Agribiotech Industries Limited SP-825, VKIA, Jaipur, VKIA, Jaipur V. Income Tax Officer Ward-4(2), Jaipur, Ward-4(2), Jaipur

ITA 264/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7780 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA J DHK
• Keywords: Depreciation; Business expenditure; Rule of consistency; Retrospective amendment; Question of law; Non compliance; Right to appeal; TDS; Set aside
• Section: 43B; 143(3); 40(a)(ia); 205; 201; 139(1); 43; 40a(ia); 13; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH 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. 264/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 M/S. AGRIBIOTECH INDUSTRIES LTD. SP-825, VKIA JAIPUR CUKE VS. THE ITO WARD- 4(2) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAFCA 1695 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI HIMANSHU GOYAL, CA JKTLO DH VKSJ LS@ REVENUE BY : SHRI K.C. GUPTA, JCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08/01/2020 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13 /01/2020 VKNS'K@ ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 24-01-2018 OF LD. CIT(A)-2, JAIPUR FOR THE ASS ESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY THE LD. CIT(A) IS BAD BOTH IN THE EYES OF LAW AND ON FACTS. 2. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND FACTS OF THE CASE IN PARTLY SUSTAINING THE ASSESSMENT U/S 143(3) OF ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 2 THE I.T. ACT. THE SAME IS ILLEGAL, AGAINST THE PROV ISIONS CONTAINED IN THE I.T. ACT DESERVES TO BE QUASHED AN D THE DISALLOWANCE MADE DESERVES TO BE DELETED. 3. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF A SUM OF RS. 1,13,481/- FOR NON-DEDUCTION OF TDS ON INTEREST PAI D TO FINANCIAL INSTITUTIONS. THE DISALLOWANCES SO MADE A RE ILLEGAL, AGAINST THE PROVISIONS CONTAINED IN THE I.T. ACT AN D DESERVES TO BE DELETED. 4. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF SUM O F RS. 2,88,190/- OUT OF EMPLOYEES CONTRIBUTION TO PF DEPO SITED AFTER DUE DATE UNDER THE PF ACT BUT BEFORE FILING O F ITR FOR THE YEAR UNDER CONSIDERATION. THE DISALLOWANCES SO MADE ARE ILLEGAL, AGAINST THE PROVISIONS CONTAINED IN THE I. T. ACT AND DESERVES TO BE DELETED. 5. (I) THE LD. CIT(A) HAS ERRED BOTH IN LAW AND FACTS OF THE CASE IN CONFIRMING THE PARTIAL DISALLO WANCE OF SUM OF RS. 3,00,000/- OUT OF TOTAL LUMP SUM DISALLO WANCE MADE BY AO OF RS. 6,00,000/- AGAINST THE FOLLOWING TOTAL EXPENSES:-. GENERAL & MISC. EXPENSES RS. 17,34,360/- MOTOR VEHICLE RUNNING MAINTENANCE CHARGES RS. 13,8 6,562/- TELEPHONE EXPENSES RS. 2,66,838/- TRAVELLING EXPENSES RS. 36,08,986/- BUSINESS EXPENSES RS.5,42,006/- AND DEPRECIATION RS. 11,42,042/- TREATING THE COMPONENT OF PERSONAL AND NON-BUSINESS USE. (II) THE DISALLOWANCE SO MADE ARE IN ARBITRARY MANN ER AND WITHOUT APPRECIATING THE FACT THAT THERE CANNOT BE A PERSONAL EXPENSE IN THE CASE OF COMPANY. ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 3 2.1 THE GROUND NOS. 1 AND 2 OF THE ASSESSEE ARE GEN ERAL IN NATURE AND THE ASSESSEE HAS NOT PRESSED THESE GROUNDS AS NO AR GUMENT WAS ADVANCED ON BEHALF OF THE ASSESSEE. ACCORDINGLY, THE GROUND NO. 1 AND 2 OF THE ASSESSEE ARE DISMISSED BEING NOT PRESSED. 3.1 THE GROUND NO. 3 OF THE ASSESSEE IS REGARDING D ISALLOWANCE U/S 40(A)(IA) IN RESPECT OF INTEREST PAID TO NBFC WITHO UT DEDUCTION OF TDS. 3.2 THE AO HAS DISALLOWED A SUM OF RS. 1,13,481/- O N ACCOUNT OF INTEREST PAID TO NBFC FOR NON-DEDUCTION OF TDS. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A). HOWEVER , THE ASSESSEE COULD NOT SUCCEED AS THE LD. CIT(A) HAS OBSERVED THAT THO UGH THE PAYMENT WAS MADE TO NBFC BUT THE ASSESSEE HAS NOT FURNISHED THE CERTIFICATE IN FORM NO. 26A TO SHOW THAT NBFC HAS DECLARED THIS AMOUNT IN ITS INCOME. 3.3 BEFORE US, THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE INTEREST OF RS. 1,13,481/- WAS PAID TO M/S. KOTAK MAHINDRA PVT. LTD. WHICH IS A LISTED NBFC. SINCE THE SAID COMPANY IS A REGULAR IN COME TAX ASSESSEE, THEREFORE, THE INTEREST PAID BY THE ASSESSEE IS PAR T OF ITS INCOME OFFERED TO TAX IN VIEW OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT AND NO DISALLOWANCE IS CALLED FOR. THE LD.AR OF THE ASSESS EE FURTHER CONTENDED THAT THE INTENTION OF THE LEGISLATURE IS THAT TAX M UST BE PAID ON THE INCOME AND IF THE PARTY TO WHOM THE PAYMENT HAS BEEN MADE, HAS INCLUDED THE ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 4 AMOUNTS IN ITS INCOME THEN THE ASSESSEE WHO FAILS T O DEDUCT TDS WILL NOT BE CONSIDERED AS ASSESSEE IN DEFAULT. IN THE CASE O F THE ASSESSEE, THE PAYMENT WAS MADE TO NBFC AND IT CANNOT BE PRESUMED THAT IT WOULD NOT HAVE FILED ITS RETURN OF INCOME OR WOULD NOT HAVE P AID ITS TAX. IN SUPPORT OF HIS CONTENTIONS, THE LD.AR OF THE ASSESSEE RELI ED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF ACCME (URVASHI PUMPS) ENGG. (P) LTD. VS JCIT (OSD), 90 TAXMANN.COM 189 (JAIPUR TRIB). 3.4 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THOUGH THE PAYMENT WAS MADE TO NBFC BUT THE ASSESSEE HAS NOT F ILED THE CERTIFICATE IN FORM NO. 26A TO SHOW THAT THE RECIPIENT HAS DECL ARED THIS AMOUNT IN ITS INCOME AND PAID THE TAX. THEREFORE, NON-COMPLIANCE OF FURNISHING OF CERTIFICATE BY THE ASSESSEE MADE IT ILLEGIBLE TO TA KE THE BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 3.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE RED THE RELEVANT MATERIALS AVAILABLE ON RECORD. AT THE OUTSET WE NOT E THAT THE FACTS REGARDING THE PAYMENT OF INTEREST TO NBFC WITHOUT D EDUCTION OF TDS ARE NOT IN DISPUTE. THE LD. CIT(A) HAS CONSIDERED THIS ISSUE IN PARA 2.3. AND 2.3.1 AS UNDER:- ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 5 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. IT IS SEEN THAT THE ASSESSING OFFICER MADE DISALLOWANCE O F INTEREST OF RS. 1,13,481/- ON ACCOUNT OF NON-DEDUCTION OF TD S BY APPLYING PROVISIONS OF SECTION 40A(IA) OF THE I.T. ACT, 1961.LD. AUTHORISED REPRESENTATIVE ARGUED THAT INTE REST HAS BEEN PAID TO M/S. KOTAK MAHINDRA PVT. LTD WHICH IS A LISTED NBFC. IT CANNOT BE ASSUMED THAT THIS COMPANY HAS NO T DISCLOSED THE INTEREST INCOME. PROVISIONS OF SECTIO N 40A(IA) HAVE BEEN AMENDED WITH RETROSPECTIVE EFFECT ACCORDI NG TO AUTHORISED REPRESENTATIVE.. 2.3.1 OVERALL FACTS INDICATE THAT THERE IS NO DISPU TE ON THE FACT THAT TAX WAS NOT DEDUCTED AT SOURCE ON PAY MENT OF INTEREST. THE APPELLANT HAS ALSO NOT FILED CERTIFIC ATE IN FORM NO. 26A THAT NBFC HAS DECLARED THIS AMOUNT IN THEIR INCOME. THEREFORE, I FIND THAT THE DISALLOWANCE WAS CORRECTLY MADE BY THE ASSESSING OFFICER. HENCE, THE SAME IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. THUS THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE MADE BY THE AO ON THE GROUND THAT THE ASSESSEE HAS NOT FILED THE CERT IFICATE IN FORM NO. 26A TO SHOW THAT NBFC HAS CONSIDERED THIS INTEREST PAYM ENT AS PART OF ITS INCOME AND PAID THE TAX. ONCE THE PAYMENT IS MADE T O THE WELL-KNOWN REGISTERED NBFC THEN GENERALLY IT IS EXPECTED THAT NBFC HAS CONSIDERED THE INTEREST RECEIPT AS PART OF ITS INCOME AND PAID THE TAX. IN ORDER TO VERIFY THIS FACT, THE ASSESSEE IS REQUIRED TO FILE THE CERTIFICATE IN FORM NO 26A. IN THE CASE IN HAND, THOUGH THE ASSESSEE EXPLA INED ALL THE FACTS BUT DUE TO NON-FILING OF CERTIFICATE IN FORM NO. 26A, T HE DISALLOWANCE IS ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 6 SUSTAINED BY THE LD. CIT(A). THIS TRIBUNAL IN THE C ASE OF ACCME (URVASHI PUMPS) ENGG. PVT. LTD.VS . CIT (OSD), (SUP RA) HAS CONSIDERED THE IDENTICAL ISSUE IN PARA 7 AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL A S RELEVANT MATERIAL ON RECORD. THE ASSESSEE CONTENDED BEFORE T HE LD. CIT(A) THAT THE INTEREST PAID TO 3 NBFCS NAMELY RELIANCE CAPITAL LI MITED, BARCLAYS BANK AND CHOLAMANDALAM DBC FINANCE LIMITED WAS INCLUDED IN T HE RETURN OF INCOME FILED BY THESE NON BANKING FINANCIAL COMPANIES THER EFORE, IN VIEW OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT NO D ISALLOWANCE 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 RETROSPECTI VE EFFECT. WE FIND THAT HON'BLE DELHI HIGH COURT IN CASE OF NARESH KUMAR (SUPRA) WHILE DEALING WITH AN IDENTICAL ISSUE HAS HELD IN PARAS 15 TO 29 AS UN DER: '15. QUESTION WHETHER THE AMENDMENT IS RETROSPECTIV E OR PROSPECTIVE IS VEXED AND RIGID RULE CAN BE APPLIED UNIVERSALLY. VARIOUS RULES OF INTERPRETATION HAVE DEVELOPED IN ORDER TO DETERMINE WHETHER OR NOT, AN AMENDMENT IS RETROSPECTIVE OR PROSPECTIVE. FISCAL STATUTES IMPOSING LIABILITIE S ARE GOVERNED BY NORMAL PRESUMPTION THAT THEY ARE NOT RETROSPECTIVE. THE CA RDINAL RULE IS THAT THE LAW TO BE APPLIED, IS THAT WHICH IS IN FORCE ON THE FIRST DAY OF THE ASSESSMENT YEAR, UNLESS OTHERWISE MANDATED EXPRESSLY OR PROVIDED BY NECESSARY IMPLICATION. THE AFORESAID DICTUM IS BASED UPON THE PRINCIPLE TH AT A NEW PROVISION CREATING A LIABILITY OR AN OBLIGATION, AFFECTING OR TAKING A WAY VESTED RIGHTS OR ATTACHING NEW DISABILITY IS PRESUMED TO BE PROSPECTIVE. HOWEV ER, IT IS ACCEPTED THAT LEGISLATURES HAVE PLENARY POWER TO MAKE RETROSPECTI VE AMENDMENTS, SUBJECT TO CONSTITUTIONAL RESTRICTIONS. 16. BASED UPON THE AFORESAID BROAD DICTUM, JUDGES A ND JURISTS HAVE DRAWN DISTINCTION BETWEEN PROCEDURAL AND SUBSTANTIVE PROV ISIONS. SUBSTANTIVE PROVISIONS DEAL WITH RIGHTS AND THE SAME ARE FUNDAM ENTAL, WHILE PROCEDURAL LAW IS CONCERNED WITH THE LEGAL PROCESS INVOLVING A CTIONS AND REMEDIES. AMENDMENTS TO SUBSTANTIVE LAW ARE TREATED AS PROSPE CTIVE, WHILE AMENDMENTS TO PROCEDURAL LAW ARE TREATED AS RETROSPECTIVE. THI S DISTINCTION ITSELF IS NOT FREE FROM DIFFICULTIES AS RIGHT TO APPEAL HAS BEEN HELD TO BE A SUBSTANTIVE LAW, BUT LAW OF LIMITATION IS REGARDED AS PROCEDURAL. THERE IS AN INTERPLAY AND INTERCONNECT BETWEEN WHAT CAN BE REGARDED AS SUBSTA NTIVE AND PROCEDURAL LAW [SEE CITV. SHRAWAN KUMAR SWARUP & SONS [1998] 232 ITR 123(ALL.) ]. 17. THERE ARE DECISIONS, WHICH HOLD THAT PROCESS OF LITIGATION OR ENFORCEMENT OF LAW IS PROCEDURAL. SIMILARLY, MACHINERY PROVISION F OR COLLECTION OF TAX, RATHER THAN TAX ITSELF IS PROCEDURAL. READ IN THIS CONTEXT , IT CAN BE STRONGLY ARGUED THAT ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 7 SECTION 40(A)(IA) AT LEAST TO THE EXTENT OF THE AME NDMENT IS PROCEDURAL AS BY ENACTING SECTION 40(A)(IA) THE LEGISLATURE DID NOT WANT TO IMPOSE A NEW TAX BUT WANTED TO ENSURE COLLECTION OF TDS AND THE AMENDMEN TS MADE STREAMLINE AND REMEDY THE ANOMALIES NOTICED IN THE SAID PROCEDURE BY ALLOWING DEDUCTION IN THE YEAR WHEN THE EXPENDITURE IS INCURRED PROVIDED TDS IS PAID BEFORE THE DUE DATE FOR FILING OF THE RETURN. REMEDIAL STATUTES AR E NORMALLY NOT RETROSPECTIVE, ON THE GROUND THAT THEY MAY AFFECT VESTED RIGHTS. B UT THESE STATUTES ARE CONSTRUED LIBERALLY WHEN JUSTIFIED AND RULE AGAINST RETROSPECTIVITY MAY BE APPLIED WITH LESS RESISTANCE [SEE BHARAT SINGH V. M ANAGEMENT OF NEW DELHI TUBERCULOSIS CENTRE [1986] 2 SCC 614 AND WORKMEN FI RESTONE TYRE & RUBBER CO. OF INDIA (P.) LTD. V. MANAGEMENT AIR 197 3 SC 1227. 18. IT IS INTERESTING TO NOTE THAT EARLIER ENGLISH DECISIONS HAVE HELD THAT AN ENACTMENT FIXING A PENALTY OR MAXIMUM PENALTY FOR O FFENCE IS MERELY PROCEDURAL FOR THE PURPOSE OF DETERMINING RETROSPEC TIVITY [SEE DPP V. LAMB [1941] 2 KB 89) AND R V. OLIVER [1944] 29 CR. APP. 137. THIS VIEW, HOWEVER, HAS BEEN CRITICIZED IN REHERD ATHLUMNEY, IN RE [189 8] 2 QB 547 ON THE GROUND THAT HIGHER OR GREATER PUNISHMENT IMPAIRS EXISTING RIGHTS OR OBLIGATION; '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 THAN AS REGARDS MATT ERS OF PROCEDURE, UNLESS THAT EFFECT CANNOT BE AVOIDED WITHOUT DOING VIOLENCE TO THE LANGUAGE OF THE ENACTMENT. IF THE ENACTMENT IS EXPRESSED IN LANGUAG E WHICH IS FAIRLY CAPABLE OF EITHER INTERPRETATION, IT OUGHT TO BE CONSTRUED AS PROSPECTIVE ONLY.' 19. THE WORD 'FAIRLY' USED IN THE AFORESAID QUOTATI ON IS IMPORTANT AND RELEVANT, BUT FOR APPLICATION OF ANOTHER RULE OF INTERPRETATI ON. G.P. SINGH IN 'PRINCIPLES OF STATUTORY INTERPRETATION', 13TH EDITION, 2012 AT PAGE 538 UNDER THE SUB- HEADING 'RECENT STATEMENTS OF THE RULE AGAINST RETR OSPECTIVITY' HAS GREATLY EMPHASIZED THE PRINCIPLE OF FAIRNESS AND OBSERVED T HAT CLASSIFICATION OF STATUTE EITHER SUBSTANTIVE OR PROCEDURAL DOES NOT NECESSARI LY DETERMINE WHETHER THE ENACTMENT OR AMENDMENT HAS RETROSPECTIVE OPERATION, E.G., LAW OF LIMITATION IS PROCEDURAL BUT ITS APPLICATION TO PAST CAUSE OF ACT ION MAY RESULT OF REVIVING OR EXTINGUISHING A RIGHT, AND SUCH OPERATION CANNOT BE SAID TO BE PROCEDURAL. SIMILARLY, WHEN REQUISITES OF AN ACTION UNDER THE N EW STATUTE, DRAWS FROM A TIME INCIDENT TO ITS PASSING, RULE AGAINST RETROSPE CTIVITY MAY NOT BE APPLICABLE. 20. IN THE SAID TEXT, REFERENCE HAS BEEN MADE TO FO RMULATION BY DIXON, C.J. IN MAXWELL V. MURPHY [1957] 96 CLR 261 HOLDING: 'THE GENERAL RULE OF THE COMMON LAW IS THAT A STATU TE CHANGING THE LAW OUGHT NOT, UNLESS THE INTENTION APPEARS WITH REASONABLE C ERTAINTY, TO BE UNDERSTOOD AS APPLYING TO FACTS OR EVENTS THAT HAVE ALREADY OCCUR RED IN SUCH A WAY AS TO CONFER OR IMPOSE OR OTHERWISE AFFECT THE RIGHTS OR LIABILITIES WHICH THE LAW HAD DEFINED BE REFERENCE TO THE PAST EVENTS. BUT GIVEN THE RIGHTS AND LIABILITIES FIXED BY REFERENCE TO THE PAST FACTS, MATTERS OR EVENTS, THE LAW APPOINTING OR ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 8 REGULATING THE MANNER IN WHICH THEY ARE TO BE ENFOR CED OR THEIR ENJOYMENT IS TO BE SECURED BY JUDICIAL REMEDY IS NOT WITHIN THE APP LICATION OF SUCH A PRESUMPTION'. 21. IDENTICALLY, IN SECRETARY OF STATE FOR SOCIAL S ECURITY V. TUNNICLIFFE [1991] 2 ALL ER 712 (CA), STAUGHTON, L.J. HAS EXPRESSED THE SAID PRINCIPLE IN THE FOLLOWING WORDS: 'THE TRUE PRINCIPLE IS THAT PARLIAMENT IS PRESUMED NOT TO HAVE INTENDED TO ALTER THE LAW APPLICABLE TO PAST EVENTS AND TRANSACTIONS IN A MANNER WHICH IS UNFAIR TO THOSE CONCERNED IN THEM UNLESS A CONTRARY INTENT ION APPEARS. IT IS NOT SIMPLY A QUESTION OF CLASSIFYING AN ENACTMENT AS RETROSPEC TIVE OR NOT RETROSPECTIVE. RATHER IT MAY WELL BE A MATTER OF DEGREE- THE GREAT ER THE UNFAIRNESS, THE MORE IT IS TO BE EXPECTED THAT PARLIAMENT WILL MAKE IT CLEA R IF THAT IS INTENDED'. 22. HOUSE OF LORDS IN L' OFFICE CHERIFIEN DES PHOSP HATES V. YAMASHITA SHINNIHON STEAMSHIP CO. LTD. [1994] 1 ALL ER 20 HAS SAID THE QUESTION OF FAIRNESS HAS TO BE ANSWERED BY TAKING INTO ACCOUNT VARIOUS FACTORS, VIZ., VALUE OF THE RIGHTS WHICH THE STATUTE AFFECTS; EXTENT TO WHICH THAT VALUE IS DIMINISHED OR EXTINGUISHED BY THE SUGGESTED RETROSPECTIVE EFFE CT OF THE STATUTE; UNFAIRNESS OF ADVERSELY AFFECTING THE RIGHTS; CLARITY OF THE L ANGUAGE USED BY PARLIAMENT AND THE CIRCUMSTANCES IN WHICH THE LEGISLATION WAS CREATED. THESE FACTORS HAVE TO BE WEIGHED TOGETHER TO PROVIDE AN ANSWER WHETHER THE CONSEQUENCES OF READING THE STATUTE WITH SUGGESTED DEGREE OF RETROS PECTIVITY IS UNFAIR; THAT THE WORDS USED BY THE PARLIAMENT COULD NOT HAVE BEEN IN TENDED TO MEAN WHAT THEY MIGHT APPEAR TO SAY. THIS PRINCIPLE WAS APPLIED WHI LE INTERPRETING A NEW PROVISION IN ARBITRATION ACT IN THIS CASE OBSERVING THAT THE DELAY ATTRIBUTABLE TO THE CLAIMANT IN PURSUING A CLAIM BEFORE ENACTMENT O F THE NEW PROVISION, COULD BE TAKEN INTO CONSIDERATION FOR DISMISSAL. 23. PRINCIPLE OF 'FAIRNESS' HAS NOT LEFT US UNTOUCH ED AND WAS APPLIED BY THE SUPREME COURT IN VIJAY V. STATE OF MAHARASHTRA [200 6] 6 SCC 289 IN THE FOLLOWING WORDS: 'THE NEGOTIATION IS NOT A RIGID RULE AND VARIES WI TH 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 THE BENEFIT OF THE COMMUNITY AS A WHOLE, EVEN IN ABSENCE OF A PROVISION THE STATUTE MAY BE HELD TO B E 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 SH OULD BE GIVEN RETROSPECTIVE EFFECT FROM THE INCEPTION ON THE GROU ND THAT THE PROVISO WAS ADDED TO REMEDY UNINTENDED CONSEQUENCES AND SUPPLY AN OBVIOUS OMISSION. THE PROVISO ENSURED REASONABLE INTERPRETATION AND R ETROSPECTIVE EFFECT WOULD SERVE THE OBJECT BEHIND THE ENACTMENT. 25. IN STATE THROUGH C.B.I DELHI V. GIAN SINGH AIR 1999 SC 3450 EXTREME PENALTY OF DEATH WAS DILUTED TO ALTERNATIVE OPTION OF IMPRISONMENT FOR LIFE ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 9 RECORDING THAT THE LEGISLATIVE BENEVOLENCE COULD BE EXTENDED TO AN ACCUSED, WHO AWAITS JUDICIAL VERDICTS AGAINST HIS SENTENCE. EARLIER IN RATTAN LAL V. STATE OF PUNJAB AIR 1965 SC 444 REFERENCE WAS MADE TO SEC TION 6 OF THE PROBATION OF OFFENDERS ACT, 1958 AND IT WAS OBSERVED THAT IF THE ACT WAS NOT GIVEN RETROSPECTIVE OPERATION, IT WOULD LEAD TO ANOMALIES AND THUS COULD NOT BE THE INTENTION OF THE LEGISLATURE. 26. PRINCIPLE OF MATCHING WHICH IS DISTURBED BY SEC TION 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 HAV ING SUBSTANTIAL TURNOVER AND EQUALLY HUGE EXPENSES AS THEY HAVE NECESSARY CUSHIO N TO ABSORB THE EFFECT. HOWEVER, MARGINAL AND MEDIUM TAXPAYERS, WHO WORK AT LOW G.P. RATE 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 SHIF TING EXPENSES TO A SUBSEQUENT YEAR, IN SUCH CASES, WILL NOT WIPE OFF T HE ADVERSE EFFECT AND THE FINANCIAL STRESS. NEVERTHELESS THE SECTION 40(A)(IA ) HAS TO BE GIVEN FULL PLAY KEEPING IN MIND THE OBJECT AND PURPOSE BEHIND THE S ECTION. AT THE SAME TIME, THE PROVISION CAN BE AND SHOULD BE INTERPRETED LIBE RALLY AND EQUITABLE SO THAT AN ASSESSEE SHOULD NOT SUFFER UNINTENDED AND DELETERIO US CONSEQUENCES BEYOND WHAT THE OBJECT AND PURPOSE OF THE PROVISION MANDAT ES. CASE OF NARESH KUMAR IS NOT ONE OF RARE CASES, BUT ONE OF SEVERAL CASES AS WE FIND THAT SECTION 40(A)(IA) IS INVOKED IN LARGE NUMBER OF CASES. 27. ONE IMPORTANT CONSIDERATION IN CONSTRUING A MAC HINERY 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 UNIN TENDED OR HARSH CONSEQUENCES WHICH WERE NOT INTENDED, THE REMEDIAL OR CORRECTION ACTION TAKEN IS NOT TO BE DISREGARDED BUT GIVEN DUE REGARD. 28. IT IS, IN THIS CONTEXT, THAT WE HAD IN RAJINDER KUMAR'S CASE (SUPRA) OBSERVED AS UNDER: '22. NOW, WE REFER TO THE AMENDMENTS WHICH HAVE BEE N MADE BY THE FINANCE ACT, 2010 AND THE EFFECT THEREOF. WE HAVE ALREADY Q UOTED THE DECISION OF THE CALCUTTA HIGH COURT IN VIRGIN CREATIONS (SUPRA). TH E SAID DECISION REFERS TO THE EARLIER DECISION OF THE SUPREME COURT IN THE CASE O F ALLIED MOTORS (P.) LTD(SUPRA) AND COMMISSIONER OF INCOME TAX V. ALOM E XTRUSIONS LTD, [2009] 319 ITR 306 (SC) . IN THE CASE OF ALLIED MOTORS (P.) LTD. (SUPRA), T HE SUPREME COURT WAS EXAMINING THE FIRST PROVISO TO SECTION 43 B AND WHETHER IT WAS RETROSPECTIVE. SECTION 43B WAS INSERTED IN THE ACT WITH EFFECT FROM 1ST APRIL 1984 FOR CURBING CLAIMS OF TAXPAYERS WHO DID NOT DI SCHARGE OR PAY STATUTORY LIABILITIES BUT CLAIMED DEDUCTIONS ON THE GROUND TH AT THE STATUTORY LIABILITY HAD ACCRUED. SECTION 43B STATES THAT THE STATUTORY LIAB ILITY WOULD BE ALLOWED AS A DEDUCTION OR AS AN EXPENSE IN THE YEAR IN WHICH THE PAYMENT WAS MADE AND ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 10 WOULD NOT BE ALLOWED, EVEN IN CASES OF MERCANTILE S YSTEM OF ACCOUNTANCY, IN THE YEAR OF ACCRUAL. IT WAS NOTICED THAT IN SOME CA SES HARDSHIP WOULD BE CAUSED TO ASSESSEES, WHO PAID THE STATUTORY DUES WITHIN TH E PRESCRIBED PERIOD THOUGH THE PAYMENTS SO MADE WOULD NOT FALL WITHIN THE RELE VANT PREVIOUS YEAR. ACCORDINGLY, A PROVISO WAS ADDED BY FINANCE ACT, 19 87 APPLICABLE WITH EFFECT FROM 1ST APRIL, 1988. THE PROVISO STIPULATED THAT W HEN STATUTORY 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 WOULD BE ALLOWED. THE SUPREME COURT NOTICED THE PURPOSE B EHIND THE PROVISO AND THE REMEDIAL NATURE OF THE INSERTION MADE. OF COURSE, T HE SUPREME COURT ALSO REFERRED TO EXPLANATION 2 WHICH WAS INSERTED BY FIN ANCE ACT, 1989 WHICH WAS MADE RETROSPECTIVE AND WAS TO TAKE EFFECT FROM 1ST APRIL, 1984. HIGHLIGHTING THE OBJECT BEHIND SECTION 43B, IT WAS OBSERVED THAT THE PROVISO MAKES THE PROVISION WORKABLE, GIVES IT A REASONABLE INTERPRET ATION. 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 SHOULD BE AVOIDED IF IT DEFEAT S THE MANIFEST OBJECT AND PURPOSE OF THE ACT. 13. THEREFORE, IN THE WELL-KNOWN WORDS OF JUDGE LEA RNED HAND, ONE CANNOT MAKE A FORTRESS OUT OF THE DICTIONARY; AND SHOULD R EMEMBER THAT STATUTES HAVE SOME PURPOSE AND OBJECT TO ACCOMPLISH WHOSE SYMPATH ETIC AND IMAGINATIVE DISCOVERY 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 INSERTED TO REME DY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION WORKABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION AND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETATION, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CAN B E 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 RETROSPECTIVE AND SALES TAX FOR THE LAST QUARTER PAID BEFORE THE FILING OF THE RETURN FOR THE ASSESSMENT YEAR IS DEDUCTIBLE. THIS DECISION DEALS WITH ASSESSMENT YEAR 1985-85. THE CA LCUTTA HIGH COURT IN THE CASE OF CIT V. SRI JAGANNATH STEEL CORPN. HAS TAKEN A SIMILAR VIEW HOLDING THAT THE STATUTORY LIABILITY FOR SALES TAX ACTUALLY DISC HARGED AFTER THE EXPIRY OF THE ACCOUNTING YEAR IN COMPLIANCE WITH THE RELEVANT STA TUTE IS ENTITLED TO DEDUCTION UNDER SECTION 43-B. THE HIGH COURT HAS HELD THE AME NDMENT TO BE CLARIFICATORY AND, THEREFORE, RETROSPECTIVE. THE GU JARAT HIGH COURT IN THE ABOVE CASE HELD THE AMENDMENT TO BE CURATIVE AND EXPLANAT ORY AND HENCE RETROSPECTIVE. THE PATNA HIGH COURT HAS ALSO HELD T HE AMENDMENT INSERTING THE FIRST PROVISO TO BE EXPLANATORY IN THE CASE OF JAMS HEDPUR MOTOR ACCESSORIES STORES V. UNION OF INDIA. THE SPECIAL LEAVE PETITIO N FROM THIS DECISION OF THE ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 11 PATNA HIGH COURT WAS DISMISSED. THE VIEW OF THE DEL HI HIGH COURT, THEREFORE, THAT THE FIRST PROVISO TO SECTION 43-B WILL BE AVAI LABLE ONLY PROSPECTIVELY DOES NOT APPEAR TO BE CORRECT. AS OBSERVED BY G.P. SINGH IN HIS PRINCIPLES OF STATUTORY INTERPRETATION, 4TH EDN. AT P. 291: 'IT I S WELL-SETTLED THAT IF A STATUTE IS CURATIVE OR MERELY DECLARATORY OF THE PREVIOUS LAW RETROSPECTIVE OPERATION IS GENERALLY INTENDED.' IN FACT THE AMENDMENT WOULD NO T SERVE ITS OBJECT IN SUCH A SITUATION UNLESS IT IS CONSTRUED AS RETROSPECTIVE. THE VIEW, THEREFORE, TAKEN BY THE DELHI HIGH COURT CANNOT BE SUSTAINED.' 23. SECTION 43B DEALS WITH STATUTORY DUES AND STIPU LATES 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 SYSTEM OF ACCO UNTANCY. THE PROVISO, HOWEVER, STIPULATES THAT DEDUCTION WOULD BE 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 DEDUC T OR DOES NOT MAKE PAYMENT OF THE TDS BEFORE THE DUE DATE, IN SUCH CASES, NOTW ITHSTANDING SECTIONS 30 TO 38 OF THE ACT, DEDUCTION IS TO BE ALLOWED AS AN EXP ENDITURE IN THE YEAR OF PAYMENT UNLESS A CASE IS COVERED UNDER THE EXCEPTIO NS CARVED OUT. THE AMENDED PROVISO AS INSERTED BY FINANCE ACT, 2010 ST ATES WHERE AN ASSESSEE HAS MADE PAYMENT OF THE TDS ON OR BEFORE THE DUE DATE O F FILING OF THE RETURN UNDER SECTION 139(1), THE SUM SHALL BE ALLOWED AS A N EXPENSE IN COMPUTING THE INCOME OF THE PREVIOUS YEAR. THE TWO PROVISIONS ARE AKIN AND THE PROVISOS TO SECTIONS 40(A)(IA) AND 43B ARE TO THE SAME EFFECT A ND FOR THE SAME PURPOSE. 24. IN PODAR CEMENT (P.) LTD. (SUPRA), THE SUPREME COURT CONSIDERED WHETHER TERM 'OWNER' WOULD INCLUDE UNREGISTERED OWNERS WHO HAD PAID SALE CONSIDERATION AND WERE COVERED BY SECTION 53A OF TH E TRANSFER OF PROPERTY ACT. THE CONTENTION OF THE ASSESSEES WAS THAT THE A MENDMENTS MADE TO THE DEFINITION OF TERM 'OWNER' BY FINANCE BILL, 1987 SH OULD BE GIVEN RETROSPECTIVE EFFECT. IT WAS HELD THAT THE AMENDMENTS WERE RETROS PECTIVE IN NATURE AS THEY RATIONALISE AND CLEAR THE EXISTING AMBIGUITIES AND DOUBTS. REFERENCE WAS MADE TO CRAWFORD: 'STATUTORY CONSTRUCTION' AND 'THE PRIN CIPLE OF DECLARATORY STATUTES', FRANCIS BENNION: 'STATUTORY INTERPRETATI ON', JUSTICE G.P. SINGH'S 'PRINCIPLES OF STATUTORY INTERPRETATION', IT WAS OB SERVED THAT SOMETIMES AMENDMENTS ARE MADE TO SUPPLY AN OBVIOUS OMISSION O R TO CLEAR UP DOUBTS AS TO THE MEANING OF THE PREVIOUS PROVISION. THE ISSUE WAS ACCORDINGLY DECIDED HOLDING THAT IN SUCH CASES THE AMENDMENTS WERE RETR OSPECTIVE THOUGH IT WAS NOTICED THAT AS PER TRANSFER OF PROPERTY ACT, REGIS TRATION 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 VIOLATE THE UNAMEND ED SECTION 40(A)(IA) OF THE ACT. WE HAVE NOTED THE AMBIGUITY AND REFERRED THEIR CONTENTION OF REVENUE AND REJECTED THE INTERPRETATION PLACED BY THEM. THE AME NDED PROVISIONS ARE CLEAR AND FREE FROM ANY AMBIGUITY AND DOUBT. THEY WILL HE LP CURTAIL LITIGATION. THE ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 12 AMENDED PROVISION CLEARLY SUPPORT VIEW TAKEN IN PAR AGRAPHS 17 - 20 THAT THE EXPRESSION 'SAID DUE DATE' USED IN CLAUSE A OF PROV ISO TO UNAMENDED SECTION REFERS TO TIME SPECIFIED IN SECTION 139(1) OF THE A CT. THE AMENDED SECTION 40(A)(IA) EXPANDS AND FURTHER LIBERALISES THE STATU TE WHEN IT STIPULATES THAT DEDUCTIONS MADE IN THE FIRST ELEVEN MONTHS OF THE P REVIOUS YEAR BUT PAID BEFORE THE DUE DATE OF FILING OF THE RETURN, WILL CONSTITU TE 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 DISMISSED .' WE FURTHER NOTE THAT THE COORDINATE BENCH OF THIS T RIBUNAL IN CASE OF RAJESH YADAV IN ITA NO. 895/JP/2012 VIDE ORDER 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), HON'BLE PUNJAB & HARYANA HIGH C OURT HAD ELABORATELY DISCUSSED THE JUDGMENT PASSED BY THE HON'BLE CALCUT TA HIGH COURT AND HON'BLE GUJARAT HIGH COURT, HON'BLE ALLAHABAD HIGH COURT AND OTHER JUDGMENTS AS AVAILABLE AND THEREAFTER HAS COME TO T HE CONCLUSION THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE MANDATORY IN NA TURE AND NON COMPLIANCE/NON DEDUCTION OF TAX ATTRACTS DISALLOWAN CE OF THE ENTIRE AMOUNT. HAVING SAID SO, WE WILL BE FAILING IN OUR DUTY IF W E DO NOT DISCUSS THE AMENDMENT BROUGHT IN BY THE FINANCE (NO. 2) ACT 201 4 WITH EFFECT 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 DEDUCTED DURING THE PRE VIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTIO N 139, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF P REVIOUS YEAR, AND FURTHER, SECTION 40(A)(IA) HAS BEEN SUBSTITUTED WHEREIN THE 30% OF ANY SUM PAYABLE TO A RESIDENT HAS BEEN SUBSTITUTED. IN THE PRESENT CASE, THE AUTHORITIES BELOW HAS ADDED THE ENTIRE SUM OF RS. 7,51,322/- BY DISALLOWI NG THE WHOLE OF THE AMOUNT. THOUGH THE SUBSTITUTION IN SECTION 40 HAS BEEN MADE EFFECTIVE WITH EFFECTIVE FROM 1.4.2015, IN OUR VIEW THE BENEFIT OF THE AMEND MENT 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. 11 ITA NO. 895/JP/2012 A .Y 2007-08. SHRI RAJENDRA YADAV VS. ITO AJMER. 7,51,322/-. IN OUR VI EW, IT WILL BE TIED OF JUSTICE IF THE DISALLOWANCE IS ONLY RESTRICTED TO 3 0% OF RS. 7,51,322/-. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED IN THE ABOVE SAID MANNER.' FURTHER THIS TRIBUNAL HAS TAKEN A SIMILAR VIEW ON T HIS ISSUE BY FOLLOWING THE ABOVE DECISIONS AND THEREFORE EVEN IF THERE IS DIVE RGENT VIEW TAKEN BY THE HON'BLE KERALA HIGH COURT 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 VIE W THE SECOND PROVISO TO ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 13 SECTION 40(A)(IA) OF THE ACT WOULD BE EFFECTIVE RET ROSPECTIVE AS IT WAS UNDISPUTEDLY INSERTED TO REMOVABLE THE HARDSHIP FAC ED BY THE ASSESSES. HENCE, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESS ING OFFICER FOR LIMITED PURPOSE TO VERIFY THE FACT THAT THE INTEREST INCOME RECEIVED BY THESE NBFCS HAVE BEEN INCLUDED IN THE RETURN OF INCOME AND OFFE RED TO TAX AND THEN DECIDE THIS ISSUE IN LIGHT OF ABOVE OBSERVATION. ACCORDINGLY, THE MATTER IS SET ASIDE TO THE RECORD OF THE AO FOR LIMITED PURPOSE TO VERIFY THE FACT THAT INTEREST PAYMENT RE CEIVED BY NBFC HAS BEEN INCLUDED IN THE RETURN OF INCOME AND OFFERED T O TAX. THE AO IS DIRECTED TO VERIFY THIS FACT FROM THE ASSESSMENT RE CORD OF NBFC. THE ASSESSEE IS ALSO DIRECTED TO FURNISH RELEVANT DETAI LS REGARDING PAN ETC. OF NBFC. AFTER VERIFICATION OF THIS FACT, THE AO HAS T O DECIDE THIS ISSUE AS PER LAW. THUS THE GROUND NO. 3 OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. 4.1 THE GROUND NO. 4 OF THE ASSESSEE IS REGARDING D ISALLOWANCE OF EMPLOYEES TO PF & ESI. 4.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE RED THE RELEVANT MATERIALS AVAILABLE ON RECORD. THE AO DISALLOWED TH E PF CONTRIBUTION OF RS. 2,88,190/- ON ACCOUNT OF LATE PAYMENT. HOWEVER, THE SAID PAYMENT WAS MADE BY THE ASSESSEE BEFORE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT. THE LD. CIT(A) ACCEPTED THE FACT OF PAYMENT OF EMPLOYEES CONTRIBUTION TO PF WITHIN THE DUE DATE OF FILING OF RETURN OF ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 14 INCOME. HOWEVER, THE SAME WAS CONFIRMED DUE TO THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. RAJAS THAN RENEWABLE ENERGY CORPORATION LTD., JAIPUR WHEREIN ON ACCOUNT OF TYPOGRAPHICAL MISTAKE IT WAS CONSIDERED AS IN FAVOUR OF REVENUE. AT THE OUTSET, WE NOTE THAT THIS ISSUE HAS BEEN CONSIDERED BY THIS TRIBUNA L IN SERIES OF DECISIONS AND HELD THAT THE SAME IS COVERED BY VARIOUS DECISI ONS OF HON'BLE JURISDICTIONAL HIGH COURT. IN THE CASE OF ZUBERI EN GINEERING CO. VS DCIT, CIRCLE 2, JAIPUR [2019] 103 TAXMANN.CO, 196 (JAIPUR TRIB), THIS TRIBUNAL HAS CONSIDERED AND DECIDED THIS ISSUE IN P ARA 18 AS UNDER:- 18. WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL AS THE LD. CIT-DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THI S ISSUE IS COVERED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT V. JAIPUR VIDYUT VITRAN NIGAM LTD. [2014] 49 TAXMANN.COM 540/[2015] 228 TAXMAN 214 (MAG.)/[2014] 363 ITR 307 (RAJ) AS UNDER: '6. WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY TH E LEARNED COUNSEL FOR THE REVENUE AND HAVE ALSO GONE THROUGH THE IMPUGNED ORDERS. IN OUR VIEW NO SUBSTANTIAL QUESTION OF LAW ARISES O UT OF THE ORDERS OF THE TRIBUNAL AS IT IS AN ADMITTED FACT THAT THE ENTIRE AMOUNT WAS DEPOSITED BY THE RESPONDENT-ASSESSEE AT LEAST ON OR BEFORE THE D UE DATE OF FILING OF THE RETURNS UNDER S. 139 OF THE IT ACT AND BEING A CONC URRENT FINDING OF FACT BY THE RESPECTIVE AUTHORITIES AND IN THE LIGHT OF T HE JUDGMENTS RENDERED BY THIS COURT IN THE CASE OF CIT V. STATE BANK OF BIKANER & JAIPUR/ JAIPUR VIDYUT VITRAN NIGAM LTD. [2014] 363 ITR 70/43 TAXMANN.COM 411 OF EVEN DATE WHEREIN IT HAS BEEN HELD THAT IF THE AMOU NT HAS BEEN DEPOSITED ON OR BEFORE THE DUE DATE OF FILING THE RETURN UNDE R S. 139 AND ADMITTEDLY IT WAS DEPOSITED ON OR BEFORE THE DUE DATE THEN THE AMOUNT CANNOT BE DISALLOWED UNDER S. 43B OF THE IT ACT OR UNDER S. 3 6(1)(VA) OF THE ACT. IN FACT IN THE ABOVE MATTERS ONE OF THE PARTIES IS SAM E AS IN THE PRESENT APPEALS, THEREFORE, THE ISSUE IS NO MORE RES INTEGR A IN THE LIGHT OF JUDGMENTS OF THIS COURT REFERRED TO SUPRA AND, IN O UR VIEW, NO SUBSTANTIAL QUESTION OF LAW ARISES OUT OF THE IMPUGNED ORDERS O F THE TRIBUNAL, WHICH MAY REQUIRE ATTENTION OF THIS COURT.' ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 15 SIMILARLY IN THE CASE OF CIT V. STATE BANKING BIKANER & JAIPUR [2014] 43 TAXMANN.COM 411/225 TAXMAN 6(MAG.)/363 ITR 70 (RAJ) , THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: '21. A CONJOINT READING OF THE PROVISO TO SECTION 4 3-B WHICH WAS INSERTED BY THE FINANCE ACT, 1987 MADE EFFECTIVE FROM 01/04/ 1988, THE WORDS NUMBERED AS CLAUSE (A), (C), (D), (E) AND (F), ARE OMITTED FROM THE ABOVE PROVISO AND, FURTHERMORE SECOND PROVISO WAS REMOVED BY FINANCE ACT, 2003 THEREFORE, THE DEDUCTION TOWARDS THE EMPLOYER' S CONTRIBUTION, IF PAID, PRIOR TO DUE DATE OF FILING OF RETURN CAN BE CLAIME D BY THE ASSESSEE. IN OUR VIEW, THE EXPLANATION APPENDED TO SECTION 36(1)(VA) OF THE ACT FURTHER ENVISAGE THAT THE AMOUNT ACTUALLY PAID BY THE ASSES SEE ON OR BEFORE THE DUE DATE ADMISSIBLE AT THE TIME OF SUBMITTING RETUR N OF THE INCOME UNDER SECTION 139 OF THE ACT IN RESPECT OF THE PREVIOUS Y EAR CAN BE CLAIMED BY THE ASSESSEE FOR DEDUCTION OUT OF THEIR GROSS TOTAL INCOME. IT IS ALSO CLEAR THAT SEC.43B STARTS WITH A NOTWITHSTANDING CLAUSE & WOULD THUS OVERRIDE SEC.36(1) (VA) AND IF READ IN ISOLATION SEC. 43B WO ULD BECOME OBSOLETE. ACCORDINGLY, CONTENTION OF COUNSEL FOR THE REVENUE IS NOT TENABLE FOR THE REASON AFORESAID THAT DEDUCTIONS OUT OF THE GROSS I NCOME FOR PAYMENT OF TAX AT THE TIME OF SUBMISSION OF RETURN UNDER SECTI ON 139 IS PERMISSIBLE ONLY IF THE STATUTORY LIABILITY OF PAYMENT OF PF OR OTHER CONTRIBUTION REFERRED TO IN CLAUSE (B) ARE PAID WITHIN THE DUE D ATE UNDER THE RESPECTIVE ENACTMENTS BY THE ASSESSEES AND NOT UNDER THE DUE D ATE OF FILING OF RETURN. 22. WE HAVE ALREADY OBSERVED THAT TILL THIS PROVISI ON WAS BROUGHT IN AS THE DUE AMOUNTS ON ONE PRETEXT OR THE OTHER WERE NOT BE ING DEPOSITED BY THE ASSESSEES THOUGH SUBSTANTIAL BENEFITS HAD BEEN OBTA INED BY THEM IN THE SHAPE OF THE AMOUNT HAVING BEEN CLAIMED AS A DEDUCT ION BUT THE SAID AMOUNTS WERE NOT DEPOSITED. IT IS PERTINENT TO NOTE THAT THE RESPECTIVE ACT SUCH AS PF ETC. ALSO PROVIDES THAT THE AMOUNTS CAN BE PAID LATER ON SUBJECT TO PAYMENT OF INTEREST AND OTHER CONSEQUENCES AND T O GET BENEFIT UNDER THE INCOME TAX ACT, AN ASSESSEE OUGHT TO HAVE ACTUALLY DEPOSITED THE ENTIRE AMOUNT AS ALSO TO ADDUCE EVIDENCE REGARDING SUCH DE POSIT ON OR BEFORE THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTI ON 139 OF THE IT ACT. 23. THUS, WE ARE OF THE VIEW THAT WHERE THE PF AND/ OR EPF, CPF, GPF ETC., IF PAID AFTER THE DUE DATE UNDER RESPECTIVE A CT BUT BEFORE FILING OF THE RETURN OF INCOME UNDER SECTION 139(1), CANNOT BE DI SALLOWED UNDER SECTION 43B OR UNDER SECTION 36(1)(VA) OF THE IT AC T.' ACCORDINGLY IN VIEW OF THE BINDING PRECEDENT OF THE HON'BLE JURISDICTIONAL HIGH COURT, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) IS DELETED. ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 16 WE FURTHER NOTE THAT THE DECISION AS RELIED UPON BY THE LD. CIT(A) IS ALSO IN FAVOUR OF THE ASSESSEE AS HON'BLE HIGH COURT HAS RELIED ON EARLIER DECISION IN THE CASE OF CIT VS SBBJ (SUPRA) WHICH IS UNDISPUTEDLY IN FAVOUR OF THE ASSESSEE. HOWEVER, ONLY IN THE CONCLU DING PART, IT APPEARS TO BE A MISTAKE TO SAY THAT THE ISSUE IS DECIDED IN FA VOUR OF REVENUE. THEREFORE, WITHOUT CONSIDERING THE OVERALL FINDINGS AND OBSERVATIONS OF THE HON'BLE HIGH COURT, THE LD. CIT(A) HAS GIVEN MU CH EMPHASIS ON THE LAST SENTENCE WHICH APPEARS TO BE A TYPOGRAPHICAL M ISTAKE. ACCORDINGLY, THE ADDITION MADE BY THE AO IS DELETED. THUS THE GR OUND NO. 4 OF THE ASSESSEE IS ALLOWED. 5.1 THE GROUND NO. 5 OF THE ASSESSEE'S IS REGARDING ADHHOC DISALLOWANCES. 5.2 THE AO MADE DISALLOWANCES ON ACCOUNT OF VARIOUS EXPENSES BEING GENERAL & MISC. EXPENSES, MOTOR VEHICLE RUNNING MAI NTENANCE CHARGES, TELEPHONE EXPENSES, TRAVELLING EXPENSES, B USINESS PROMOTION EXPENSES AND DEPRECIATION ON VEHICLE. THE ASSESSEE CHALLENGED THE ACTION BEFORE THE AO AND CONSEQUENTLY THE DISALLOWANCES WA S RESTRICTED TO RS. 3.00 LACS BY THE LD. CIT(A). 5.3 BEFORE US, THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE AO HAS MERELY STATED THAT ELEMENT OF PERSONAL NATURE CANNO T BE DENIED IN THE ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 17 ABOVE STATED EXPENSES AND ACCORDINGLY, THE AO MADE THE ADHOC DISALLOWANCE OF RS. 6.00 LACS. THE LD.AR OF THE ASS ESSEE FURTHER SUBMITTED THAT IN THE CASE OF A COMPANY THE DISALLOWANCE CANN OT BE MADE ON THE GROUND OF PERSONAL ELEMENT REGARDING VARIOUS EXPENS ES INCLUDING THE MOTOR VEHICLES, TELEPHONES ETC. THE LD.AR OF THE FU RTHER CONTENDED THAT KEEPING IN VIEW THE TURNOVER OF THE ASSESSEE AT RS. 91,29,70,523/-, THE EXPENDITURE CLAIMED BY THE ASSESSEE IS REASONABLE, PROPER AND IS NOT EXCESSIVE. EVEN THE AO HAS ALSO NOT GIVEN THE FINDI NGS THAT THE ASSESSEE HAS INFLATED THE EXPENSES. THE LD. CIT(A) HAS THOUG H RESTRICTED THE DISALLOWANCE TO THE EXTENT OF RS. 3.00 LACS YET IT IS AGAIN MADE ON ADHOC BASIS. IN SUPPORT OF HIS CONTENTIONS, THE LD.AR OF THE ASSESSEE RELIED ON THE DECISION OF ITAT JAIPUR BENCH IN THE CASE OF AR PIT MARBLES (P) LTD VS ACIT, 78 TAXMANN.COM 52. 5.4 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE AO HAS CLEARLY POINTED OUT VARIOUS DEFECTS AND DEFICIENCIES IN MAI NTAINING THE RECORDS BY THE ASSESSEE IN RESPECT OF VEHICLE RUNNING MAINTENA NCE CHARGES AS WELL AS TELEPHONE CHARGES. SINCE THE ASSESSEE HAS NOT SUPPO RTED THE CLAIM OF EXPENSES BY VERIFIABLE DOCUMENTARY EVIDENCES, THERE FORE, THE AO HAS MADE VERY REASONABLE DISALLOWANCES OF RS. 6.00 LACS OUT OF TOTAL CLAIM OF ABOUT RS. 50 LACS. THE LD. CIT(A) HAS RESTRICTED TH E ADDITION TO RS. 3.00 ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 18 LACS WHICH IS NOW VERY SMALL IN COMPARISON TO THE T OTAL CLAIM OF THE ASSESSEE. THE LD. DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 5.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AS WELL AS CONSIDERED THE RELEVANT MATERIALS AVAILABLE ON RECORD. THE AO HAS MADE ADHOC DISALLOWANCE OF RS. 6.00 LACS AS PER PARA 5 AS UNDE R:- 5. DURING THE COURSE OF ASSESSMENT PROCEEDING, ON SCRUTINY OF FINAL ACCOUNTS, IT IS NOTICED THAT ASSE SSEE HAS DEBITED RS. 17,34,360/- AGAINST GENERAL & MISC. EXPENSES, RS. 13,86,562/-, AGAINST MOTOR VEHICLE R UNNING & MAINTENANCE CHARGES, RS. 2,66,838/- AGAINST TELE PHONE EXPENSES, RS. 36,08,986/- AGAINST TRAVELLING EXPENS ES, RS. 5,42,006/- AGAINST BUSINESS PROMOTION EXPENSES AND RS. 11,42,042/- AGAINST DEPRECIATION ON VEHICLES. DURIN G THE COURSE OF EXAMINATION OF BOOKS OF ACCOUNTS AND VOUC HERS, IT IS NOTICED THAT NEITHER THE LOG BOOK HAS BEEN MAINT AINED IN RESPECT OF USE OF VEHICLE NOR ANY CALL REGISTER HAS BEEN MAINTAINED IN RESPECT OF TELEPHONE CALLS. THE ASSES SEE HAS STATED THAT ALL THE ABOVE STATED EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSE SSEE. PERSONAL USE OF THE CAR AND OTHER VEHICLES FACILITY CANNOT BE DENIED AND RULED OUT BY THE ASSESSEE. TO COVER UP T HE COMPONENT OF PERSONAL AND NON-PERSONAL USE, A LUMPS UM DISALLOWANCE OF RS. 6,00,000/- IS MADE OUT OF ALL T HE ABOVE STATED EXPENSES SAND ADDED BACK TO THE TOTAL INCOME . IT IS CLEAR THAT THE AO HAS MADE ADHOC DISALLOWANCE ON THE GROUND THAT NEITHER THE LOG BOOK HAS BEEN MAINTAINED BY THE ASS ESSEE IN RESPECT OF USE OF VEHICLES NOR ANY CALL REGISTER HAS BEEN MAINTAIN ED IN RESPECT OF TELEPHONE CALLS. THE AO FINALLY CONCLUDED THAT TO C OVER UP THE ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 19 COMPONENTS OF PERSONAL AND NON-BUSINESS USE, A LUMP SUM DISALLOWANCE OF RS. 6.00 LACS IS MADE. THE SOLE REASON OF DISALL OWANCE IS PERSONAL ELEMENT AND USAGE OF CAR AND TELEPHONES WHEREAS AO HAS GIVEN DETAILS OF SO MANY OTHER EXPENSES WHICH INCLUDED BUSINESS PROM OTION EXPENSES ALSO WHEREIN THERE CANNOT BE ANY ELEMENT OF PERSONAL USA GE. THE LD. CIT(A) WHILE PASSING THE IMPUGNED ORDER RESTRICTED THE DIS ALLOWANCE TO RS. 3.00 LACS WHICH IS ALSO ON ADHOC BASIS. THEREFORE, WE FIND THAT SUCH AN ADHOC DISALLOWANCE ON THE GROUND OF ELEMENT OF PERSONAL U SE IN THE CASE OF THE COMPANY IS NOT PERMITTED AND JUSTIFIED. THIS TRIBUN AL IN THE CASE OF ARPIT MARBLES (P) LTD. VS ACIT (SUPRA) HAS CONSIDERED THI S ISSUE IN PARA 2.2 AS UNDER:- 2.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED TH E MATERIAL ON RECORD. THE AO HAS DISALLOWED 10% OF TELEPHONE, VEH ICLE REPAIR &MAINTENANCE AND DEPRECIATION ON CAR HOLDING THAT T HESE FACILITIES ARE SUCH THAT THEY CAN BE USED FOR OTHER THAN BUSINESS PURPO SES. FURTHER, 10% OF STAFF WELFARE AND TRAVELLING EXPENSES HAVE BEEN DISALLOWE D HOLDING THAT THE EXPENSES ARE NOT FULLY VERIFIABLE. IN OUR VIEW, THE SE DISALLOWANCES CANNOT BE SUSTAINED IN EYE OF LAW ON GROUND OF ADHOC NATURE A ND SECONDLY, THE CONCEPT OF PERSONAL USE IS ALIEN TO A CORPORATE ENTITY. IN A C ORPORATE STRUCTURE, THE FACILITIES ARE PROVIDED TO EMPLOYEES AS PER TERMS OF HIS/HER E MPLOYMENT AND SUCH FACILITIES SUFFER THE NECESSARY PERQUISITE TAXATION IN HANDS OF THE EMPLOYEES. THERE IS NOTHING ON RECORD WHICH PROVES THAT THE FA CILITIES HAVE BEEN USED FOR PERSONAL PURPOSES AND SECONDLY, THEY HAVE ESCAPED T HE PERQUISITE TAXATION. REGARDING DISALLOWANCE OF BONUS, NO BASIS HAS BEEN GIVEN BY AO TO DISALLOW THE SAME. HENCE, THESE DISALLOWANCES ARE HEREBY DEL ETED. HENCE, THESE GROUNDS ARE ALLOWED. ITA NO.264/JP/2019 M/S. AGRIBIOTECH INDUSTRIES LTD. VS ITO, WAR D-4(2), JAIPUR 20 ACCORDINGLY, IN VIEW OF THE ABOVE FACTS AND CIRCUMS TANCES OF THE CASE AS WELL AS THE DECISION OF THIS TRIBUNAL IN THE CASE O F ARPIT MARBLES VS ACIT (SUPRA), THE ADHOC DISALLOWANCE SUSTAINED BY THE LD . CIT(A) IS DELETED. THUS GROUND NO. 5 OF THE ASSESSEE IS ALLOWED. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 13 /01/ 2020. 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:- 13 /01/ 2020 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. AGRIBIOTECH INDUSTRIES LTD., J AIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 4(2), 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.264/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR