M/s. Satyam Petrochemicals, Satara V. Deputy Commissioner of Income-tax,

ITA 1860/PUN/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1753 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JADHAV
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Retrospective amendment; Non-deduction of tax
• Section: 194C; 201(1); 2

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE ! ' , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM ITA NO.1860/PN/2013 ASSESSMENT YEAR : 2009-10 M/S SATYAM PETROCHEMICALS, C/O NITIRAJ SERVICE CENTRE P B ROAD, UMBRAJ 415 109. PAN: ABHFS7366K .. APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, SATARA CIRCLE, SATARA. ... RESPONDENT / APPELLANT BY : SHRI C. H. NANIWADEKAR / DEPARTMENT BY : SHRI S. K. JADHAV / DATE OF HEARING : 26.05.2016 / DATE OF PRONOUNCEMENT: 31.05.2016 % / ORDER PER VIKAS AWASTHY, JM : THE PRESENT APPEAL BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- III, PUNE DAT ED 26.11.2012 FOR THE ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING ETHYL ACET ATE AND ETHANOL. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNE D ASSESSMENT YEAR ON 28.09.2009 DECLARING TOTAL INCOME OF RS.2,04,89,380 /-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGL Y FIRST NOTICE UNDER SECTION 2 ITA NO.1860/PN/2013 143(2) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) WAS ISSUED TO THE ASSESSEE ON 20.08.2010. DURING THE COURSE OF SCRUTINY ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER INTER-ALIA MADE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE AC T FOR NON-DEDUCTION OF TAX/SHORT DEDUCTION OF TAX AT SOUR CE ON THE PAYMENTS MADE TO VARIOUS PARTIES AGGREGATE TO RS.31,44,113/-. THE A SSESSING OFFICER HAD MADE DISALLOWANCE OF RS.9,60,138/- ON ACCOUNT OF SHORT D EDUCTION OF TAX AT SOURCE ON THE PAYMENTS MADE TO M/S MANGALMURTI ROADLINES. AGGRIEVED BY THE ASSESSMENT ORDER DATED 12.12.2011 , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 3. THE CIT(A) VIDE IMPUGNED ORDER PARTLY ACCEPTED T HE APPEAL OF THE ASSESSEE AND DELETED THE ADDITION UNDER SECTION 40(A)(IA) OF THE ACT TO THE EXTENT OF RS.93,000/- THEREBY CONFIRMING THE DISALLOWANCE TO THE TUNE OF RS.20,90,575/-. IN RESPECT OF SHORT DEDUCTION OF TAX ON THE PAYMENTS M ADE TO MANGALMURTI ROADLINES, THE CIT(A) REMITTED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE TDS AMOUNT REMITTED TO THE GOVT . EXCHEQUER. THE CIT(A) DIRECTED THE ASSESSING OFFICER TO RESTRICT THE DISA LLOWANCE TO THE EXTENT OF PAYMENTS/CREDITS NOT COVERED BY TDS. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN SECOND APPEAL BEFORE TRIBUNAL BY RAISING THE FOLLOWING GROUND OF APPEAL :- 1. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW I N UPHOLDING DISALLOWANCE OF RS. 16,38,000 BEING EXPENDITURE ON OBTAINING ELECTR ICAL SUPPLY U/S 40(A)(IA) OF THE ACT. THE LEARNED CIT(A) FAILED TO APPRECIATE THE NA TURE OF EXPENDITURE AS ALSO THE CONTENTIONS & ARGUMENTS ADVANCED IN THIS BEHALF. 2. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UPHOLDING DISALLOWANCE OF RS. 27,575 & RS. 4,25,000 BEING PROJECT FEES AND CO NSULTANCY FEES RESPECTIVELY FOR NEW CHEMICAL PROJECT U/S 40(A)(IA) OF THE ACT. HE O UGHT TO HAVE HELD THAT NO TAX WAS REQUIRED TO BE DEDUCTED ON THESE PAYMENTS AND PROVI SIONS OF SEC. 40(A)(IA) WERE NOT APPLICABLE. 3. WITHOUT PREJUDICE TO GROUND 2 ABOVE, THE LEARNED CIT(A) OUGHT TO HAVE ALLOWED DEPRECIATION ON THESE PROJECT FEES AND CONS ULTANCY FEES BY TREATING THEM AS PART OF CAPITAL ASSETS. 3 ITA NO.1860/PN/2013 4. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UPHOLDING IN PRINCIPLE THE DISALLOWANCE OF CARRIAGE OUTWARD EXPENSES PAID TO M /S MANGAL MURTI ROADLINES ON ACCOUNT OF ALLEGED SHORT DEDUCTION OF TAX AND DIREC TING THE ALLOWANCE ONLY TO THE EXTENT OF AMOUNTS COVERED BY TDS MADE. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ALL ANY OF THE ABOVE GROUNDS OF APPEAL. 5. SHRI C. H. NANIWADEKAR APPEARING ON BEHALF OF TH E ASSESSEE SUBMITTED THAT PAYEES HAVE SHOWN THE AMOUNT IN THEIR RESPECTIVE RE TURNS OF INCOME AND HAVE PAID THE TAX THEREON. THE LD. AR FURTHER SUBMITTED THAT AS PER SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WHERE AN ASSESSEE FAILS TO DED UCT THE WHOLE OR PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B AN D THE ASSESSEE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVIS O TO SUB-SECTION (1) OF SECTION 201, THEN IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INC OME. TO SUPPORT HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE DECI SION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF VIVEK DATTATRAYA GUPTE HU F VS. ITO IN ITA NOS.406 & 407/PN/2014 FOR THE ASSESSMENT YEARS 2008-09 & 2009 -10 RESPECTIVELY, DECIDED ON 16.12.2015. THE LD. AR FURTHER SUBMITTED IN RESPECT OF SHORT D EDUCTION OF TAX THAT NO DISALLOWANCE CAN BE MADE ON THE SHORT DEDUCTION OF TAX AS THE PROVISIONS OF SECTION 40(A)(IA) APPLY ONLY IN CASE OF NON-DEDUCTION OF TA X ON THE PAYMENTS MADE. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR PLACED RELIA NCE ON THE DECISION OF COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF APOLLO TYRES L TD. VS. DCIT REPORTED AS (2013) 155 TTJ 470 (COCH.) AND THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. PANKAJ BHARGAVA REPORTED AS (2013) 36 CCH 343 (DEL.-TRIB.). 6. ON THE OTHER HAND, SHRI S. K. JADHAV REPRESENTIN G THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF THE CIT(A) ON ISSUE. THE LD. DR CONTENDED THAT SINCE THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE TO THE RESPECTIVE PARTIES, THE ASSESSING OFFICER HAS R IGHTLY INVOKED THE PROVISIONS OF 4 ITA NO.1860/PN/2013 SECTION 40(A)(IA) OF THE ACT AND HAS RIGHTLY MADE T HE DISALLOWANCE ON SUCH PAYMENTS. IN RESPECT OF PAYMENTS MADE TO MANGALMUR TI ROADLINES, THE ASSESSEE HAS DEDUCTED TAX AT SOURCE AT RS.10,570/- INSTEAD O F DEDUCTING RS.20,517/-. IT IS NOT THE CASE WHERE SHORT FALL IN TDS WAS DUE TO DIF FERENCE OF OPINION AS TO THE TAXABILITY OF AN ITEM. THE ASSESSEE WAS DUTY BOUND TO DEDUCT TAX AT SOURCE AS PER THE PROVISIONS OF SECTION 194C OF THE ACT. THE PRO VISIONS OF SECTION 40(A)(IA) ARE ATTRACTED EVEN IN CASE OF SHORT DEDUCTION OF TAX AT SOURCE. THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE AND CONFIRMIN G THE IMPUGNED ORDER. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE RIVAL PARTIES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE GROUND NO.1 & 2 RAISED IN THE PRESENT APPEAL IS WITH RESPECT TO THE DISALLOWANCE MADE UNDER SECT ION 40(A)(IA) ON THE FOLLOWING PAYMENTS :- (I) PAYMENTS TO M/S PANKAJ & CO. FOR ERECTION OF ELECTRICAL LINES ON CONTRACT : RS.16,38,000/- (II) PROJECT REPORT FEES TO ADEPT CONSULTANTS : RS. 27,575/- (III) CONSULTATION FEES TO SHRI SHASHIKANT PISE : RS. 4,25,000/- 8. THE CONTENTION OF THE ASSESSEE IS THAT THE PAYEE S HAVE SHOWN THE ABOVE- SAID AMOUNTS IN THEIR RESPECTIVE RETURNS OF INCOME AND HAS PAID TAX THEREON. FURTHER, THE ASSESSEE HAS NOT BEEN HELD TO BE ASSES SEE IN DEFAULT UNDER THE PROVISIONS OF SECTION 201. THEREFORE, NO DISALLOWA NCE UNDER SECTION 40(A)(IA) OF THE ACT CAN BE MADE IN VIEW OF THE PROVISO INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013. WE FIND THAT SIMILAR ISSUE HAD COME UP BEFORE THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF VIVEK DATTATRAYA GUP TE HUF VS. ITO (SUPRA). SIMILAR LEGAL PLEA WAS RAISED IN THE AFORESAID CASE TAKING THE SHELTER OF THE NEWLY INSERTED SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. THE CO-ORDINATE BENCH OF THE TRIBUNAL WHILE DEALING WITH THE ISSUE HELD AS U NDER :- 5 ITA NO.1860/PN/2013 10. NOW, COMING TO THE SECOND ASPECT OF THE ISSUE I.E. NEW LEGAL PLEA RAISED BY THE ASSESSEE IN VIEW OF SECOND PROVISO TO SECTION 4 0(A)(IA) OF THE ACT, WHICH WAS INSERTED BY THE FINANCE ACT, 2012. THE TRIBUNAL IN ACIT VS. BHAVOOK CHANDRAPRAKASH TRIPATHI (SUPRA) WHILE ADJUDICATING SIMILAR ISSUE HAD OBSERVED AS UNDER:- 4. FOLLOWING THE AFORESAID PRECEDENT, WE HEREBY RE VERSE THE DECISION OF THE CIT(A). HOWEVER, AT THE TIME OF HEARING, THE LD. RE PRESENTATIVE FOR THE RESPONDENT-ASSESSEE MADE A NEW LEGAL ARGUMENT THAT SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WAS INSERTED BY FINANC E ACT, 2012 W.E.F. 01.04.2013, WHEREBY IT IS PROVIDED THAT THE DISALLO WANCE U/S 40(A)(IA) OF THE ACT WOULD NOT BE MADE IF THE ASSESSEE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SECTION 201(1) O F THE ACT. THE STAND OF THE ASSESSEE IS THAT THE SAID PROVISO SHOULD BE UNDERST OOD AS RETROSPECTIVE IN NATURE AS IT HAS BEEN INTRODUCED TO ELIMINATE UNINT ENDED CONSEQUENCES WHICH MAY CAUSE UNDUE HARDSHIPS TO THE TAX PAYERS. IT WAS POINTED OUT THAT IN SIMILAR CIRCUMSTANCES, THE PUNE BENCH OF THE TRI BUNAL IN THE CASE OF ITO VS. M/S GAURIMAL MAHAJAN & SONS VIDE ITA NO.1852/PN /2012 DATED 06.01.2014 FOLLOWING THE DECISION OF THE COCHIN BEN CH OF THE TRIBUNAL IN THE CASE OF ANTONY D. MUNDACKAL VS. ACIT VIDE ITA NO.38 /COCH/2013 DATED 29.11 .2013 HAS RESTORED THE MATTER BACK TO THE FIL E OF THE ASSESSING OFFICER. IN THE PRECEDENT DATED 06.01.2014 (SUPRA), THE TRIB UNAL NOTED THAT SUCH A PLEA WAS RAISED FOR THE FIRST TIME BEFORE THE TRIBU NAL AND THE CORRECTNESS OR OTHERWISE OF THE CONTENTIONS RAISED WAS NOT EXAMINE D BY THE LOWER AUTHORITIES. THEREFORE, THE TRIBUNAL RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION AFRESH, FOLLOWING THE DECISION OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF ANTONY D. MUNDACKAL (SUPRA) IN A SIMILAR CIRCUM STANCE. THE LD. REPRESENTATIVE SUB MITTED THAT THE MATTER BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER IN THE LIGHT OF THE ORDER OF THE TRIBUNAL DATED 06,01.2014 (SUPRA). THE AFORESAI D PLEA OF THE RESPONDENT-ASSESSEE HAS NOT BEEN SERIOUSLY OPPOSED BY THE LD. DEPARTMENTAL REPRESENTATIVE APPEARING FOR THE REVEN UE. 5. FOLLOWING THE AFORESAID PRECEDENT, WE THEREFORE DEEM IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSIN G OFFICER WHO SHALL CONSIDER THE PLEA OF THE ASSESSEE BASED ON THE SECO ND PROVISO TO SECTION 40(A)(IA) OF THE ACT INSERTED BY THE FINANCE ACT W. E.F. 01.04.2013 IN THE LIGHT OF THE DIRECTIONS OF THE TRIBUNAL CONTAINED IN ITS ORDER DATED 06.01.2014 (SUPRA). NEEDLESS TO SAY, THE ASSESSING OFFICER SH ALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE PASSIN G AN ORDER AFRESH ON THIS ASPECT AS PER LAW. 11. THE ISSUE RAISED IN THE PRESENT APPEALS IS SQUA RELY COVERED BY THE ORDER OF TRIBUNAL (SUPRA) AND FOLLOWING THE SAME PARITY OF R EASONING, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER, W HO SHALL CONSIDER THE PLEA OF THE ASSESSEE BASED ON THE PROVISIONS OF THE ACT INSERTE D BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013 AND IN LINE WITH EARLIER ORDER OF THE TRIBUNAL DATED 06.01.2014 (SUPRA), THE ASSESSING OFFICER IS DIRECTED TO ADJUD ICATE THE ISSUE IN ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARI NG TO THE ASSESSEE. 9. SINCE THE ISSUE BEFORE US IS SIMILAR, WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF DIRECTIONS OF THE TRIBUNAL GIVEN IN THE AFORESAI D ORDER. THE ASSESSING OFFICER AFTER GRANTING AN OPPORTUNITY OF HEARING TO THE ASS ESSEE SHALL DECIDED THIS ISSUE 6 ITA NO.1860/PN/2013 AFRESH IN ACCORDANCE WITH LAW. ACCORDINGLY, GROUND NOS.1 & 2 RAISED IN THE APPEAL BY ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO.3 RAISED IN THE APPEAL IS AN ALTERNAT E TO THE GROUND NOS.1 & 2. SINCE WE HAVE ALREADY ACCEPTED THE PLEA OF THE ASSE SSEE IN RESPECT OF GROUND NOS.1 & 2, THE GROUND NO.3 HAS BECOME INFRUCTUOUS. 11. IN GROUND NO.4, THE ASSESSEE HAS ASSAILED THE F INDINGS OF CIT(A) IN UPHOLDING THE PRINCIPLE OF DISALLOWANCE OF EXPENSES ON ACCOUNT OF ALLEGED SHORT DEDUCTION OF TAX AND DIRECTING THE ASSESSING OFFICE R TO ALLOW EXPENDITURE TO THE EXTENT OF AMOUNT COVERED BY TDS MADE. THE ASSESSEE HAS MADE PAYMENT OF RS.9,60,138/- TO M/S MANGALMURTI ROADLINES. THE AS SESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE ON PAYMENTS UNDER THE PROVISIONS OF S ECTION 194C OF THE ACT. OSTENSIBLY, THE ASSESSEE DEDUCTED TAX OF RS.10,570/ - ON THE AFORESAID PAYMENTS INSTEAD OF RS.21,507/-. ADMITTEDLY, THERE WAS SHOR T DEDUCTION OF TAX BY THE ASSESSEE ON THE AFORESAID PAYMENTS. THE ASSESSING OFFICER MADE DISALLOWANCE OF THE ENTIRE AMOUNT. IN FIRST APPEAL, THE CIT(A) GRA NTED PARTIAL RELIEF TO THE ASSESSEE. THE CONTENTION OF THE LD. AR IS THAT NO DISALLOWANC E IS TO BE MADE ON THE PAYMENTS WHERE THERE IS SHORT DEDUCTION OF TAX. RELIANCE HA S BEEN PLACED ON THE DECISION RENDERED IN THE CASE OF APOLLO TYRES LTD. VS. DCIT (SUPRA). THE COCHIN BENCH OF THE TRIBUNAL WHILE DEALING WITH THE SIMILAR ISSUE H AS HELD AS UNDER :- 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULL Y GONE THROUGH THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, WHICH READS AS FOLLOW S: '(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 WHI CH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDU CTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED I N SUB-SECTION (1) OF SECTION 139: PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEE N DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING THE PR EVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 13 9, SUCH SUM SHALL BE ALLOWED AS A 7 ITA NO.1860/PN/2013 DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS Y EAR IN WHICH SUCH TAX HAS BEEN PAID. EXPLANATION.- FOR THE PURPOSES OF THIS SUB-CLAUSE.- (I) 'COMMISSION OR BROKERAGE' SHALL HAVE THE SAME M EANING AS IN CLAUSE (I) OF THE EXPLANATION TO SECTION 194H; (II) 'FEES FOR TECHNICAL SERVICES' SHALL HAVE THE S AME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB- SECTION (1) OF SECTION 9; (III) 'PROFESSIONAL SERVICES' SHALL HAVE THE SAME M EANING 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; (V) 'RENT' SHALL HAVE THE SAME MEANING AS IN CLAUSE (I) TO THE EXPLANATION TO SECTION 194-I; (VI) 'ROYALTY' SHALL HAVE THE SAME MEANING AS IN EX PLANATION 2 TO CLAUSE (VI) OF SUB- SECTION (1) OF SECTION 9;' THEREFORE, SECTION 40(A)(IA) ENABLES THE ASSESSING OFFICER TO DISALLOW ANY PAYMENT TOWARDS INTEREST, COMMISSION OR BROKERAGE, FEE FOR PROFESSIONAL SERVICE, FEES FOR TECHNICAL SERVICE ETC. ON WHICH TAX IS DEDUCTIBLE A T SOURCE UNDER CHAPTER XVIIB AND IF SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTIO N HAS NOT BEEN PAID. 9. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIO NS OF SECTION 201(1A) WHICH READS AS FOLLOWS: '(1A) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SE CTION (1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPANY AS IS REFERRED TO IN T HAT SUB-SECTION DOES NOT DEDUCT THE WHOLE OR ANY PART OF THE TAX OR AFTER DEDUCTING FAI LS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT SHALL BE LIABLE TO PAY SIM PLE INTEREST,- (I) AT ONE PER CENT FOR EVERY MONTH OR PART OF A MO NTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO T HE DATE ON WHICH SUCH TAX IS DEDUCTED; AND (II) AT ONE AND ONE-HALF PER CENT FOR EVERY MONTH O R PART OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DED UCTED TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID, AND SUCH INTEREST SHALL BE PAID BEFORE FURNISHING T HE STATEMENT IN ACCORDANCE WITH THE PROVISIONS OF SUB- SECTION (3) OF SECTION 200.) ' SECTION 201(1A) ENABLES THE ASSESSING OFFICER TO LE VY INTEREST IN CASE THE TAX WAS NOT DEDUCTED EITHER WHOLLY OR PARTLY OR AFTER DEDUC TION IT WAS NOT PAID AS REQUIRED UNDER THE ACT. IN FACT, THE PROVISIONS OF SECTION 201(1A) WAS AMENDED BY FINANC E ACT, 2001 WITH RETROSPECTIVE EFFECT FROM 01-04-1962 AFTER THE JUDGMENT OF THE AN DHRA PRADESH HIGH COURT IN P.V. RAJAGOPAL (SUPRA) 10. AS RIGHTLY POINTED OUT BY THE LD.SENIOR COUNSEL FOR THE ASSESSEE IN SECTION 201(1A) THE LEGISLATURE INTENDED TO LEVY INTEREST E VEN IN CASE OF SHORT DEDUCTION OF TAX. IN OTHER WORDS, IF ANY PART OF THE TAX WHICH R EQUIRED TO BE DEDUCTED WAS FOUND TO BE NOT DEDUCTED THEN INTEREST U/S 201(1A) CAN BE LEVIED IN RESPECT OF THAT PART OF THE AMOUNT WHICH WAS NOT DEDUCTED. WHEREAS THE LANG UAGE OF SECTION 40(A)(IA) DOES NOT SAY THAT EVEN FOR SHORT DEDUCTION DISALLOW ANCE HAS TO BE MADE PROPORTIONATELY. THEREFORE, THE LEGISLATURE HAS CLE ARLY ENVISAGED IN SECTION 201(1A) FOR LEVY OF INTEREST ON THE AMOUNT ON WHICH TAX WAS NOT DEDUCTED WHEREAS THE LEGISLATURE HAS OMITTED TO DO SO IN SECTION 40(A)(I A) OF THE ACT. IN OTHER WORDS, THE PROVISIONS OF SECTION 40(A) (IA) DOES NOT ENABLE TH E ASSESSING OFFICER TO DISALLOW ANY PROPORTIONATE AMOUNT FOR SHORT DEDUCTION OR LESSER DEDUCTION. 8 ITA NO.1860/PN/2013 12. THUS, IN VIEW OF THE ABOVE DECISION OF THE CO-O RDINATE BENCH OF THE TRIBUNAL AND THE FACTS OF THE PRESENT CASE, WE HOLD THAT PRO VISIONS OF SECTION 40(A)(IA) ARE NOT ATTRACTED WHERE THERE IS SHORT DEDUCTION OF TAX . ACCORDINGLY, NO DISALLOWANCE UNDER SECTION 40(A)(IA) IN RESPECT OF PAYMENTS MADE TO M/S MANGALMURTI ROADLINES WHEREIN THE ASSESSEE HAD MADE SHORT DEDUCTION OF TA X CAN BE MADE. HENCE, THE GROUND NO.4 RAISED IN THE APPEAL IS ALLOWED. 13. THE GROUND NO.5 RAISED IN THE APPEAL IS GENERAL IN NATURE AND HENCE, DOES NOT REQUIRE ANY ADJUDICATION. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ACCEPTED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON TUESDAY, THE 31 ST DAY OF MAY, 2016. SD/- SD/- ( R.K. PANDA ) ( VIKAS AWASTHY ) / ACCOUNTANT MEMBER # / JUDICIAL MEMBER PUNE ; DATED : 31 ST MAY, 2016. %&'#()!*!+( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-III, PUNE; 4) THE CIT-III, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE