PRAKASH CHAND KYADAV, Jaipur V. DCIT, Jaipur

ITA 1036/JPR/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6323 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 28-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A S NEHRA JCIT DR DHK
• Assessee Lawyers: R S POONIA
• Keywords: Rule of consistency; Retrospective amendment; Non-deduction of tax; Non compliance; Right to appeal
• Section: 43B; 194C; 12

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,O JH HKKXPUN] YS[KK LNL; LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM VK;DJ VIHY LA-@ ITA NO. 1036/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2013-14 SHRI PRAKASH CHAND YADAV 433M AMAR NAGAR-C, SIRSI ROAD BISSHNAWALA, PANCHYAWALA, JAPUR CUKE VS. THE DCIT CIRCLE 3 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AADPY 2864 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI R.S. POONIA, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI A.S. NEHRA, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12/07/2018 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 18 /07/2018 VKNS'K@ ORDER PER BHAGCHAND, AM THE APPEAL FILED BY THE ASSESSEE EMANATES FROM T HE ORDER OF THE LD. CIT(A)-1, JAIPUR DATED 27-09-2016 FOR THE AS SESSMENT YEAR 2013- 14 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING DISALLOW ANCE OF LABOUR PAYMENTS OF RS. 5,97,060/- U/S 40(A)(IA) OF THE I.T. ACT, 1961 TREATING AS CONTRACT PAYMENTS WITHOUT TAX DEDUCTION AT SOURCE. 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING DISALLOWA NCE OF INTEREST PAYMENTS OF RS.2,20,851/- U/S 40(A)(IA) OF I.T. ACT, 1961 FOR NON-DEDUCTION OF TAX AT SOURCE. ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 2 2.1 APROPOS GROUND NO. 1 AND 2 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) ARE AS UNDER:- (I) THE BRIEF FACTS ARE THAT DURING THE YEAR UNDER CONSIDERATION THE APPELLANT CLAIMED PAYMENT OF RS. 5,97,060/- TO THREE PERSONS FOR LABOUR PAYMENTS WIT HOUT DEDUCTION OF TAX AT SOURCE. FURTHER, IT PAID INTERE ST OF RS. 2,20,851/- TO M/S. INDIA INFOLINE FINANCE LTD (NBFC ) WITHOUT DEDUCTION OF TAX AT SOURCE. THE AO INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND MADE ADDITION OF RS. 5,97,060/- AND RS. 2,20,851/- TO THE INCOME OF THE APPELLANT. (II) DURING THE APPELLATE PROCEEDINGS REGARDING THE LABOUR PAYMENTS, IT WAS SUBMITTED BY THE APPELLANT THAT TH ESE PAYMENTS WERE RELATED TO CHOKTI PAYMENT AND THESE W ERE MADE THROUGH THREE PERSON AND THERE WAS NO REQUIREM ENT IN LAW TO DEDUCT TDS ON SUCH PAYMENT U/S 194C OF THE A CT. REGARDING INTEREST PAYMENT, IT WAS SUBMITTED BY THE APPELLANT THAT THE INTEREST PAID TO M/S. INDIA INFO LINE FINANCE LTD. WAS DECLARED BY NBFC IN ITS BOOKS OF ACCOUNT A ND SHOWN AS ITS INCOME AND TAX HAS BEEN PAID THEREOF B Y THE SAID NBFC ON SUCH INTEREST RECEIPT. IT WAS FURTHER SUBMITTED THAT THE INTEREST WAS PAID DURING THE FINANCIAL YEA R ITSELF AND NOTHING WAS PAYABLE AT THE END OF THE YEAR WHILE SE CTION 40(A)(IA) OF THE ACT APPLIES ON THE AMOUNT REMAININ G PAYABLE AT THE END OF THE YEAR. (III) I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER AND THE MATERIAL PLACED ON RECORD. IT MAY BE MENTIONED THAT AS PER PROVISIONS OF SECTION 194C OF THE ACT, TAX IS REQUIRED TO BE DEDUCTED AT SOURCE BY ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY CO NTRACTOR FOR CARRYING OUT ANY WORK INCLUDING SUPPLY OF LABO UR. IT IS AN UNDISPUTED FACT THAT THE APPELLANT PAID A TOTAL SUM OF RS. 5,97,060/- TO THREE PERSONS FOR SUPPLY OF LABOUR, I T DOES NOT MATTER WHETHER THE SAID ORGANIZED THE REQUIRED LABO UR FROM CHOWK (CHOKTI LABOUR) OR FROM THE LABOUR EMPLOYED B Y THE SAID PERSON. THE CRUX OF THE MATTER IS THAT THE APP ELLANT PAID ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 3 AMOUNT OF RS. 5,97,060/- FOR SUPPLY OF LABOUR WITHO UT MAKING TDS THEREOF, THUS THE PROVISIONS OF SECTION 40(A)(IA) ARE CLEARLY APPLICABLE TO THE INSTANT CASE UNDER CO NSIDERATION. IT WAS THE CONTENTION OF THE APPELLANT THAT THE INT EREST PAYMENT HAS BEEN PAID DURING THE YEAR UNDER CONSIDE RATION AND NOTHING WAS PAYABLE AT THE END OF THE YEAR AND THUS THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE NOT APPLICABLE. (IV) IT IS TO BE NOTED THAT IN A RECENT DECISION DA TED 29-04- 2015 IN THE CASE OF P.M.S. DIESELS VS CIT (2015) 93 CCH PHHC/(2015) 227 CTR 0401 (P&H), THE HON'BLE HIGH COURT OF PUNJAB & HARYANA AFTER CONSIDERING THE CAS ES OF CIT VS VECTOR SHIPPING SERVICES (P) LTD (2013), 262 CTR (ALL.), V.M. SALGAOCAR & BROS. (P) LTD. ETC. VS CI T, ETC (2002) 243 ITR 383 (SC), ACIT VS MERILYN SHIPPING & TRANSPORTERS 136 ITD 23 (SB) (VISHAKHAPATNAM), TUBE INVESTMENT OF INDIA LTD AND ANOTHER VS ACIT (TDS) A ND OTHERS, (2010) 325 ITR 610 (MAD) HELD THAT: THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 ARE APPLICABLE NOT ONLY TO THE AMOUNT WHICH IS SHOWN AS PAYABLE ON THE DATE OF BALANCE SH EET, BUT IT IS APPLICABLE TO SUCH EXPENDITURE WHICH BECOME PAYABLE AT ANY TIME DURING THE RELEVANT PREVIOUS YEAR AND WAS ACTU ALLY PAID WITHIN THE PREVIOUS YEAR. IN THE RESULT, THE QUESTI ON IS DECIDED IN FAVOUR OF REVENUE AND AGAINST THE ASSESSEE. (V) THE SAME WAS VIEW WAS TAKEN BY THE HON'BLE CALC UTTA HIGH COURT IN THE CASE OF LD. CIT VS CRESCENT EXPOR T SYNDICATE (2013) 216 TAXMAN 258 (CALCUTTA) WHEREIN IT WAS HELD THAT: IT IS NOTICEABLE THAT SECTION 40(A)(IA) IS APPLICABLE IRRESPECTIVE OF THE METHOD OF ACCOUNTING FOLLOWED BY AN ASSESSEE. THEREFORE, BY USING THE TE RM PAYABLE LEGISLATURE INCURRED THE ENTIRE ACCRUED LIABILITY. IF ASSESSEE WAS FOLLOWING MERCANTILE SYS TEM OF ACCOUNTING, THEN THE MOMENT AMOUNT WAS CREDITED TO THE ACCOUNT OF PAYEE ON ACCOUNT OF LIABILITY, TDS W AS REQUIRED TO BE MADE BUT IF ASSESSEE WAS FOLLOWING C ASH SYSTEM OF ACCOUNTING THEN ON MAKING PAYMENT TDS WAS TO BE MADE AS THE LIABILITY WAS DISCHARGED BY MAKIN G PAYMENT. THE TDS PROVISIONS ARE APPLICABLE BOTH THE IN THE SITUATION OF ACTUAL PAYMENT AS WELL OF THE CRED IT OF ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 4 THE AMOUNT. IT BECOMES VERY CLEAR FROM THE FACT THA T THE PHRASE ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVIIB WAS NOT THEREIN THE BILL BUT INCORPOR ATED IN THE ACT.THIS WAS NOT WITHOUT ANY PURPOSE. (VA) THE HON'BLE HIGH COURT OF HIMACHAL PRADES IN T HE CASE OF PALAM GAS SERVICE VS LD. CIT (2014) 89 CCH 0123 HPHC/2015360 ITR 0740 (HP) HELD THAT : LASTLY INSOFAR AS THE PLEA TAKEN BY THE APPELLANT THAT NO DISALLOWANCE CAN BE MADE UNDER SECTION 40(A)(IA) AS THE FREIGHT CHARGES HAD BEEN P AID AND WERE NOT PAYABLE. SUFFICE IT TO STATE THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WERE APPLICABLE NOT ONLY TO THE AMOUNT WHICH WERE SHOWN AS OUTSTANDING ON THE CLOSING OF THE RELEVANT PREVIOUS YEAR, BUT TO THE ENTIRE EXPENDITURE WHICH BECAME LIABLE F OR PAYMENT AT ANY POINT OF TIME DURING THE YEAR UNDER CONSIDERATION AND WHICH WAS ALSO PAID BEFORE THE CLOSING OF THE YEAR AS RIGHTLY HELD BY THE AUTHORIT IES BELOW. (VB) THE HON'BLE ITAT, LUCKNOW BENCHIN THE CASE OF DCIT VS AMA MEDICAL & DIAGNOSTIC CENTRE (2014) 40 C CH 0581 LUCKNOW TRIB/ (2014) 63 SOT 0136 (LUCKNOW) (URO) HELD THAT :- ITAT THE OF THE VIEW THAT THE HON'BLE JURISDICTIONAL HIGH COURT HAS NOT EXAMINED THE IMPU GNED ISSUE I.E. WHETHER DISALLOWANCE U/S 40(A)(IA) OF THE ACT COULD BE MADE ONLY IN RESPECT OF SUCH AMOUNT WHCH ARE PAYABL E AS ON 31 ST MARCH OF EVERY YEAR UNDER CONSIDERATION WHEREAS TH E HON'BLE GUJARAT HIGH COURT AND HON'BLE CALCUTTA HIG H COURT HAVE DEALT WITH THE ISSUE IN DETAIL IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENT AND HAVE CATEGORICALLY HELD THAT SECT ION 40(A)(IA) COULD COVER NOT ONLY TO THE AMOUNT WHICH ARE PAYALE AS ON 31 ST MARCH OF A PARTICULAR YEAR BUT ALSO WHICH ARE PAYABLE AT ANY TIME DURING THE YEAR (PARA 7.5) ITAT CONSIDERED OPINION THAT THE VIEW EXPRESSED OR THE RATIO LAID DOWN BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORTS HAS BEEN OVERRULED. THEREFORE, IT CANNOT BE SAID THAT SINCE THE HON'BLE JURISDICTIONAL HIGH COURT HAS APPROVED THE VIEW TAK EN BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILY N SHIPPING & ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 5 TRANSPORTS, THE SAME HAS TO BE FOLLOWED BY THE TRIB UNAL SITUATED WITHIN THE JURISDICTION OF HON'BLE ALLAHAB AD HIGH COURT. THE HON'BLE JURISDICTIONAL HIGH COURT HAS NO T EXAMINED THE IMPUGNED ISSUE AT ALL AND SIMPLE PASSI NG REFERENCE WAS MADE WITH REGARD TO THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPI NG & TRANSPORTS AND THE RELIEF WAS GRANTED TO THE ASSESS EE ON MERIT. THEREFORE, THE RATIO LAID DOWN IN THE CASE OF MERIL YN SHIPPING & TRANSPORTS, WHICH HAS BEEN SUSPENDED BY HON'BLE A NDHRA PRADESH HIGH COURT, HAS NOT BEEN APPROVED BY THE HO N'BLE ALLAHABAD HIGH COURT. THEREFORE, SUBORDINATE JUDICI AL FORUM ARE NOT REQUIRED TO FOLLOW THE RATIO ORDER LAID DOW N IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA), AS IT WAS OVERRULED BY THE OTHER HIGH COURT (PARA 8). (VI) IT MAY BE MENTIONED THAT VIDE CIRCULAR NO. 10 OF 2013 DATED 16-12-2013,IT HAS BEEN STATED BY THE CBDT THA T: 4. AFTER CAREFUL EXAMINATION OF THE ISSUE, THE BOARD IS OF THE CONSIDERED VIEW THAT THE PROVIS ION OF SECTION 40(A)(IA) OF THE ACT WOULD COVER NOT ONLY T HE AMOUNTS WHICH ARE PAYABLE AS ON 31 ST MARCH OF A PREVIOUS YEAR BUT ALSO AMOUNTS WHICH ARE PAYABLE AT ANY TIME DURING THE YEAR. THE STATUTORY PROVISIONS ARE AMPLY CLEAR AND THE CONTEXT OF SECTION 40(A)(IA) OF THE ACT THE TERM PAYABLE WOULD INCLUDE AMOUNT WHICH ARE PAID DURING THE PREVIOUS YEAR. (VII) IT WAS ANOTHER CONTENTION OF THE APPELLANT TH AT THE RECIPIENT COMPANY I.E. M/S. INDIA INFOLINE FINANCE LTD. HAS INCLUDED THE INTEREST PAYMENT OF RS. 2,20,851/- BY THE APPELLANT IN ITS RETURN OF INCOE AND HAS PAID TAX T HEREOF AND THUS THE DISALLOWANCE CANNOT BE MADE U/S 40(A)(IA) OF THE ACT. IT IS TO BE NOTED THAT THE APPELLANT HAS NOT F ILED THE REQUIRED CERTIFICATE FROM THE CHARTERED ACCOUNTANT AS STIPULATED IN IST PROVISO TO SECTION 201 OF THE ACT . HERE IT MAY BE MENTIONED THAT AS PER THE PROVISO TO SECTION 201 INSERTED W.E.F. 01-07-2012, THE APPELLANT WOULD NOT BE TREATED AS ASSESSEE IN DEFAULT IF THE CONCERNED NBF C (I) HAS FURNISHED ITS RETURN OF INCOME U/S 139; ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 6 (II) HAS TAKEN INTO ACCOUNT SUCH SUMS FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED B Y IT IN SUCH RETURN OF INCOME AND THE PERSON FURNISHE S A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SU CH FORM AS MAY BE PRESCRIBED (FORM NO. 26A) (VIII) THEREFORE, IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT THE AO WAS JUSTIFIED IN MAKING DISALLOWANCE OF RS. 5,97,060/- AND RS. 2,20,851/- U/S 40(A)(IA) OF THE ACT, HENCE THE SAME IS HEREBY SUSTAINED. 2.2 AS REGARDS THE GROUND NO. 1, THE LD.AR OF THE A SSESSEE SUBMITTED THAT 30% DISALLOWANCE SHOULD BE APPLIED IN THE YEAR UNDER CONSIDERATION FOR WHICH THE LD.AR OF THE ASSESSEE RELIED ON FOLLO WING CASES. (I) RAJENDRA YADAV IN ITA NO. 895/JP/2012 (ITAT JAIPUR BENCH) (II) CIT VS NARESH KUMAR (2013) 39 TAXMANN.COM 182 (DELHI) (III) CIT VS ANSAL LAND MARK TOWNSHIP (P) LTD [2015] 61 TAXMANN.COM 45(DELHI) 2.3 AS REGARDS THE GROUND NO. 2, THE LD.AR OF THE A SSESSEE OF THE ASSESSEE PRAYED TO SET ASIDE THE ISSUE WITH FOLLOWI NG SUBMISSIONS. 1. THE LD. CIT(A) CONFIRMED ADDITION ON ACCOUNT OF PAYMENT OF INTEREST OF RS. 2,20,851/- TO A NBFC NAMELY M/S. INDIA INFOLINE FINANCE LTD. 2. THE NBFC IS A LIMITED COMPANY AND ASSESSEE TRIED A LOT TO GET FORM NO. 26A FROM NBFC BUT FAILED. ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 7 3. IN THE CASE OF M/S. ACCME (URVASHI PUMPS) ENGINEERING PVT. LTD. VS JCIT (OSD) (2018) 90 TAXMANN. COM 189 (ITAT JAIPUR) DECIDED THAT WE SET ASIDE THE ISSUE TO THE RECORD OF AO FOR LIMITED PURPOSE TO VERIFY THE FACT THAT INTEREST INCOME REC EIVED BY THE NBFCS HAVE BEEN INCLUDED IN THE RETURN OF INCOME AND OFFERED FOR TAX AND THEN DECIDED THE ISS UE IN LIGHT OF ABOVE OBSERVATION. 4. THEREFORE, YOUR HONOUR IS REQUESTED TO SET ASIDE THE ISSUE. 2.4 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE LOWER AUTHORITIES. 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOT IMPERATIVE TO REPEAT THE FACTS OF THE CASE AS THE LD. CIT(A) HAS EXPLICITLY DEALT WITH BOTH THE I SSUES. HOWEVER, AS REGARDS THE GROUND NO. 1 OF THE ASSESSEE, WE FIND T HAT THE SIMILAR ISSUE HAS BEEN DECIDED BY THE ITAT JAIPUR BENCH VIDE ITS ORDER DATED 29-01- 2016 IN THE CASE OF SHRI RAJENDRA YADAV VS ITO, WAR D- 1(3) (ITA NO. 895/JP/2012) BY OBSERVING AS UNDER:- 6.1. RECENTLY IN THE MATTER OF P.M.S. DIESELS 2015 ] 59 TAXMANN.COM 100 (PUNJAB & HARYANA), HONBLE PUNJAB & HARYANA HIGH COURT HAD ELABORATELY DISCUSSED THE JUDGMENT PASSED BY THE HONBLE CALCUTTA HIGH CO URT AND HONBLE GUJARAT HIGH COURT, HONBLE ALLAHABAD HIGH COURT AND OTHER JUDGMENTS AS AVAILABLE AND THEREAFTER HAS COM E TO THE CONCLUSION THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE MANDATORY IN NATURE AND NON COMPLIANCE/NON DEDUCTIO N OF TAX ATTRACTS DISALLOWANCE OF THE ENTIRE AMOUNT. HAVING SAID SO, WE ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 8 WILL BE FAILING IN OUR DUTY IF WE DO NOT DISCUSS TH E AMENDMENT BROUGHT IN BY THE FINANCE (NO. 2) ACT 2014 WITH EFF ECT FROM 1.4.2015 BY VIRTUE OF WHICH PROVISO TO SECTION 40(A )(IA) HAS BEEN INSERTED, WHICH PROVIDES THAT IF ANY SUCH SUM TAXED HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DE DUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DAT E SPECIFIED IN SUB-SECTION (1) OF SECTION 139, SUCH SUM SHALL BE A LLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF PREVIOUS YEAR, AND FURTHER, SECTION 40(A)(IA) HAS BEEN SUBSTITUTED WHE REIN THE 30% OF ANY SUM PAYABLE TO A RESIDENT HAS BEEN SUBSTITUT ED. IN THE PRESENT CASE, THE AUTHORITIES BELOW HAS ADDED THE E NTIRE SUM OF RS. 7,51,322/- BY DISALLOWING THE WHOLE OF THE AMOU NT. THOUGH THE SUBSTITUTION IN SECTION 40 HAS BEEN MADE EFFECT IVE WITH EFFECTIVE FROM 1.4.2015, IN OUR VIEW THE BENEFIT OF THE AMENDMENT SHOULD BE GIVEN TO THE ASSESSEE EITHER BY DIRECTING THE AO TO CONFIRM FROM THE CONTRACTORS, NAMELY, M/S . GARVIT STONEX, M/S. CHANDA MARBLES AND M/S. NIDHI GRANITES AS TO WHETHER THE SAID PARTIES HAVE DEPOSITED THE TAX OR NOT AND FURTHER OR RESTRICT THE ADDITION TO 30% OF RS. 7,51 ,322/-. IN OUR VIEW, IT WILL BE TIED OF JUSTICE IF THE DISALLOWANC E IS ONLY RESTRICTED TO 30% OF RS. 7,51,322/-. ACCORDINGLY, T HE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE ABOVE SAID MA NNER. IN VIEW OF THE DECISION OF ITAT, JAIPUR BENCH IN TH E CASE OF RAJENDRA YADAV (SUPRA), THE DISALLOWANCE IS RESTRICTED TO 30 %. THUS GROUND NO. 1 OF THE ASSESSEE IS PARTLY ALLOWED. 2.6 AS REGARDS THE GROUND NO. 2 OF THE ASSESSEE, IT IS NOTED THAT THE SIMILAR ISSUE HAS BEEN DECIDED BY THE ITAT JAIPUR B ENCH VIDE ITS ORDER DATED 23-01-2018 IN THE CASE OF ACCME (URVASHI PUMP S) ENG. (P) LTD VS JCIT (OSD), CIRCLE 4, JAIPUR BY OBSERVING AS UNDE R:- 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT THE INTEREST PAID TO 3 NBFCS NAMELY RELIANCE CAPITAL LIMITED, BARCLAYS BANK AND CHOLAMANDALAM DB C FINANCE LIMITED WAS INCLUDED IN THE RETURN OF INCOME FILED B Y THESE NON ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 9 BANKING FINANCIAL COMPANIES THEREFORE, IN VIEW OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT NO DISALLOWA NCE IS CALLED FOR IN RESPECT OF THIS AMOUNT ON WHICH THE RECIPIENT HAVE PAID THE TAXES. THE ASSESSEE URGED THAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS REMEDIAL IN NATURE AND THEREFORE, THE SAID AMENDMENT WILL HAVE RETROSPECTIVE EFFECT. WE FIND TH AT HONBLE DELHI HIGH COURT IN CASE OF CIT VS. NARESH KUMAR ( SUPRA) WHILE DEALING WITH AN IDENTICAL ISSUE HAS HELD IN PARA 15 TO 29 AS UNDER:- 15. QUESTION WHETHER THE AMENDMENT IS RETROSPECTIVE OR PROSPECTIVE IS VEXED AND RIGID RULE CAN BE APPLIED UNIVERSALLY. VARIOUS RULES OF INTERPRETATION HAVE DEVELOPED IN O RDER TO DETERMINE WHETHER OR NOT, AN AMENDMENT IS RETROSPECT IVE OR PROSPECTIVE. FISCAL STATUTES IMPOSING LIABILITIES A RE GOVERNED BY NORMAL PRESUMPTION THAT THEY ARE NOT RETROSPECTIVE. THE CARDINAL RULE IS THAT THE LAW TO BE APPLIED, IS THAT WHICH IS IN FORCE ON THE FIRST DAY OF THE ASSESSMENT YEAR, UNLESS OTHERWISE M ANDATED EXPRESSLY OR PROVIDED BY NECESSARY IMPLICATION. THE AFORESAID DICTUM IS BASED UPON THE PRINCIPLE THAT A NEW PROVIS ION CREATING A LIABILITY OR AN OBLIGATION, AFFECTING OR TAKING AWAY VESTED RIGHTS OR ATTACHING NEW DISABILITY IS PRESUMED TO BE PROSPECTI VE. HOWEVER, IT IS ACCEPTED THAT LEGISLATURES HAVE PLENARY POWER TO MAKE RETROSPECTIVE AMENDMENTS, SUBJECT TO CONSTITUTIONAL RESTRICTIONS. 16. BASED UPON THE AFORESAID BROAD DICTUM, JUDGES AND JURISTS HAVE DRAWN DISTINCTION BETWEEN PROCEDURAL AND SUBSTAN TIVE PROVISIONS. SUBSTANTIVE PROVISIONS DEAL WITH RIGHTS AND THE SAME ARE FUNDAMENTAL, WHILE PROCEDURAL LAW IS CONCERNED WI TH THE LEGAL PROCESS INVOLVING ACTIONS AND REMEDIES. AMENDMENTS TO SUBSTANTIVE LAW ARE TREATED AS PROSPECTIVE, WHILE AME NDMENTS TO PROCEDURAL LAW ARE TREATED AS RETROSPECTIVE. THIS DIS TINCTION ITSELF IS NOT FREE FROM DIFFICULTIES AS RIGHT TO APPEAL HA S BEEN HELD TO BE A SUBSTANTIVE LAW, BUT LAW OF LIMITATION IS REGARDED AS PROCEDURAL. THERE IS AN INTERPLAY AND INTERCONNECT BETWEEN WHAT CA N BE REGARDED AS SUBSTANTIVE AND PROCEDURAL LAW [SEE CITV . SHRAWAN KUMAR SWARUP & SONS [1998] 232 ITR 123(ALL.) ]. 17. THERE ARE DECISIONS, WHICH HOLD THAT PROCESS OF LITI GATION OR ENFORCEMENT OF LAW IS PROCEDURAL. SIMILARLY, MACHINE RY PROVISION FOR COLLECTION OF TAX, RATHER THAN TAX ITSELF IS PR OCEDURAL. READ IN THIS CONTEXT, IT CAN BE STRONGLY ARGUED THAT SECTIO N 40(A)(IA) AT LEAST TO THE EXTENT OF THE AMENDMENT IS PROCEDURAL AS BY ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 10 ENACTING SECTION 40(A)(IA) THE LEGISLATURE DID NOT WANT TO IMPOSE A NEW TAX BUT WANTED TO ENSURE COLLECTION OF TDS AND T HE AMENDMENTS MADE STREAMLINE AND REMEDY THE ANOMALIES NOTICED IN THE SAID PROCEDURE BY ALLOWING DEDUCTION IN THE Y EAR WHEN THE EXPENDITURE IS INCURRED PROVIDED TDS IS PAID BEFORE THE DUE DATE FOR FILING OF THE RETURN. REMEDIAL STATUTES ARE NOR MALLY NOT RETROSPECTIVE, ON THE GROUND THAT THEY MAY AFFECT V ESTED RIGHTS. BUT THESE STATUTES ARE CONSTRUED LIBERALLY WHEN JUST IFIED AND RULE AGAINST RETROSPECTIVITY MAY BE APPLIED WITH LESS RES ISTANCE [SEE BHARAT SINGH V. MANAGEMENT OF NEW DELHI TUBERCUL OSIS CENTRE [1986] 2 SCC 614 AND WORKMEN FIRESTONE TYRE & RUBBER CO. OF INDIA (P.) LTD. V. MANAGEMENT AIR 1973 SC 12 27. 18. IT IS INTERESTING TO NOTE THAT EARLIER ENGLISH DEC ISIONS HAVE HELD THAT AN ENACTMENT FIXING A PENALTY OR MAXIMUM PENAL TY FOR OFFENCE IS MERELY PROCEDURAL FOR THE PURPOSE OF DETERMINING RETROSPECTIVITY [SEE DPP V. LAMB [1941] 2 KB 89) AND R V. OLIVER [1 944] 29 CR. APP. 137. THIS VIEW, HOWEVER, HAS BEEN CRITICIZED IN R EHERD ATHLUMNEY, IN RE [1898] 2 QB 547 ON THE GROUND THAT HIGHER OR GREATER PUNISHMENT IMPAIRS EXISTING RIGHTS OR OBLIG ATION; 'NO RULE OF CONSTRUCTION IS MORE FIRMLY ESTABLISHED THAN THIS; THAT A RETROSPECTIVE OPERATION IS NOT TO BE GIVEN TO A STA TUTE SO AS TO IMPAIR AN EXISTING RIGHT OR OBLIGATION, OTHERWISE TH AN AS REGARDS MATTERS OF PROCEDURE, UNLESS THAT EFFECT CANNOT BE AVOIDED WITHOUT DOING VIOLENCE TO THE LANGUAGE OF THE ENACTMENT. IF THE ENACTMENT IS EXPRESSED IN LANGUAGE WHICH IS FAIRLY CAPABLE OF EITHER INTERPRETATION, IT OUGHT TO BE CONSTRUED AS PROSPEC TIVE ONLY.' 19. THE WORD 'FAIRLY' USED IN THE AFORESAID QUOTATION IS IMPORTANT AND RELEVANT, BUT FOR APPLICATION OF ANOTHER RULE O F INTERPRETATION. G.P. SINGH IN 'PRINCIPLES OF STATUT ORY INTERPRETATION', 13TH EDITION, 2012 AT PAGE 538 UNDER THE SUB-HEADIN G 'RECENT STATEMENTS OF THE RULE AGAINST RETROSPECTIVITY' HAS GREATLY EMPHASIZED THE PRINCIPLE OF FAIRNESS AND OBSERVED T HAT CLASSIFICATION OF STATUTE EITHER SUBSTANTIVE OR PROCEDURAL DOES NO T NECESSARILY DETERMINE WHETHER THE ENACTMENT OR AMENDMENT HAS RET ROSPECTIVE OPERATION, E.G., LAW OF LIMITATION IS PROCEDURAL BUT ITS APPLICATION TO PAST CAUSE OF ACTION MAY RESULT OF REVIVING OR EXTI NGUISHING A RIGHT, AND SUCH OPERATION CANNOT BE SAID TO BE PROCEDURAL. SIMILARLY, WHEN REQUISITES OF AN ACTION UNDER THE NEW STATUTE, DRAW S FROM A TIME ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 11 INCIDENT TO ITS PASSING, RULE AGAINST RETROSPECTIVI TY MAY NOT BE APPLICABLE. 20. IN THE SAID TEXT, REFERENCE HAS BEEN MADE TO FORMU LATION BY DIXON, C.J. IN MAXWELL V. MURPHY [1957] 96 CLR 261 H OLDING: 'THE GENERAL RULE OF THE COMMON LAW IS THAT A STATUTE CHANGING THE LAW OUGHT NOT, UNLESS THE INTENTION APPEARS WITH REAS ONABLE CERTAINTY, TO BE UNDERSTOOD AS APPLYING TO FACTS OR EVENTS THAT HAVE ALREADY OCCURRED IN SUCH A WAY AS TO CONFER OR IMPOS E OR OTHERWISE AFFECT THE RIGHTS OR LIABILITIES WHICH THE LAW HAD DE FINED BE REFERENCE TO THE PAST EVENTS. BUT GIVEN THE RIGHTS AND LIABIL ITIES FIXED BY REFERENCE TO THE PAST FACTS, MATTERS OR EVENTS, THE LAW APPOINTING OR REGULATING THE MANNER IN WHICH THEY ARE TO BE ENFORC ED OR THEIR ENJOYMENT IS TO BE SECURED BY JUDICIAL REMEDY IS NO T WITHIN THE APPLICATION OF SUCH A PRESUMPTION'. 21. IDENTICALLY, IN SECRETARY OF STATE FOR SOCIAL SECURITY V. TUNNICLIFFE [1991] 2 ALL ER 712 (CA), ST AUGHTON, L.J. HAS EXPRESSED THE SAID PRINCIPLE IN THE FOLLOWING WORDS: 'THE TRUE PRINCIPLE IS THAT PARLIAMENT IS PRESUMED N OT TO HAVE INTENDED TO ALTER THE LAW APPLICABLE TO PAST EVENTS AND TRANSACTIONS IN A MANNER WHICH IS UNFAIR TO THOSE CONCERNED IN TH EM UNLESS A CONTRARY INTENTION APPEARS. IT IS NOT SIMPLY A QUES TION OF CLASSIFYING AN ENACTMENT AS RETROSPECTIVE OR NOT RETROSPECTIVE. RATHER IT MAY WELL BE A MATTER OF DEGREE- THE GREATER THE UNFAIRNE SS, THE MORE IT IS TO BE EXPECTED THAT PARLIAMENT WILL MAKE IT CLEAR IF THAT IS INTENDED'. 22. HOUSE OF LORDS IN L' OFFICE CHERIFIEN DES PHOSPHATES V. YAMASHITA SHINNIHON STEAMSHIP CO. LTD . [1994] 1 ALL ER 20 HAS SAID THE QUESTION OF FAIRNESS HAS TO BE A NSWERED BY TAKING INTO ACCOUNT VARIOUS FACTORS, VIZ., VALUE OF THE RIGHTS WHICH THE STATUTE AFFECTS; EXTENT TO WHICH THAT VALUE IS D IMINISHED OR EXTINGUISHED BY THE SUGGESTED RETROSPECTIVE EFFECT OF THE STATUTE; UNFAIRNESS OF ADVERSELY AFFECTING THE RIGHTS; CLARI TY OF THE LANGUAGE USED BY PARLIAMENT AND THE CIRCUMSTANCES IN WHICH TH E LEGISLATION WAS CREATED. THESE FACTORS HAVE TO BE WEIGHED TOGETHE R TO PROVIDE AN ANSWER WHETHER THE CONSEQUENCES OF READING THE STA TUTE WITH SUGGESTED DEGREE OF RETROSPECTIVITY IS UNFAIR; THAT THE WORDS USED BY THE PARLIAMENT COULD NOT HAVE BEEN INTENDED TO M EAN WHAT THEY MIGHT APPEAR TO SAY. THIS PRINCIPLE WAS APPLIED WHILE INTERPRETING A ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 12 NEW PROVISION IN ARBITRATION ACT IN THIS CASE OBSERV ING THAT THE DELAY ATTRIBUTABLE TO THE CLAIMANT IN PURSUING A CLAIM BE FORE ENACTMENT OF THE NEW PROVISION, COULD BE TAKEN INTO CONSIDERATION FOR DISMISSAL. 23. PRINCIPLE OF 'FAIRNESS' HAS NOT LEFT US UNTOUCHED AND WAS APPLIED BY THE SUPREME COURT IN VIJAY V. STATE OF MAHARASHTRA [2006] 6 SCC 289 IN THE FOLLOWING WORDS: 'THE NEGOTIATION IS NOT A RIGID RULE AND VARIES WIT H THE INTENTION AND PURPORT OF THE LEGISLATION, BUT TO APPLY IT IN SUCH A CASE IS A DOCTRINE OF FAIRNESS. WHEN A NEW LAW IS ENACTED FOR T HE BENEFIT OF THE COMMUNITY AS A WHOLE, EVEN IN ABSENCE OF A PROVI SION THE STATUTE MAY BE HELD TO BE RETROSPECTIVE IN NATURE.' 24. IN ALLIED MOTORS (P.) LTD. V. CIT [1997] (224) ITR 677/91 TAXMAN 205 (SC) IT WAS HELD THAT THE NEW PROVISO TO SECTION 43B SHOULD BE GIVEN RETROSPECTIVE EFFECT FROM THE INCEP TION ON THE GROUND THAT THE PROVISO WAS ADDED TO REMEDY UNINTEND ED CONSEQUENCES AND SUPPLY AN OBVIOUS OMISSION. THE PRO VISO ENSURED REASONABLE INTERPRETATION AND RETROSPECTIVE EFFECT WOULD SERVE THE OBJECT BEHIND THE ENACTMENT. 25. IN STATE THROUGH C.B.I DELHI V. GIAN SINGH AIR 199 9 SC 3450 EXTREME PENALTY OF DEATH WAS DILUTED TO ALTERNATIVE OPTION OF IMPRISONMENT FOR LIFE RECORDING THAT THE LEGISLATIV E BENEVOLENCE COULD BE EXTENDED TO AN ACCUSED, WHO AWAITS JUDICIAL VERDICTS AGAINST HIS SENTENCE. EARLIER IN RATTAN LAL V. STAT E OF PUNJAB AIR 1965 SC 444 REFERENCE WAS MADE TO SECTION 6 OF THE P ROBATION OF OFFENDERS ACT, 1958 AND IT WAS OBSERVED THAT IF THE ACT WAS NOT GIVEN RETROSPECTIVE OPERATION, IT WOULD LEAD TO ANOM ALIES AND THUS COULD NOT BE THE INTENTION OF THE LEGISLATURE. 26. PRINCIPLE OF MATCHING WHICH IS DISTURBED BY SECTIO N 40(A)(IA) OF THE ACT, MAY NOT MATERIALLY BE OF CONSEQUENCE TO TH E REVENUE WHEN THE TAX RATES ARE STABLE AND UNIFORM OR IN CASE S OF BIG ASSESSEES HAVING SUBSTANTIAL TURNOVER AND EQUALLY H UGE EXPENSES AS THEY HAVE NECESSARY CUSHION TO ABSORB THE EFFECT . HOWEVER, MARGINAL AND MEDIUM TAXPAYERS, WHO WORK AT LOW G.P. R ATE AND WHEN EXPENDITURE WHICH BECOMES SUBJECT-MATTER OF AN ORDER UNDER SECTION 40(A)(IA) IS SUBSTANTIAL, CAN SUFFER SEVERE ADVERSE CONSEQUENCES AS IS APPARENT FROM THE CASE OF NARESH KUMAR. TRANSFERRING OR SHIFTING EXPENSES TO A SUBSEQUENT YE AR, IN SUCH CASES, WILL NOT WIPE OFF THE ADVERSE EFFECT AND THE F INANCIAL STRESS. ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 13 NEVERTHELESS 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 INTERPRETE D LIBERALLY AND EQUITABLE SO THAT AN ASSESSEE SHOULD NOT SUFFER UNI NTENDED AND DELETERIOUS CONSEQUENCES BEYOND WHAT THE OBJECT AND PURPOSE OF THE PROVISION MANDATES. CASE OF NARESH KUMAR IS NOT ONE OF RARE CASES, BUT ONE OF SEVERAL CASES AS WE FIND THAT SECT ION 40(A)(IA) IS INVOKED IN LARGE NUMBER OF CASES. 27. ONE IMPORTANT CONSIDERATION IN CONSTRUING A MACHIN ERY SECTION IS THAT IT MUST BE SO CONSTRUED SO AS TO EFFECTUATE THE LIABILITY IMPOSED BY THE CHARGING SECTION AND TO MAKE THE MAC HINERY WORKABLE. HOWEVER, WHEN THE MACHINERY SECTION RESULTS IN UNINTE NDED OR HARSH CONSEQUENCES WHICH WERE NOT INTENDED, THE REMED IAL OR CORRECTION ACTION TAKEN IS NOT TO BE DISREGARDED BU T GIVEN DUE REGARD. 28. IT IS, IN THIS CONTEXT, THAT WE HAD IN RAJINDER KUM AR'S CASE (SUPRA) OBSERVED AS UNDER: '22. NOW, WE REFER TO THE AMENDMENTS WHICH HAVE BEEN M ADE BY THE FINANCE ACT, 2010 AND THE EFFECT THEREOF. WE HA VE ALREADY QUOTED THE DECISION OF THE CALCUTTA HIGH COURT IN V IRGIN CREATIONS (SUPRA). THE SAID DECISION REFERS TO THE EARLIER DECISION OF THE SUPREME COURT IN THE CASE OF ALLIED MOTORS (P.) LTD(SUPRA) AND COMMISSIONER OF INCOME TAX V. ALOM EXTRUSIONS LT D, [2009] 319 ITR 306 (SC) . IN THE CASE OF ALLIED MOTORS (P.) LTD. (SUPRA), T HE SUPREME COURT WAS EXAMINING THE FIRST PROVISO TO SEC TION 43B AND WHETHER IT WAS RETROSPECTIVE. SECTION 43B WAS INSERTED IN THE ACT WITH EFFECT FROM 1ST APRIL 1984 FOR CURBING CLAIMS O F TAXPAYERS WHO DID NOT DISCHARGE OR PAY STATUTORY LIABILITIES BUT CLAIMED DEDUCTIONS ON THE GROUND THAT THE STATUTORY LIABILITY HAD ACCR UED. SECTION 43B STATES THAT THE STATUTORY LIABILITY WOULD BE ALLOWED AS A DEDUCTION OR AS AN EXPENSE IN THE YEAR IN WHICH THE PAYMENT WAS MA DE AND WOULD NOT BE ALLOWED, EVEN IN CASES OF MERCANTILE SYS TEM OF ACCOUNTANCY, IN THE YEAR OF ACCRUAL. IT WAS NOTICED THAT IN SOME CASES HARDSHIP WOULD BE CAUSED TO ASSESSEES, WHO PAID THE STATUTORY DUES WITHIN THE PRESCRIBED PERIOD THOUGH T HE PAYMENTS SO MADE WOULD NOT FALL WITHIN THE RELEVANT PREVIOUS YEAR . ACCORDINGLY, A PROVISO WAS ADDED BY FINANCE ACT, 1987 APPLICABLE WITH EFFECT FROM 1ST APRIL, 1988. THE PROVISO STIPULATED THAT WHE N STATUTORY ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 14 DUES COVERED BY SECTION 43B WERE PAID ON OR BEFORE T HE DUE DATE FOR FURNISHING OF THE RETURN UNDER SECTION 139(1), THE DEDUCTION/EXPENSE, EQUAL TO THE AMOUNT PAID WOULD BE ALLOWED. THE SUPREME COURT NOTICED THE PURPOSE BEHIND THE PRO VISO AND THE REMEDIAL NATURE OF THE INSERTION MADE. OF COURSE, T HE SUPREME COURT ALSO REFERRED TO EXPLANATION 2 WHICH WAS INSERT ED 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 WOR KABLE, GIVES IT A REASONABLE INTERPRETATION. IT WAS ELUCIDATED: '12. IN THE CASE OF GOODYEAR INDIA LTD. V. STATE OF HARYANA THIS COURT SAID THAT THE RULE OF REASONABLE CONSTRUCTION MUST BE APPLIED WHILE CONSTRUING A STATUTE. LITERAL CONSTRUCTION SHO ULD BE AVOIDED IF IT DEFEATS THE MANIFEST OBJECT AND PURPOSE OF THE A CT. 13. THEREFORE, IN THE WELL-KNOWN WORDS OF JUDGE LEARNE D HAND, ONE CANNOT MAKE A FORTRESS OUT OF THE DICTIONARY; A ND SHOULD REMEMBER THAT STATUTES HAVE SOME PURPOSE AND OBJECT TO ACCOMPLISH WHOSE SYMPATHETIC AND IMAGINATIVE DISCOVE RY IS THE SUREST GUIDE TO THEIR MEANING. IN THE CASE OF R.B. JUDHA MAL KUTHIALA V. CIT, THIS COURT SAID THAT ONE SHOULD AP PLY THE RULE OF REASONABLE INTERPRETATION. A PROVISO WHICH IS INSERT ED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION WO RKABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SE CTION AND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SE CTION A REASONABLE INTERPRETATION, REQUIRES TO BE TREATED AS RETROSPEC TIVE 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 HIGH COURTS. IN THE CASE OF CIT V. CHANDULAL VENICHAND, THE GUJARAT HIGH COURT HAS HELD THAT THE FIRST PROVISO TO SECTION 43-B IS RETR OSPECTIVE AND SALES TAX FOR THE LAST QUARTER PAID BEFORE THE FILING OF THE RETURN FOR THE ASSESSMENT YEAR IS DEDUCTIBLE. THIS DECISION DEALS WI TH ASSESSMENT YEAR 1985-85. THE CALCUTTA HIGH COURT IN THE CASE O F CIT V. SRI JAGANNATH STEEL CORPN. HAS TAKEN A SIMILAR VIEW HOLD ING THAT THE STATUTORY LIABILITY FOR SALES TAX ACTUALLY DISCHARG ED AFTER THE EXPIRY OF THE ACCOUNTING YEAR IN COMPLIANCE WITH THE RELEVANT STATUTE IS ENTITLED TO DEDUCTION UNDER SECTION 43-B. THE HIGH C OURT HAS HELD THE AMENDMENT TO BE CLARIFICATORY AND, THEREFORE, R ETROSPECTIVE. THE GUJARAT HIGH COURT IN THE ABOVE CASE HELD THE AMEND MENT TO BE ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 15 CURATIVE AND EXPLANATORY AND HENCE RETROSPECTIVE. TH E PATNA HIGH COURT HAS ALSO HELD THE AMENDMENT INSERTING THE FIR ST PROVISO TO BE EXPLANATORY IN THE CASE OF JAMSHEDPUR MOTOR ACCESSO RIES STORES V. UNION OF INDIA. THE SPECIAL LEAVE PETITION FROM THIS DECISION OF THE PATNA HIGH COURT WAS DISMISSED. THE V IEW 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 STAT UTORY INTERPRETATION, 4TH EDN. AT P. 291: 'IT IS WELL-SETT LED THAT IF A STATUTE IS CURATIVE OR MERELY DECLARATORY OF THE PREVIOUS L AW RETROSPECTIVE OPERATION IS GENERALLY INTENDED.' IN FACT THE AMEND MENT WOULD NOT SERVE ITS OBJECT IN SUCH A SITUATION UNLESS IT IS C ONSTRUED AS RETROSPECTIVE. THE VIEW, THEREFORE, TAKEN BY THE DELH I HIGH COURT CANNOT BE SUSTAINED.' 23. SECTION 43B DEALS WITH STATUTORY DUES AND STIPUL ATES THAT THE YEAR IN WHICH THE PAYMENT IS MADE THE SAME WOULD BE A LLOWED AS A DEDUCTION EVEN IF THE ASSESSEE IS FOLLOWING THE MERC ANTILE SYSTEM OF ACCOUNTANCY. THE PROVISO, HOWEVER, STIPULATES THAT DE DUCTION WOULD BE ALLOWED WHERE THE STATUTORY DUES COVERED BY SECTIO N 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 I S REQUIRED TO DEDUCT TAX AT SOURCE AND FAILS TO DEDUCT OR DOES NO T MAKE PAYMENT OF THE TDS BEFORE THE DUE DATE, IN SUCH CASES, NOTWIT HSTANDING SECTIONS 30 TO 38 OF THE ACT, DEDUCTION IS TO BE AL LOWED AS AN EXPENDITURE IN THE YEAR OF PAYMENT UNLESS A CASE IS COVERED UNDER THE EXCEPTIONS CARVED OUT. THE AMENDED PROVISO AS IN SERTED BY FINANCE ACT, 2010 STATES WHERE AN ASSESSEE HAS MADE PAYMENT OF THE TDS ON OR BEFORE THE DUE DATE OF FILING OF THE RETURN UNDER SECTION 139(1), THE SUM SHALL BE ALLOWED AS AN EXPEN SE IN COMPUTING THE INCOME OF THE PREVIOUS YEAR. THE TWO PR OVISIONS ARE AKIN AND THE PROVISOS TO SECTIONS 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 UNREGIS TERED OWNERS WHO HAD PAID SALE CONSIDERATION AND WERE COVER ED BY SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THE CON TENTION OF THE ASSESSEES WAS THAT THE AMENDMENTS MADE TO THE DEFINI TION OF TERM 'OWNER' BY FINANCE BILL, 1987 SHOULD BE GIVEN RETROS PECTIVE EFFECT. IT WAS HELD THAT THE AMENDMENTS WERE RETROSPECTIVE IN NATURE AS THEY RATIONALISE AND CLEAR THE EXISTING AMBIGUITIES AND DOUBTS. ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 16 REFERENCE WAS MADE TO CRAWFORD: 'STATUTORY CONSTRUCTI ON' AND 'THE PRINCIPLE OF DECLARATORY STATUTES', FRANCIS BENNION : 'STATUTORY INTERPRETATION', JUSTICE G.P. SINGH'S 'PRINCIPLES O F STATUTORY INTERPRETATION', IT WAS OBSERVED THAT SOMETIMES AME NDMENTS ARE MADE TO SUPPLY AN OBVIOUS OMISSION OR TO CLEAR UP D OUBTS AS TO THE MEANING OF THE PREVIOUS PROVISION. THE ISSUE WAS ACCO RDINGLY DECIDED HOLDING THAT IN SUCH CASES THE AMENDMENTS WE RE RETROSPECTIVE THOUGH IT WAS NOTICED THAT AS PER TRANS FER OF PROPERTY ACT, REGISTRATION ACT, ETC. A LEGAL OWNER 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 VIOLA TE THE UNAMENDED SECTION 40(A)(IA) OF THE ACT. WE HAVE NOT ED THE AMBIGUITY AND REFERRED THEIR CONTENTION OF REVENUE AND REJECTED THE INTERPRETATION PLACED BY THEM. THE AMENDED PROVI SIONS ARE CLEAR AND FREE FROM ANY AMBIGUITY AND DOUBT. THEY WIL L HELP CURTAIL LITIGATION. THE AMENDED PROVISION CLEARLY SUPPORT VI EW TAKEN IN PARAGRAPHS 17 - 20 THAT THE EXPRESSION 'SAID DUE DA TE' 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) EXPANDS AND FURTHER LIBERALISES THE STATUTE WHEN IT STIPULA TES THAT DEDUCTIONS MADE IN THE FIRST ELEVEN MONTHS OF THE PREVIOUS YEA R BUT PAID BEFORE THE DUE DATE OF FILING OF THE RETURN, WILL CO NSTITUTE 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 A RE DISMISSED. WE FURTHER NOTE THAT THE COORDINATE BENCH OF THIS TR IBUNAL IN CASE OF RAJESH YADAV IN ITA NO. 895/JP/2012 VIDE O RDER DATED 29.01.2016 HAS HELD AS UNDER:- 6.1. RECENTLY IN THE MATTER OF P.M.S. DIESELS 2015 ] 59 TAXMANN.COM 100 (PUNJAB & HARYANA), HONBLE PUNJAB & HARYANA HIGH COURT HAD ELABORATELY DISCUSSED THE JU DGMENT PASSED BY THE HONBLE CALCUTTA HIGH COURT AND HONB LE GUJARAT HIGH COURT, HONBLE ALLAHABAD HIGH COURT AND OTHER JUDGMENTS AS AVAILABLE AND THEREAFTER HAS COME TO THE CONCLUSION THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE MANDATORY IN NA TURE AND NON ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 17 COMPLIANCE/NON DEDUCTION OF TAX ATTRACTS DISALLOWANC E OF THE ENTIRE AMOUNT. HAVING SAID SO, WE WILL BE FAILING IN OUR DUTY IF WE DO NOT DISCUSS THE AMENDMENT BROUGHT IN BY THE FINA NCE (NO. 2) ACT 2014 WITH EFFECT FROM 1.4.2015 BY VIRTUE OF WHIC H PROVISO TO SECTION 40(A)(IA) HAS BEEN INSERTED, WHICH PROVIDES THAT IF ANY SUCH SUM TAXED HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 13 9, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INC OME OF PREVIOUS YEAR, AND FURTHER, SECTION 40(A)(IA) HAS B EEN SUBSTITUTED WHEREIN THE 30% OF ANY SUM PAYABLE TO A RESIDENT HAS BEEN SUBSTITUTED. IN THE PRESENT CASE, THE AUTHORITIES B ELOW HAS ADDED THE ENTIRE SUM OF RS. 7,51,322/- BY DISALLOWING THE WHOLE OF THE AMOUNT. THOUGH THE SUBSTITUTION IN SECTION 40 HAS B EEN MADE EFFECTIVE WITH EFFECTIVE FROM 1.4.2015, IN OUR VIEW T HE BENEFIT OF THE AMENDMENT SHOULD BE GIVEN TO THE ASSESSEE EITHE R BY DIRECTING THE AO TO CONFIRM FROM THE CONTRACTORS, N AMELY, M/S. GARVIT STONEX, M/S. CHANDA MARBLES AND M/S. NIDHI G RANITES AS TO WHETHER THE SAID PARTIES HAVE DEPOSITED THE TAX OR N OT AND FURTHER OR RESTRICT THE ADDITION TO 30% OF RS. 11 I TA NO. 895/JP/2012 A.Y 2007-08. SHRI RAJENDRA YADAV VS. ITO AJMER. 7,51,322/-. IN OUR VIEW, IT WILL BE TIED OF JUSTICE I F THE DISALLOWANCE IS ONLY RESTRICTED TO 30% OF RS. 7,51,3 22/-. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED IN THE ABOVE SAID MANNER. FURTHER THIS TRIBUNAL HAS TAKEN A SIMILAR VIEW ON THI S ISSUE BY FOLLOWING THE ABOVE DECISIONS AND THEREFORE EVEN IF THERE IS DIVERGENT VIEW TAKEN BY THE HONBLE KERALA HIGH COUR T THE VIEW TAKEN IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNAL BY FOLLOWING THE VARIOUS DECISIONS ARE TO BE FOLLOWED TO MAINTAIN THE RULE OF CONSISTENCY. ACCORDINGLY, WE ARE OF THE VIEW THE SEC OND PROVISO TO SECTION 40(A)(IA) OF THE ACT WOULD BE EFFECTIVE R ETROSPECTIVE AS IT WAS UNDISPUTEDLY INSERTED TO REMOVABLE THE HARDS HIP FACED BY THE ASSESSES. HENCE, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER FOR LIMITED PURPOSE TO VERIFY THE FACT THAT THE INTEREST INCOME RECEIVED BY THESE NBFCS HAVE BEEN I NCLUDED IN THE RETURN OF INCOME AND OFFERED TO TAX AND THEN DE CIDE THIS ISSUE IN LIGHT OF ABOVE OBSERVATION. ITA NO.1036/JP/2016 SHRI PRAKASH CHAND YADAV VS DCIT, CIRCLE 3, JAIP UR 18 TAKING INTO CONSIDERATION THE FACTS, CIRCUMSTANCES OF THE CASE AND THE DECISION OF ITAT JAIPUR BENCH IN THE CASE OF ACCME (URVASHI PUMPS) ENGG. LTD. (SUPRA), THE GROUND NO. 2 OF THE ASSESS EE IS SET ASIDE TO THE FILE OF THE AO TO DECIDE IT AFRESH AS INDICATED ABO VE. THUS GROUND NO. 2 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18-07-2018. SD/- SD/- FOT; IKY JKO HKKXPUN (VIJAY PAL RAO) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/07/ 2018 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI PRAKASH CHAND YADAV, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CIRCLE 3, JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.1036 /JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR