EAD WITH PROVISO TO SECTION 201 OF THE ACT, NO DISALLOWANCE IS CALLED FO R U/S 40(A)(IA) OF THE ACT. THE LD. CIT(A) DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT FILED ANY CERTIFIC ATE FROM THE CONCERNED PERSONS TO WHOM INTEREST HAS BEEN PAID WITHOUT DEDUC TION OF TAX AT ITA 03/JP/2018_ M/S N.M. ROOF DESIGNERS VS. DCIT 3 SOURCE. ACCORDINGLY, THE ADDITION MADE BY THE ASSES SING OFFICER WAS CONFIRMED. 4. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THE INTEREST WAS PAID TO THE NBFCS AND SINCE THE NBFCS A RE REGULARLY ASSESSED TO TAX AND FILING THEIR RETURNS OF INCOME, THEREFORE, IN VIEW OF PROVISO TO SECTION 40(A)(IA) READ WITH PROVISO TO SE CTION 201 OF THE ACT, THERE IS COMPLIANCE U/S 40(A)(IA) OF THE ACT AND CO NSEQUENTLY NO DISALLOWANCE OF THE SAID INTEREST IS CALLED FOR. THE LD AR HAS RELIED UPON THE DECISION OF THE BANGALORE BENCHES OF THE TRIBUNA L IN THE CASE OF SHRI AZMATH ULLA VS. ACIT DATED 07/06/2017 IN ITA NO. 14 4/BANG/2017. 5. ON THE OTHER HAND, THE LD DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT ONCE THE ASSESS EE HAS FAILED TO FILE THE CERTIFICATE FROM THE CONCERNED PERSONS TO WHOM I NTEREST HAS BEEN PAID TO SHOW THAT THE AMOUNT OF INTEREST WAS CONSIDER ED IN COMPUTATION OF THE INCOME AND OFFERED TO TAX IN THE RETURN OF I NCOME FILED BY THE RECIPIENTS. THE ASSESSEE CANNOT BE GIVEN BENEFIT OF PROVISO TO SECTION 40(A)(IA) READ WITH PROVISO TO SECTION 201 OF THE AC T. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS PAID INTEREST O F RS. 37,15,215/- TO THREE NBFCS AS UNDER: ITA 03/JP/2018_ M/S N.M. ROOF DESIGNERS VS. DCIT 4 1. MONELINES CREDIT LTD. RS. 33,53,846/- 2. RELIANCE CRUZE LOANS RS. 1,29,510/- 3. MBW FINANCIAL SERVICES RS. 2,31,859/- THERE IS NO DISPUTE THAT THE ASSESSEE HAS NOT DEDUCT ED TAX AT SOURCE IN RESPECT OF THE INTEREST PAID TO THE NBFCS, HOWEVER, IT IS ALSO NOT IN DISPUTE THAT THE INTEREST PAID TO THE NBFCS IS MOST LIKELY TO BE PART OF THEIR INCOME OFFERED TO TAX. THE ONLY REQUIREMENT FO R TAKING THE BENEFIT OF PROVISO TO SECTION 40(A)(IA) READ WITH PROVISO TO SECTION 201 OF THE ACT IS THAT THE ASSESSEE SHOULD FILE THE CERTIFICATE OF THE CONCERNED PERSONS IN FORM NO. 26A TO THE EFFECT THAT THE AMOUNT OF INTER EST HAS BEEN TAKEN INTO ACCOUNT WHILE FILING THE RETURN OF INCOME BY T HE RECIPIENT. THE BANGALORE BENCHES OF THE TRIBUNAL IN THE CASE OF SH RI AZMATH ULLA VS ACIT (SUPRA) HAS CONSIDERED AN IDENTICAL ISSUE IN PA RA 5 AND 6 AS UNDER: 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. AS REGARDS THE APPLICABILITY OF THE SECOND PROVISO TO SECTION 40(A)(IA) RETROSPECTIVELY AN IDENTICAL ISSUE WAS CO NSIDERED BY THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS NARESH KUMAR (36 2 ITR 256) AND HELD THAT THE PROVISO INSERTED IN SECTION 40(A)(IA) IS A N EXPLANATORY AND REMEDIAL IN NATURE AND THEREFORE WILL BE APPLICABLE WITH RETROSPECTIVE EFFECT IN PARA 26 TO 29 AS UNDER. 26. PRINCIPLE OF MATCHING WHICH IS DISTURBED BY SE CTION 40(A)(IA) OF THE ACT, MAY NOT MATERIALLY BE OF CONSEQUENCE TO THE REVENUE WHEN THE TAX RATES ARE STABLE AND UNIFORM OR IN CASES OF BIG ASSESSEES HAVING SUBSTANTIAL TURNOVER AND EQUALLY HUGE EXPENSES AS THEY HAVE NEC ESSARY CUSHION TO ABSORB THE EFFECT. HOWEVER, MARGINAL AND MEDIUM TAX PAYERS, WHO WORK AT LOW G.P. RATE AND WHEN EXPENDITURE WHICH BECOMES SU BJECT-MATTER OF AN ITA 03/JP/2018_ M/S N.M. ROOF DESIGNERS VS. DCIT 5 ORDER UNDER SECTION 40(A)(IA) IS SUBSTANTIAL, CAN S UFFER SEVERE ADVERSE CONSEQUENCES AS IS APPARENT FROM THE CASE OF NARESH KUMAR. TRANSFERRING OR SHIFTING EXPENSES TO A SUBSEQUENT YEAR, IN SUCH CASES, WILL NOT WIPE OFF THE ADVERSE EFFECT AND THE FINANCIAL STRESS. NEVERT HELESS THE SECTION 40(A)(IA) HAS TO BE GIVEN FULL PLAY KEEPING IN MIND THE OBJECT AND PURPOSE BEHIND THE SECTION. AT THE SAME TIME, THE PROVISION CAN BE AND SHOULD BE INTERPRETED LIBERALLY AND EQUITABLE SO THAT AN ASSE SSEE SHOULD NOT SUFFER UNINTENDED AND DELETERIOUS CONSEQUENCES BEYOND WHAT THE OBJECT AND PURPOSE OF THE PROVISION MANDATES. CASE OF NARESH K UMAR IS NOT ONE OF RARE CASES, BUT ONE OF SEVERAL CASES AS WE FIND THAT SEC TION 40(A)(IA) IS INVOKED IN LARGE NUMBER OF CASES. 27. ONE IMPORTANT CONSIDERATION IN CONSTRUING A MA CHINERY SECTION IS THAT IT MUST BE SO CONSTRUED SO AS TO EFFECTUATE THE LIABIL ITY IMPOSED BY THE CHARGING SECTION AND TO MAKE THE MACHINERY WORKABLE . HOWEVER, WHEN THE MACHINERY SECTION RESULTS IN UNINTENDED OR HARSH CO NSEQUENCES WHICH WERE NOT INTENDED, THE REMEDIAL OR CORRECTION ACTION TAK EN IS NOT TO BE DISREGARDED BUT GIVEN DUE REGARD. 28. IT IS, IN THIS CONTEXT, THAT WE HAD IN RAJINDE R KUMAR'S CASE (SUPRA) OBSERVED AS UNDER: '22. NOW, WE REFER TO THE AMENDMENTS WHICH HAVE BE EN MADE BY THE FINANCE ACT, 2010 AND THE EFFECT THEREOF. WE HAVE A LREADY QUOTED THE DECISION OF THE CALCUTTA HIGH COURT IN VIRGIN CREAT IONS (SUPRA). THE SAID DECISION REFERS TO THE EARLIER DECISION OF THE SUPR EME COURT IN THE CASE OF ALLIED MOTORS (P.) LTD(SUPRA) AND COMMISSIONER OF I NCOME TAX V. ALOM EXTRUSIONS LTD, [2009] 319 ITR 306 (SC). IN THE CAS E OF ALLIED MOTORS (P.) LTD. (SUPRA), THE SUPREME COURT WAS EXAMINING THE FIRST PROVISO TO SECTION 43B AND WHETHER IT WAS RETROSPECTIVE. SECTION 43B WAS I NSERTED IN THE ACT WITH EFFECT FROM 1ST APRIL 1984 FOR CURBING CLAIMS OF TA XPAYERS WHO DID NOT DISCHARGE OR PAY STATUTORY LIABILITIES BUT CLAIMED DEDUCTIONS ON THE GROUND THAT THE STATUTORY LIABILITY HAD ACCRUED. SECTION 4 3B STATES THAT THE STATUTORY LIABILITY WOULD BE ALLOWED AS A DEDUCTION OR AS AN EXPENSE IN THE YEAR IN WHICH THE PAYMENT WAS MADE AND WOULD NOT BE ALLOWED, EVEN IN CASES OF MERCANTILE SYSTEM OF ACCOUNTANCY, IN THE Y EAR OF ACCRUAL. IT WAS NOTICED THAT IN SOME CASES HARDSHIP WOULD BE CAUSED TO ASSESSEES, WHO PAID THE STATUTORY DUES WITHIN THE PRESCRIBED PERIO D THOUGH THE PAYMENTS SO MADE WOULD NOT FALL WITHIN THE RELEVANT PREVIOUS YEAR. ACCORDINGLY, A PROVISO WAS ADDED BY FINANCE ACT, 1987 APPLICABLE W ITH EFFECT FROM 1ST APRIL, 1988. THE PROVISO STIPULATED THAT WHEN STATU TORY DUES COVERED BY SECTION 43B WERE PAID ON OR BEFORE THE DUE DATE FOR FURNISHING OF THE RETURN UNDER SECTION 139(1), THE DEDUCTION/EXPENSE, EQUAL TO THE AMOUNT PAID ITA 03/JP/2018_ M/S N.M. ROOF DESIGNERS VS. DCIT 6 WOULD BE ALLOWED. THE SUPREME COURT NOTICED THE PUR POSE BEHIND THE PROVISO AND THE REMEDIAL NATURE OF THE INSERTION MA DE. OF COURSE, THE SUPREME COURT ALSO REFERRED TO EXPLANATION 2 WHICH WAS INSERTED BY FINANCE ACT, 1989 WHICH WAS MADE RETROSPECTIVE AND WAS TO TAKE EFFECT FROM 1ST APRIL, 1984. HIGHLIGHTING THE OBJECT BEHIN D SECTION 43B, IT WAS OBSERVED THAT THE PROVISO MAKES THE PROVISION WORKA BLE, GIVES IT A REASONABLE INTERPRETATION. IT WAS ELUCIDATED: '12. IN THE CASE OF GOODYEAR INDIA LTD. V. STATE O F HARYANA THIS COURT SAID THAT THE RULE OF REASONABLE CONSTRUCTION MUST BE AP PLIED WHILE CONSTRUING A STATUTE. LITERAL CONSTRUCTION SHOULD BE AVOIDED IF IT DEFEATS THE MANIFEST OBJECT AND PURPOSE OF THE ACT. 13. THEREFORE, IN THE WELL-KNOWN WORDS OF JUDGE LE ARNED HAND, ONE CANNOT MAKE A FORTRESS OUT OF THE DICTIONARY; AND SHOULD R EMEMBER THAT STATUTES HAVE SOME PURPOSE AND OBJECT TO ACCOMPLISH WHOSE SY MPATHETIC AND IMAGINATIVE DISCOVERY IS THE SUREST GUIDE TO THEIR MEANING. IN THE CASE OF R.B. JUDHA MAL KUTHIALA V. CIT, THIS COURT SAID THA T ONE SHOULD APPLY THE RULE OF REASONABLE INTERPRETATION. A PROVISO WHICH IS IN SERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION W ORKABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION A ND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE I NTERPRETATION, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CAN BE GIVEN TO THE SECTION AS A WHOLE. 14. THIS VIEW HAS BEEN ACCEPTED BY A NUMBER OF HIG H COURTS. IN THE CASE OF CIT V. CHANDULAL VENICHAND, THE GUJARAT HIGH COURT HAS HELD THAT THE FIRST PROVISO TO SECTION 43-B IS RETROSPECTIVE AND SALES TAX FOR THE LAST QUARTER PAID BEFORE THE FILING OF THE RETURN FOR THE ASSESS MENT YEAR IS DEDUCTIBLE. THIS DECISION DEALS WITH ASSESSMENT YEAR 1985-85. T HE CALCUTTA HIGH COURT IN THE CASE OF CIT V. SRI JAGANNATH STEEL CORPN. HA S TAKEN A SIMILAR VIEW HOLDING THAT THE STATUTORY LIABILITY FOR SALES TAX ACTUALLY DISCHARGED AFTER THE EXPIRY OF THE ACCOUNTING YEAR IN COMPLIANCE WITH TH E RELEVANT STATUTE IS ENTITLED TO DEDUCTION UNDER SECTION 43-B. THE HIGH COURT HAS HELD THE AMENDMENT TO BE CLARIFICATORY AND, THEREFORE, RETRO SPECTIVE. THE GUJARAT HIGH COURT IN THE ABOVE CASE HELD THE AMENDMENT TO BE CURATIVE AND EXPLANATORY AND HENCE RETROSPECTIVE. THE PATNA HIGH COURT HAS ALSO HELD THE AMENDMENT INSERTING THE FIRST PROVISO TO BE EXP LANATORY IN THE CASE OF JAMSHEDPUR MOTOR ACCESSORIES STORES V. UNION OF IND IA. THE SPECIAL LEAVE PETITION FROM THIS DECISION OF THE PATNA HIGH COURT WAS DISMISSED. THE VIEW OF THE DELHI HIGH COURT, THEREFORE, THAT THE FIRST PROVISO TO SECTION 43-B WILL BE AVAILABLE ONLY PROSPECTIVELY DOES NOT APPEAR TO BE CORRECT. AS OBSERVED BY G.P. SINGH IN HIS PRINCIPLES OF STATUTORY INTERP RETATION, 4TH EDN. AT P. 291: ITA 03/JP/2018_ M/S N.M. ROOF DESIGNERS VS. DCIT 7 'IT IS WELL-SETTLED THAT IF A STATUTE IS CURATIVE O R MERELY DECLARATORY OF THE PREVIOUS LAW RETROSPECTIVE OPERATION IS GENERALLY I NTENDED.' IN FACT THE AMENDMENT WOULD NOT SERVE ITS OBJECT IN SUCH A SITU ATION UNLESS IT IS CONSTRUED AS RETROSPECTIVE. THE VIEW, THEREFORE, TA KEN BY THE DELHI HIGH COURT CANNOT BE SUSTAINED. ' 23. SECTION 43B DEALS WITH STATUTORY DUES AND ST IPULATES THAT THE YEAR IN WHICH THE PAYMENT IS MADE THE SAME WOULD BE ALLOWED AS A DEDUCTION EVEN IF THE ASSESSEE IS FOLLOWING THE MERCANTILE SY STEM OF ACCOUNTANCY. THE PROVISO, HOWEVER, STIPULATES THAT DEDUCTION WOULD B E ALLOWED WHERE THE STATUTORY DUES COVERED BY SECTION 43B STAND PAID ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. SECTION 40(A)(IA) IS APPLICABLE TO CASES WHERE AN ASSESSEE IS REQUIRED TO DEDUCT TAX AT SOURCE AND FAILS TO DEDUCT OR DOES NOT MAKE PAYMENT OF THE TDS BEFORE THE DUE DATE, IN SUCH CASES, NOTWITHSTANDING SECTIONS 30 TO 38 OF THE ACT, DEDUC TION IS TO BE ALLOWED AS AN EXPENDITURE IN THE YEAR OF PAYMENT UNLESS A CASE IS COVERED UNDER THE EXCEPTIONS CARVED OUT. THE AMENDED PROVISO AS INSER TED BY FINANCE ACT, 2010 STATES WHERE AN ASSESSEE HAS MADE PAYMENT OF T HE TDS ON OR BEFORE THE DUE DATE OF FILING OF THE RETURN UNDER SECTION 139(1), THE SUM SHALL BE ALLOWED AS AN EXPENSE IN COMPUTING THE INCOME OF TH E PREVIOUS YEAR. THE TWO PROVISIONS ARE AKIN AND THE PROVISOS TO SECTION S 40(A)(IA) AND 43B ARE TO THE SAME EFFECT AND FOR THE SAME PURPOSE. 24. IN PODAR CEMENT (P.) LTD. (SUPRA), THE SUPREME COURT CONSIDERED WHETHER TERM 'OWNER' WOULD INCLUDE UNREGISTERED OWN ERS WHO HAD PAID SALE CONSIDERATION AND WERE COVERED BY SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THE CONTENTION OF THE ASSESSEES WAS T HAT THE AMENDMENTS MADE TO THE DEFINITION OF TERM 'OWNER' BY FINANCE B ILL, 1987 SHOULD BE GIVEN RETROSPECTIVE EFFECT. IT WAS HELD THAT THE AM ENDMENTS WERE RETROSPECTIVE IN NATURE AS THEY RATIONALISE AND CLE AR THE EXISTING AMBIGUITIES AND DOUBTS. REFERENCE WAS MADE TO CRAWFORD: 'STATUT ORY CONSTRUCTION' AND 'THE PRINCIPLE OF DECLARATORY STATUTES', FRANCI S BENNION: 'STATUTORY INTERPRETATION', JUSTICE G.P. SINGH'S 'PRINCIPLES O F STATUTORY INTERPRETATION', IT WAS OBSERVED THAT SOMETIMES AMENDMENTS ARE MADE TO SUPPLY AN OBVIOUS OMISSION OR TO CLEAR UP DOUBTS AS TO THE ME ANING OF THE PREVIOUS PROVISION. THE ISSUE WAS ACCORDINGLY DECIDED HOLDIN G THAT IN SUCH CASES THE AMENDMENTS WERE RETROSPECTIVE THOUGH IT WAS NOTICED THAT AS PER TRANSFER OF PROPERTY ACT, REGISTRATION ACT, ETC. A LEGAL OWN ER MUST HAVE A REGISTERED DOCUMENT. 25. IN VIEW OF THE AFORESAID DISCUSSION IN PARAS 18,19 AND 20, IT IS APPARENT THAT THE RESPONDENT ASSESSEE DID NOT VIOLATE THE UN AMENDED SECTION 40(A)(IA) OF THE ACT. WE HAVE NOTED THE AMBIGUITY A ND REFERRED THEIR ITA 03/JP/2018_ M/S N.M. ROOF DESIGNERS VS. DCIT 8 CONTENTION OF REVENUE AND REJECTED THE INTERPRETATI ON PLACED BY THEM. THE AMENDED PROVISIONS ARE CLEAR AND FREE FROM ANY AMBI GUITY AND DOUBT. THEY WILL HELP CURTAIL LITIGATION. THE AMENDED PROVISION CLEARLY SUPPORT VIEW TAKEN IN PARAGRAPHS 17 - 20 THAT THE EXPRESSION 'SA ID DUE DATE' USED IN CLAUSE A OF PROVISO TO UNAMENDED SECTION REFERS TO TIME SPECIFIED IN SECTION 139(1) OF THE ACT. THE AMENDED SECTION 40(A)(IA) EX PANDS AND FURTHER LIBERALISES THE STATUTE WHEN IT STIPULATES THAT DED UCTIONS MADE IN THE FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR BUT PAID BEFORE THE DUE DATE OF FILING OF THE RETURN, WILL CONSTITUTE SUFFICIENT COMPLIANCE.' 29. IN VIEW OF THE AFORESAID DISCUSSION, WE DO NOT FIND ANY MERIT IN THE PRESENT APPEALS FILED BY THE REVENUE AND THEY ARE D ISMISSED. 6. HAVING HELD THAT THE SECOND PROVISO TO SECTION 40(A)(IA) SHALL HAVE RETROSPECTIVE EFFECT THE QUESTION ARISES THAT IF TH E RECIPIENTS OF INTEREST IN QUESTION HAVE ALREADY CONSIDERED THE SAME FOR COMPU TING THEIR INCOME OFFERED TO TAX THEN THE DISALLOWANCE U/S. 40(A)(IA) IS NOT ATTRACTED. IN THIS CASE THOUGH THE ASSESSEE DID NOT FILE THE RELEVANT MATERIAL BEFORE THE AO IN THIS REGARD HOWEVER, IT IS A FACT WHICH EXISTED RIGHT FROM THE BEGINNING AND THE RELEVANT DETAILS ARE AVAILABLE WITH THE REV ENUE REGARDING THE INCOME OFFERED BY THESE NBFCS. THEREFORE, IN VIEW O F THE FACTS AND CIRCUMSTANCES OF THE CASE IF THE CERTIFICATES FILED IN SUPPORT OF THE CLAIM THAT THE NBFCS HAVE INCLUDED THIS AMOUNT OF INTERES T IN COMPUTATION OF THEIR INCOME OFFERED TO TAX ARE FOUND TO BE CORRECT THEN THE COMPLIANCE U/S. 40(A)(IA) IS DEEMED TO HAVE BEEN MADE AND NO D ISALLOWANCE IS CALLED FOR. THEREFORE THIS ISSUE IS SET ASIDE TO THE RECOR D OF THE AO FOR VERIFICATION OF THE FACT THAT THE RECIPIENT NBFCS HAVE ALREADY T AKEN INTO ACCOUNT THE AMOUNT OF INTEREST RECEIVED BY THEM FOR COMPUTING T HE INCOME IN THEIR RETURN OF INCOME. IN CASE THE AO IS SATISFIED THAT THE NBFCS HAVE CONSIDERED THIS AMOUNT FOR COMPUTATION OF INCOME IN THEIR RETURN OF INCOME THEN NO DISALLOWANCE IS CALLED FOR U/S. 40(A )(IA). ACCORDINGLY, THE MATTER IS SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER FOR VERIFICATION OF THE FACT THAT THE RECIPIENTS NB FCS HAS ALREADY TAKEN ITA 03/JP/2018_ M/S N.M. ROOF DESIGNERS VS. DCIT 9 INTO ACCOUNT THE AMOUNT OF INTEREST RECEIVED BY THE M IN THEIR TOTAL INCOME DECLARED IN THE RETURN OF INCOME AND PAID TH E TAX. THE ASSESSEE IS ALSO DIRECTED TO FURNISH THE REQUISITE INFORMATI ON FOR VERIFICATION OF THE FACT. 7. GROUND NO. 2 OF THE APPEAL IS REGARDING THE DISA LLOWANCE OF ADVERTISEMENT EXPENDITURE U/S 40(A)(IA) OF THE ACT. 8. AT THE TIME OF HEARING, THE LD AR OF THE ASSESS EE HAS STATED AT BAR THAT THE ASSESSEE DOES WANT TO PRESS GROUND NO. 2 AN D THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD DR HAS RAISED NO OB JECTION IF GROUND NO. 2 OF THE ASSESSEES APPEAL IS DISMISSED AS NOT PRESSED. ACCORDINGLY, GROUND NO. 2 OF THE ASSESSEES APPEAL IS DISMISSED BEING NOT PRESSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20 TH DECEMBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S N.M. ROOF DESIGNERS LTD., JAIPUR. ITA 03/JP/2018_ M/S N.M. ROOF DESIGNERS VS. DCIT 10 2. IZR;FKHZ @ THE RESPONDENT- THE J D.C.I.T., CIRCLE-2, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 03/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR