M/s. Talbros Private Ltd., Delhi V. ITO, New Delhi

ITA 1490/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65528 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 08-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 30-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SHUMONA SEN
• Keywords: Retrospective amendment; Right to appeal
• Section: 12; 10; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H: NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A.NO.1490/DEL/2012 ASSESSMENT YEAR : 2008-09 M/S. TALBROS PRIVATE LIMITED, INCOME-TAX OFFICER, 258A, MAMCHAND DHANIA MARG, VS. WARD-16(1), NEW DEL HI. G.T. KARNAL ROAD, SIRASPUR, DELHI. PAN: AAACT4727A (APPELLANT) (RESPONDENT) APPELLANT BY : DR. RAKESH GUPTA , ADVOCATE MS. SONALI AGGARWAL, CA & SHRI TARUN KUMAR, ADVOCATE. RESPONDENT BY : MRS. SHUMONA SEN, SR. DR O R D E R PER U.B.S. BEDI, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XIX, N EW DELHI, DATED 05-01-2012 RELEVANT TO THE ASSESSMENT YEARS 2008-09 WHEREBY CONFIRMATION OF ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE AMOUNT OF RS.73,65,220/- UNDER SEC. 40(A)(IA) OF THE INCOME-T AX ACT, 1961 (THE ACT) HAS BEEN CHALLENGED. 2. FACTS INDICATE THAT THE ASSESSING OFFICER NOTICE D FROM THE TAX AUDIT REPORT THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON AN AMOUNT OF 2 RS.73,65,220/- AND DISALLOWANCES WERE NOT TAKEN INT O CONSIDERATION IN COMPUTATION OF THE INCOME. WHEN THE COUNSEL OF THE ASSESSEE WAS ASKED BY THE AO TO EXPLAIN, HE SUBMITTED THAT OUT OF TOTAL A MOUNT OF RS.73,65,220/- SHOWN IN THE ANNEXURE TO TAX AUDIT REPORT, THE ASSE SSEE HAS DEDUCTED TDS ON AMOUNT EXCLUDING THE INTEREST INCOME OF RS.7,53, 294/- AND THE AMOUNT SO DEDUCTED WAS DEPOSITED ON 4-08-2008. HE FURTHER SU BMITTED THAT THE ENTIRE TDS ON THE AFORESAID AMOUNT HAS BEEN PAID BEFORE TH E DUE DATE OF FILING OF THE RETURN OF INCOME AND NO DISALLOWANCE CAN BE MAD E UNDER SEC. 40(A)(IA) IN VIEW OF THE AMENDMENT MADE TO THIS SECTION BY TH E FINANCE ACT, 2010 WHICH HAS BEEN HELD TO BE RETROSPECTIVE BY THE RULI NG OF MUMBAI BENCH OF ITAT IN THE CASE OF M/S. GOLDEN STABLES LIFESTYLE C ENTRE (P) LTD. VS. CIT (ITAT `G BENCH MUMBAI) IN ITA NO.5145/MUM./2009, DATED 30/09/2010. THE AO OBSERVED THAT THE PROVISIONS OF SECTION 40(A )(IA) ARE VERY CLEAR FOR A.Y. 2008-09 AND REQUIRED THAT THE TAX DEDUCTED BY THE ASSESSEE BEFORE FEBRUARY OF THE PREVIOUS YEAR HAD TO BE DEPOSITED B EFORE THE ENDING OF THE PREVIOUS YEAR & THE TAX DEDUCTED IN THE LAST MONTH I.E. MARCH OF THE PREVIOUS YEAR HAD TO BE DEPOSITED BEFORE THE FILING OF RETUR N. THUS, IN THIS CASE THE ASSESSEE WAS REQUIRED TO DEPOSIT THE TAX DEDUCTED U PTO FEBRUARY 2008 BY 31-3-08 & TAX DEDUCTED DURING THE MONTH OF MARCH 20 08 HAD TO BE DEPOSITED BEFORE THE FILING OF RETURN. IT WAS OBSERVED FROM THE RETURNS OF TDS FILED BY 3 THE ASSESSEE FOR THE QUARTER ENDING JUNE, SEPTEMBER , DECEMBER 2007 & MARCH 2008 THAT THESE RETURNS WERE FILED ON 4-8-200 8. THUS, THERE IS CLEAR VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE IT ACT, 1961. ACCORDINGLY AMOUNT OF RS.66,29,926/- WAS BEING DISALLOWED AND A DDED BACK TO THE INCOME OF THE ASSESSEE. 3. REGARDING INTEREST EXPENSES OF RS.7,35, 294/-, THE COUNSEL OF THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE ASSESSEE HAD NOT DEDUCTED ANY TDS AT ALL ON THIS AMOUNT AND ADMITTED THAT THE SAM E OUGHT TO BE ADDED BACK TO THE RETURN OF INCOME. THE AO DISALLOWED AN AMOU NT OF RS.7,35,294/- ACCORDINGLY. 4. THE ASSESSEE TOOK UP THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) AND MADE FOLLOWING SUBMISSIONS:- IT IS RESPECTFULLY SUBMITTED THAT LD. AO HAD MADE AN ADDITION OF AN AMOUNT OF RS.73,65,220/- ON THE GROUND THAT T HE ASSESSEE HAD NOT DEPOSITED THE TAX WITHIN THE STIPULATED PER IOD. LD. AO MADE DISALLOWANCE OF THE AMOUNT ON WHICH SUCH TAX W AS NOT DEPOSITED. THE DISALLOWANCE MADE BY THE LD. AO THO UGH IS NOT MAINTAINABLE IN VIEW OF THE VARIOUS JUDICIAL DECISI ONS, HOWEVER AS YOUR HONOUR IS RELYING ON THE RECENT JUDGMENT OF HONBLE ITAT MUMBAI SPECIAL BENCH IN THE CASE OF M/S. BHARA TI SHIPYARD LTD. REPORTED AT 11 ITR (TRIB) 599, IT IS RESPECTFULLY SUBMITTED THAT SINCE THE ASSESSEE HAD PAID THE ENTI RE AMOUNT OF TDS ON 04-08-2008 AS PER COPY OF TDS CHALLANS ENCLO SED AT PB-58-64, THE SAME MAY KINDLY BE DIRECTED TO BE ALL OWED IN THE 4 YEAR OF PAYMENT WITHOUT PREJUDICE TO OUR RIGHT TO C LAIM THE SAME IN THE YEAR UNDER APPEAL IN CASE THE ABOVE JUD GMENT OF HONBLE SPECIAL BENCH IS REVERSED BY HONBLE BOMBAY HIGH COURT IN FUTURE. 5. THE LEARNED CIT(A) WHILE CONSIDERING AND NOT ACC EPTING THE PLEA OF THE ASSESSEE IN THIS REGARD, HAS CONCLUDED TO CONFI RM THE ACTION OF THE AO AS PER PARA 6 & 7 OF HIS ORDER WHICH READ AS UNDER:- 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND TH E WRITTEN SUBMISSIONS FILED BY THE AR IN THIS REGARD. 7. IT IS SEEN FROM THE AUDIT REPORT (ANNEXURE-K) TH AT TDS WAS NOT DEDUCTED ON THE FOLLOWING ITEMS OF EXPENSE: NATURE AMOUNT INTEREST 314465 CONTRACTOR 5650780 FEES 366586 RENT 612560 INTERSET (GTF) 420829 TOTAL 7365220 THE AR ADMITTED THAT THE TAX DEDUCTED WAS PAID ON 04.08.2008 BEYOND THE DUE DATE PRESCRIBED U/S 40(A) (IA). THE AR CONTENDED THAT SINCE THE AMOUNTS WERE PAID BEFOR E THE DUE DATE FOR FILING RETURN OF INCOME, THE SAME ARE TO B E ALLOWED IN THE LIGHT OF THE FOLLOWING DECISIONS: KANUBHAI RAMJIBHAI MAKWANA VS. ITO 9 TAXMAN.COM 5 5 (AHD.-ITAT) GOLDEN STABLES LIFESTYLES CENTRE (P) LTD. VS. CIT 2010-TIOL- 596-ITAT-MUM. IN THE CASE OF M/S. BHARATI SHIPYARD LTD. 11 ITR ( TRIB) 599, IT IS HELD THAT AMENDED PROVISIONS BROUGHT ON TO THE STATUTE BY FINANCE ACT 2010 WITH EFFECT FROM 01.04.2010 ARE 5 PROSPECTIVE IN OPERATION AND NOT APPLICABLE TO THE EARLIER YEARS. HENCE THE CONTENTIONS OF THE AR ARE NOT TENABLE AND THE ACTION OF THE AO IS UPHELD. THE AR FURTHER ARGUED THAT THE SAME MAY BE DIRECTE D TO BE ALLOWED THE SAME IN NEXT A.Y. SINCE THE AR HAS NOT WAIVED HIS RIGHT TO APPEAL SUCH DIRECTION CANNOT BE ISSUED SINCE THERE IS NO FINALITY ON THE ISSUE. ACCORDINGLY, GROUND NO.3 IS DISMISSED. 6. STILL AGGRIEVED, THE ASSESSEE HAS FILED FURTHER APPEAL AND BY REITERATING THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES, THE ASSESSEE HAS PLEADED FOR DELETION OF ADDITION OF RS.66,29,926/- BY CONTE NDING THAT RETROSPECTIVITY OF THE PROVISION HAS BEEN UPHELD BY THE HONBLE CAL CUTTA HIGH COURT IN THE CASE OF CIT VS. VIRGIN CREATIONS IN ITAT NO.302 OF 2011 GA 3200/2011 DATED 23 RD NOVEMBER, 2011 AND MUMBAI `C BENCH OF ITAT IN THE CASE OF SHRI PIYUSH C. MEHTA VS. ACIT IN ITA NO.1321/MUM/2 009 FOR A.Y. 2005- 06 VIDE ORDER DATED 11 TH APRIL 2012, HAS, WHILE DISCUSSING VARIOUS DECISION S INCLUDING SPECIAL BENCH DECISION IN THE CASE OF BHA RATI SHIPYARD LTD., 11 ITR (TRIB.) 599, HAS CONCLUDED TO DELETE SIMILAR DI SALLOWANCE UNDER SEC.40(A)(IA) BY FOLLOWING HONBLE CALCUTTA HIGH CO URT DECISION IN THE CASE OF CIT VS. VIRGIN CREATIONS (SUPRA). IT WAS SUBMIT TED THAT ITAT DELHI & GUJARAT BENCHES ARE ALSO FOLLOWING SUCH PRECEDENCE TO DELETE THE SIMILAR ADDITION. THEREFORE, BY FILING COPIES OF THESE DEC ISIONS THE ASSESSEE HAS 6 PLEADED FOR DELETION OF THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). 7. THE LEARNED DR ON THE OTHER HAND, HAS STRONGLY R ELIED UPON THE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT (A) AND PLEADED THAT SINCE LANGUAGE OF THE RELEVANT PROVISIONS IS VERY CLEAR I NASMUCH AS THERE IS NO AMBIGUITY IN THE SAME, AND THERE IS A SPECIAL BENCH DECISION ON THIS ISSUE, RELEVANT AMENDMENT CAN ONLY BE APPLIED PROSPECTIVEL Y. THEREFORE, THE ORDER OF THE LEARNED CIT(A) BEING LEGALLY CORRECT NEEDS F URTHER CONFIRMATION. HE URGED FOR THE CONFIRMATION OF THE IMPUGNED ORDER. 8. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS DEDUCTED TDS ON AN AMOUNT OF RS.66,29,926/- OUT OF DEDUCTIBLE AMOUNT OF RS.73,65 ,220/- AND PAID THE SAME ON 4 TH OF AUGUST, 2009 WHICH IS WELL WITHIN THE DUE DATE FOR FILING OF THE RETURN AS PROVIDED UNDER SEC. 139(1) OF THE ACT . HONBLE CALCUTTA HIGH COURT IN ITS DECISION DATED 23 RD NOVEMBER, 2011 IN THE CASE OF CIT VS. VIRGIN CREATIONS (SUPRA) HAS HELD THAT THE AMENDMEN T WITH RESPECT TO SEC. 40(A)(IA) HAS RETROSPECTIVE EFFECT AND SUCH DECISIO N OF THE HONBLE HIGH COURT HAS BEEN FOLLOWED BY THE MUMBAI BENCH `C IN THE CASE OF SHRI PIYUSH C. MEHTA VS. ACIT (SUPRA) AND RELEVANT PORTI ON OF SAID ORDER FROM PAGE 8 ONWARDS IS REPRODUCED AS UNDER:- 7 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEGISLA TIVE HISTORY OF THE PROVISIONS OF SEC.40(A)9IA) OF THE ACT HAVE TO BE FIRST SEEN. SECTION 40 HAS CERTAIN CLAUSES PROVIDING FOR THE AMOUNTS WHICH ARE NOT DEDUCTIBLE. SUBCLAUSE (IA) OF CLAUSE (A) OF SECTION 40 WAS INSERTED BY THE FINANCE (NO.2) ACT,2004 WITH EFFECT FROM 1ST APRIL, 2005 READING AS UNDER:- 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTED THE INCOME CHARGEABLE UNDER THE HEAD `PROFITS AND GAINS OF BUSINESS OR PROFESSION. (IA) ANY INTEREST, COMMISSION OR BROKERAGE, FEES FOR 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 LABOUR FOR CARRYING OUT ANY WORK), ON OR, AFTER DEDUCTION, HAS NOT BEEN PAID DURING THE PREVIOUS YEAR, OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY O F THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200: PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR, HAS BEEN DEDUCTED IN THE PREVIOUS YEAR BUT PAID IN ANY SUBSEQUENT YEAR AFTER THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION200, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF 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 8 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 EXPLANATION III TO SECTION 194C; 9. 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 PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES TO RESIDENT S, AND PAYMENTS TO A RESIDENT CONTRACTOR OR SUB- CONTRACTOR FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH 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 CHAPTER XVII-B. IT IS ALSO PROPOSED TO PROVIDE THAT WHERE IN RESPECT OF PAYMENT OF ANY SUM, TAX HAS BEEN DEDUCTED UNDER CHAPTER XVII-B OR PAID IN ANY SUBSEQUENT YEAR, THE SUM OF PAYMENT SHALL BE ALLOWED IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. THE PROPOSED AMENDMENT WILL TAKE EFFECT FROM 1ST DAY OF APRIL, 2005 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR2005- 2006 AND SUBSEQUENT YEARS. [CLAUSE 11] 10. THEREAFTER THE FINANCE ACT, 2008 MADE AMENDMENT TO CLAUSE (A) IN SUBCLAUSE (IA) IN SECTION 40 WITH RET ROSPECTIVE 9 EFFECT FROM 1ST APRIL, 2005. THE SECTION AS AMENDED BY THE FINANCE ACT, 2008 READ AS UNDER:- (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR 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 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 BEFORE 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 DEDUCTED- (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 YEAR BUT PAID AFTER THE END OF THE SAID PREVIOUS YEAR, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. ; 11. THE FINANCE ACT, 2008 BROUGHT OUT AMENDMENT TO SECTION 40(A)(IA) W.R.E.F. 1.4.2005 BY RELAXING EARLIER POS ITION TO SOME EXTENT. IT MADE TWO CATEGORIES OF DEFAULTS CAUSING DISALLOWANCE ON THE BASIS OF THE PERIOD OF THE PREVIOUS YEAR IN WHICH TAX WAS DEDUCTIBLE. THE FIRST CATEGORY OF DISALLOWANCES INC LUDED THE CASES IN WHICH TAX WAS DEDUCTIBLE AND WAS SO DEDUCT ED DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT THERE WAS F AILURE TO PAY SUCH TAX ON OR BEFORE THE DUE DATE SPECIFIED IN SUB -SECTION (1) 10 OF SECTION 139 OF THE ACT. IN OTHER WORDS, IF ANY A MOUNT ON WHICH TAX WAS DEDUCTIBLE DURING LAST MONTH OF THE P REVIOUS YEAR, THAT IS MARCH 2005, BUT WAS PAID BEFORE 31ST OCTOBER, 2005, BEING THE DUE DATE U/S 139(1), THE DEDUCTIBIL ITY OF THE AMOUNT WAS KEPT INTACT. THE SECOND CATEGORY INCLUDE D CASES OTHER THAN THOSE GIVEN IN CATEGORY FIRST. TO PUT IT SIMPLY, IF TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR, THAT IS, UP TO FEBRUAR Y, 2005, THE DISALLOWANCE WAS TO BE MADE IF THE ASSESSEE FAILED TO PAY IT BEFORE 31ST MARCH, 2005. 12. THEN CAME THE AMENDMENT TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1S T 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 SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB- CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY 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 OR; AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE 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 DEDUCTED 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 DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. 13. FROM THE ABOVE PROVISION AS AMENDED BY THE FINA NCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1ST APRIL, 2010 IT CAN BE SEEN THAT THE ONLY DIFFERENCE WHICH THIS AMENDMENT HAS MADE IS DISPENSING WITH THE EARLIER TWO CATEGORIES OF DEFAU LTS AS PER THE FINANCE ACT, 2008, AS DISCUSSED IN THE EARLIER PARA , CAUSING 11 DISALLOWANCE ON THE BASIS OF THE PERIOD OF THE PREV IOUS 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 PR EVIOUS YEAR BUT THERE WAS FAILURE TO PAY SUCH TAX ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139. THE FI NANCE ACT, 2010 HAS NOT TINKERED WITH THIS POSITION. THE SECON D CATEGORY OF THE FINANCE ACT, 2008 WHICH REQUIRED THE DEPOSIT OF TAX BEFORE THE CLOSE OF THE PREVIOUS YEAR IN CASE OF DEDUCTION DURING THE FIRST ELEVEN MONTHS, AS A PRE-CONDITION FOR THE GRA NT OF DEDUCTION IN THE YEAR OF INCURRING EXPENDITURE, HAS BEEN ALTERED. THE HITHERTO REQUIREMENT OF THE ASSESSEE D EDUCTING TAX AT SOURCE DURING THE FIRST ELEVEN MONTHS OF THE PRE VIOUS YEAR AND PAYING IT BEFORE THE CLOSE OF THE PREVIOUS YEAR UP TO 3 1ST 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 DI SALLOWANCE WILL BE MADE IF AFTER DEDUCTING TAX AT SOURCE, THE ASSESSEE FAILS TO PAY THE AMOUNT OF TAX ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 OF THE ACT. THE EFFE CT OF THIS AMENDMENT IS THAT NOW THE ASSESSEE DEDUCTING TAX EI THER IN THE LAST MONTH OF THE PREVIOUS YEAR OR FIRST ELEVEN MON THS OF THE PREVIOUS YEAR SHALL BE ENTITLED TO DEDUCTION OF THE EXPENDITURE IN THE YEAR 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 FINANCE ACT, 2010. 14. THE QUESTION AS TO WHETHER THE AMENDMENT BY THE FINANCE ACT, 2010 AS AFORESAID IS PROSPECTIVE OR RETROSPECT IVE FROM 1.4.2005 CAME UP FOR CONSIDERATION BEFORE THE MUMBA I SPECIAL BENCH ITAT IN THE CASE OF BHARATI SHIPYARD LTD. BEF ORE THE SPECIAL BENCH IT WAS ARGUED THAT THE AMENDMENT WAS MADE WITH A VIEW TO REMOVE THE UNNECESSARY HARDSHIP CAUS ED TO THE ASSESSEE BY THE EARLIER PROVISION. THE SPECIAL BENC H BY ITS ORDER DATED 9.9.2011 HOWEVER HELD THAT THE AMENDMEN T CARRIED OUT BY THE FINANCE ACT, 2010 WITH RETROSPECTIVE EFF ECT FROM ASSESSMENT YEAR 2010- 2011 CANNOT BE HELD TO BE RET ROSPECTIVE FROM ASSESSMENT YEAR 2005-2006. THE SPECIAL BENCH H ELD THAT THE AMENDMENT BROUGHT OUT BY THE FINANCE ACT, 2010 TO SECTION 12 40(A)(IA) W.E.F. 01.04.2010, IS NOT REMEDIAL AND CU RATIVE IN NATURE. 15. PRIOR TO THE DECISION OF THE SPECIAL BENCH, IDE NTICAL ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE ITAT KOLKA TA BENCH IN THE CASE OF VIRGIN CREATIONS VS. ITO, WARD 32(4) , KOLKATA ITA NO. 267/KOL/2009 FOR AY 05-06 THE ISSUE THAT AR OSE FOR CONSIDERATION WAS DISALLOWANCE OF EXPENSES /S.40(A) (IA)CLAIMED AS DEDUCTION WHILE COMPUTING INCOME FROM BUSINESS B EING EMBROIDERY CHARGES, DYEING CHARGES, INTEREST ON LOA N AND FREIGHT CHARGES WITHOUT DEDUCTING TAX AT SOURCE. TH E EMBROIDERY CHARGES WERE PAID BETWEEN 22ND MAY, 2004 TO 30.11.2004. TAX HAD BEEN DEDUCTED AT SOURCE BUT WER E PAID TO THE GOVERNMENT ONLY ON 28.10.2005 AND NOT WITHIN TH E TIME CONTEMPLATED BY SECTION 200(1) OF THE ACT. THE DYEI NG CHARGES WERE PAID BETWEEN 5.4.2004 TO 20.8.2004. TAX WAS DE DUCTED AT SOURCE BUT WAS PAID TO THE GOVERNMENT ONLY ON 28.10 .2005. FREIGHT OUTWARD CHARGES WERE PAID WITHOUT DEDUCTION OF TAX AT SOURCE. INTEREST ON LOANS WERE CREDITED TO THE CRED ITORS ACCOUNT ON 31.3.2005 TO THE EXTENT THEY WERE 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 TRIBU NAL, THE ASSESSEE CONTENTED THAT THE AMENDMENT BY THE FINANC E ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1ST APRIL, 2010 WHEREBY AMOUNT OF TAX DEDUCTED AT THE TIME OF MAKING PAYMEN T IN RESPECT OF EXPENDITURE REFERRED TO IN SEC.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 SHO ULD BE ALLOWED AS A DEDUCTION. IN OTHER WORDS IT WAS ARGUE D THAT THE AMENDMENT BY THE FINANCE ACT, 2010 TO THE PROVISION S OF SEC.40(A)(IA) HAS TO BE HELD TO BE RETROSPECTIVE W. E.F. 1-4-2005. THE ITAT KOLKATA BENCH BY ITS ORDER DATED 15.12.201 0, HELD AS FOLLOWS: 8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREFUL 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 13 MUMBAI BENCH AFTER ANALYZING THE PROVISIONS OF SEC.40(A)9IA) SINCE ITS INCEPTION AND VARIOUS AMENDMENTS MADE TO THE SAME INCLUDING THE SUGGESTION MADE BY THE INDUSTRY IN THE FORM OF REPRESENTATION IN THEIR PRE-BUDGET MEMORANDUM TO THE HONBLE FINANCE MINISTER AND BY APPLYING 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 ACT 2010 THUS WERE RESULTING INTO UNINTENDED CONSEQUENCES AND CAUSING GRAVE AND GENUINE HARDSHIPS TO THE ASSESSES WHO HAD SUBSTANTIALLY COMPLIED WITH THE RELEVANT TDS PROVISIONS BY DEDUCTING THE TAXES 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 POSITIO N AND TO REMOVE THE HARDSHIPS WHICH WAS BEING CAUSED TO THE ASSESSEE BELONGING TO SUCH CATEGORY, AMENDMENTS HAVE BEEN MADE IN THE PROVISIONS OF SECTION 40(A)(IA) BY THE FINANCE ACT, 2010. THE SAID AMENDMENTS, IN OUR OPINION, THUS ARE CLEARLY REMEDIAL/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. 1ST APRIL, 2005. IN THE CASE OF R.B.JODHA MA L KUTHIALA 82 ITR 570, IT WAS HELD BY THE HONBLE SUPREME COURT THAT A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CAN BE GIVEN TO THE SECTION AS A WHOLE. IN THE PRESENT CASE, THE AMOUNT 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 DATE OF FILING OF ITS RET URN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS BEING THE UNDISPUTED POSITION, WE HOLD THAT THE 14 DISALLOWANCE MADE BY THE A.O. AND CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF FREIGHT CHARGES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IS NOT SUSTAINABLE AS PER THE AMENDMENTS MADE IN THE SAID PROVISIONS BY THE FINANCE ACT, 2010 WHICH, BEING REMEDIAL/CURATIVE IN NATURE, HAVE RETROSPECTIVE APPLICATION, 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 OR 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. 16. AS AGAINST THE AFORESAID DECISION THE REVENUE P REFERRED APPEAL BEFORE THE HONBLE CALCUTTA HIGH COURT. THE HONBLE CALCUTTA HIGH COURT 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 ADMITTED. IT IS ARGUED BY MR. NIZAMUDDIN THAT THIS COURT NEEDS TO TAKE DECISION AS TO WHETHER SECTION 40(A)(IA) IS HAVING RETROSPECTIVE OPERATION OR NOT. THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PERIOD APRIL 1, 2005 AND APRIL 28, 2006 AND THE SAME WERE PAID BY THE ASSESSEE IN JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS FACTUAL POSITION WAS UNDISPUTED. MOREOVER, THE SUPREME COURT, AS HAS BEEN RECORDED BY THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT. LTD. AND ALSO IN THE CAS E OF ALOM EXTRUSIONS LTD., HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HAS RETROSPECTIVE 15 APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME COURT HELD THAT THE PROVISION, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL. IN VIEW OF THE AUTHORITATIVE PRONOUNCEMENT OF THE SUPREME COURT, THIS COURT CANNOT DECIDE OTHERWISE. HENCE WE DISMISS THE APPEAL WITHOUT ANY ORDER AS TO COSTS. 17. IT CAN BE SEEN FROM THE ABOVE DECISION OF THE H ONBLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISION S OF SEC.40(A)(IA) OF THE ACT, BY THE FINANCE ACT, 2010 AS AFORESAID WAS HELD TO BE RETROSPECTIVE FROM 1.4.2005. IF THE AMENDMENT IS CONSIDERED AS RETROSPECTIVE FROM 1.4.2005, THE EFFE CT WILL BE THAT PAYMENTS OF TDS TO THE CREDIT OF THE GOVERNMEN T ON OR BEFORE THE LAST DATE FOR FILING RETURN OF INCOME U/ S.139(1) OF THE ACT FOR THE RELEVANT AY HAVE TO BE ALLOWED AS DEDUC TION. ADMITTEDLY IN THE CASE OF THE ASSESSEE PAYMENTS WER E SO MADE BEFORE THE SAID DUE DATE AND IN TERMS OF THE DECISI ON OF THE HONBLE CALCUTTA HIGH COURT NO DISALLOWANCE COULD B E MADE BY THE AO U/S. 40(A)(IA) OF THE ACT. 18. THE QUESTION NOW IS AS TO WHETHER TO FOLLOW THE DECISION OF THE HONBLE SPECIAL BENCH WHICH HAS TAKEN THE VIEW THAT AMENDMENT BY THE FINANCE ACT, 2010 TO THE PROVISION S OF SEC.40(A)(IA) OF THE ACT IS PROSPECTIVE AND NOT RET ROSPECTIVE FROM 1.4.2005 OR THE DECISION OF THE HONBLE CALCUT TA HIGH COURT TAKING A CONTRARY VIEW. ON THE ABOVE QUESTION , THE LEARNED COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOT ICE THE DECISION OF THE ITAT DELHI IN THE CASE OF TEJ INTER NATIONAL (P) LTD. V. DY. CIT (2000) 69 TTJ (DEL) 650, WHEREIN IT WAS HELD THAT IN THE HIERARCHICAL JUDICIAL SYSTEM THAT WE HA VE IN INDIA, THE WISDOM OF THE COURT BELOW HAS TO YIELD TO THE H IGHER WISDOM OF THE COURT ABOVE, AND THEREFORE, ONCE AN AUTHORIT Y HIGHER THAN THIS TRIBUNAL HAS EXPRESSED ITS ESTEEMED VIEWS ON A AN ISSUE, NORMALLY, THE DECISION OF THE HIGHER JUDICIA L AUTHORITY IS TO BE FOLLOWED. THE BENCH HAS FURTHER HELD THAT THE FACT THAT THE JUDGMENT OF THE HIGHER JUDICIAL FORUM IS FROM A NON - 16 JURISDICTIONAL HIGH COURT DOES NOT REALLY ALTER THI S POSITION, AS LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE C ASE OF CIT V. GODAVARIDEVI SARAF 113 ITR 589(BOM). 19. IN VIEW OF THE ABOVE, WE HOLD FOLLOWING THE DEC ISION OF THE HONBLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE P ROVISIONS OF SEC.40(A)(IA) OF THE ACT, BY THE FINANCE ACT, 20 10 IS RETROSPECTIVE FROM 1.4.2005. CONSEQUENTLY, ANY PAY MENT OF TAX DEDUCTED AT SOURCE DURING PREVIOUS YEARS RELEVANT T O AND FROM AY 05-06 CAN BE MADE TO THE GOVERNMENT ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT. IF PAYMENTS ARE MADE AS AFORESAID, THEN NO DEDUCTION U/S.40(A)(IA) OF THE ACT CAN BE MADE. ADMITTEDLY I N THE PRESENT CASE THE ASSESSEE HAD DEPOSITED THE TAX DEDUCTED AT SOURCE ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT AND THEREFORE THE IMPUGNED DISALLOWANCE DES ERVES TO BE DELETED. WE ORDER ACCORDINGLY AND ALLOW THE APPEAL BY THE ASSESSEE. 9. THEREFORE, FOLLOWING THE AFORESAID DECISION IN T HE CASE OF SHRI PIYUSH C. MEHTA (SUPRA), WE DIRECT TO DELETE THE ADDITION OF RS.66,29,926/- AS MADE BY THE ASSESSING OFFICER UNDER SEC. 40(A)(IA) AND C ONFIRMED BY THE CIT(A) IN VIEW OF THE FACT THAT TDS AMOUNT IN RELATION TO THE SAID AMOUNT HAS BEEN PAID UNDISPUTEDLY BY THE ASSESSEE ON 04-08-2008 WHI CH IS BEFORE THE DUE DATE OF FILING OF THE RETURN UNDER SEC.139(1) OF TH E ACT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 11. THIS ORDER PRONOUNCED IN THE OPEN COURT SOON AF TER THE CONCLUSION OF HEARING ON 8 TH OCTOBER, 2012. SD/- SD/- (SHAMIM YAHYA) (U.B.S. BEDI ) ACCOUNTANT MEMER JUDICIAL M EMBER DATED: 8 TH OCTOBER, 2012. 17 ITA NO.1490/DEL/2012 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.