The ACIT,B.K.Circle, Banaskantha V. Shri Late Dhirajlal Dayaljibhai Thakkar L/h. Shri Jaideep Dhirajlal Thakkar, Ahmedabad

ITA 2776/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9696 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-12-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 28-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: U S BHATI
• Keywords: Business expenditure; Retrospective amendment; Question of law; Non-deduction of tax
• Section: 143(3); 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI R. P. TOLANI, JM & SHRI MANISH BORAD, AM. ITA NO. 2776/AHD/2013 ASST. YEAR: 2006-07 ACIT, B.K. CIRCLE, PALANPUR. VS. LATE DHIRAJLAL D. THAKKAR, L/H SHRI JAIDEEP D. THAKKAR, 52/2, KABUTARKHANA, CHOKHA BAZAR, KALPUR, AT AHMEDABAD. APPELLANT RESPONDENT PAN AAXPT 0185C APPELLANT BY SHRI K. MADHUSUDAN, SR.DR RESPONDENT BY SHRI U. S. BHATI, AR DATE OF HEARING: 9/12/2016 DATE OF PRONOUNCEMENT: 23/12/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF REVENUE FOR ASST. YEAR 2006-07 IS D IRECTED AGAINST THE ORDER OF LD. CIT(A) XX, AHMEDABAD, DAT ED 30.09.2013 VIDE APPEAL NO.CIT(A)-XX/104/12-13 ARISING OUT OF O RDER U/S 143(3) R.W.S. 147 OF THE IT ACT, 1961 (IN SHORT THE ACT) F RAMED ON 12/12/2012 BY ACIT, B.K. CIRCLE, PALANPUR. FOLLOWING GROUNDS H AVE BEEN RAISED BY THE REVENUE :- ITA NO. 2776/AHD/2013 ASST. YEAR 2006-07 2 1), THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) -XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS .2,20,93,203/- MADE ON ACCOUNT OF JOB WORK EXPENSES U/S.40(A)(IA) OF THE A CT. 1A) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XV , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE AMENDMENT I NTRODUCED BY FINANCE ACT 2000 IN SECTION 40(A)(IA) OF THE ACT ARE CLARIFICAT ORY & HAVE RETROSPECTIVE EFFECT AND HENCE NO DISALLOWANCE BE MADE U/S.40(A)( IA) OF THE ACT, WHERE T.D.S. HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF R.O.L. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD OUGHT TO HAVE UP HELD THE ORDER OF THE ASSESSING OFFICER. 3) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD MAY BE SET-ASIDE AND THAT O F THE ASSESSING OFFICER BE RESTORED. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS A PARTNERSHIP FIRM AND IT DERIVES INCOME FROM TRADING IN CASTOR SEEDS, CASTOR OIL, GUAR, JUAR, RAPSEED SEEDS ETC. ON WHOLE SALE BASIS. ASSESSEE FILED ITS RETURN OF INCOME ON 30.12.2006 D ECLARING TOTAL INCOME AT RS.10,23,540/-. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 16.12.2008 FOR TOTAL INCOME OF RS.10,63, 240/-. THEREAFTER IT WAS NOTICED BY THE ASSESSING OFFICER FROM FORM NO.2 6Q THAT TAX DEDUCTED U/S 194-C OF THE ACT WAS DEPOSITED AFTER T HE EXPIRY OF TIME LIMIT PRESCRIBED U/S 200(1) OF THE ACT AND, THEREFO RE, NOTICE U/S 148 OF THE ACT WAS ISSUED ON 20.09.2011. THE ASSESSEE VID E ITS LETTER DATED 10.10.2011 REPLIED THAT THE RETURN FILED ON 30.10.2 006 MAY BE TREATED AS RETURN FILED U/S 148 OF THE ACT. THE ASSESSING O FFICER FURTHER ISSUED NOTICE U/S 143(2) OF THE ACT ON 20.10.2011. DUE TO CHANGE OF INCUMBENT NOTICE U/S 143(2) OF THE ACT WAS ISSUED O N 8.8.2012. AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE LD. ASSESSI NG OFFICER ITA NO. 2776/AHD/2013 ASST. YEAR 2006-07 3 COMPLETED THE ASSESSMENT ON 12/12/2012 DETERMINING TOTAL INCOME AT RS.2,31,56,443/-. 3. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) WHO AFTER CONSIDERING THE CONTENTIONS OF ASSESSING OFFICER AN D THE SUBMISSIONS OF ASSESSEE HE DELETED THE IMPUGNED DISALLOWANCE. 4. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 5. THE LD. DR SUPPORTED THE ORDER OF ASSESSING OFFI CER. 6. AT THE OUTSET THE LD. AR SUBMITTED THAT THE ISSU E IS COVERED IN FAVOUR OF ASSESSEE BY THE JUDGMENT OF HON. GUJARAT HIGH COURT IN THE CASE OF CIT VS. OMPRAKASH R. CHAUDHARY IN TAX APPEA L NO.412 OF 2013 AND OTHERS. THEREFORE, LD. CIT(A) HAS RIGHTLY DELETED THE IMPUGNED ADDITION. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. SOLITARY GRIEVANCE OF THE REVENUE IN THIS APPEAL IS AGAINST THE ACTION OF LD. CIT(A) DELETING THE DISAL LOWANCE MADE U/S 40(A)(IA) OF THE ACT AT RS.2,20,93,203/-. THE SAID DISALLOWANCE WAS MADE BY LD. ASSESSING OFFICER AS TAX DEDUCTED AT SO URCE ON THE EXPENDITURE OF JOB WORK AT RS.2,20,93,203/- WAS NOT PAID WITHIN THE PRESCRIBED TIME LIMIT U/S 40(A)(IA) OF THE ACT. 8. WE FURTHER OBSERVE THAT THERE IS NO DISPUTE TO T HIS FACT AT THE END OF BOTH THE PARTIES THAT THE DUE AMOUNT TO BE D EDUCTED AT SOURCE ITA NO. 2776/AHD/2013 ASST. YEAR 2006-07 4 ON THE JOB WORK EXPENSES OF RS.2,20,93,203/- WAS DE DUCTED AND DULY DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN. THE ONLY ANOMANY BETWEEN THE TWO PARTIES ARISES AS THE LD. ASSESSING OFFICER MADE DISALLOWANCE WITH THE CONTENTION THAT TDS DEDUCTED WAS NOT DEPOSITED WITHIN THE PRESCRIBED TIME LIMIT AS PROVI DED U/S 40(A)(IA) OF THE ACT WHEREAS ASSESSEES SUBMISSION WAS THAT TDS FOR FIRST THREE QUARTERS WAS DULY DEDUCTED AND DEPOSITED BEFORE THE CLOSE OF THE FINANCIAL YEAR AND THE REMAINING AMOUNT OF TDS WAS PAID WELL BEFORE THE DUE DATE OF FILING THE RETURN AS PER SEC TION 139(1) OF THE ACT. WE FURTHER OBSERVE THAT LD. CIT(A) HAS DELETED THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT BY OBSERVING AS FOLLOWS :- 4.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSION MADE BY THE APPELLANT. THE AO HAS MADE THE DISALLOWANCE BY INVO KING THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT FOR THE REASON T HAT THE TDS MADE ON THE JOB WORK EXPENSES WERE NOT DEPOSITED WITHIN THE TIME AS PER THE PROVISIONS OF THE SECTION. : HENCE THE JOB WORK CHARGES WERE DISALLOWED IN VIEW OF THE OF SECTION 40(A)(IA). THE A.R. OF THE APPELLANT HAS CO NTENDED THAT ALTHOUGH TDS WAS MADE CORRECTLY BUT THE SAME WAS DEPOSITED IN G OVERNMENT ACCOUNT BY THE DUE DATE U/S 139(1) OF I.T. ACT. THE TOTAL TDS AMOUNT WAS AT RS.90.264/- OUT OF THE SAME RS,62,620/- WAS DEPOSITED BY 31.6.0 6 AND THE BALANCE OF RS.28,014/- DEPOSITED ON 30.05.06 I.E. IN THE SUBSE QUENT YEAR BUT BEFORE DUE DATE OF FILING OF RETURN OF INCOME. FURTHER IT WAS CONTENDED THAT SINCE ALL TDS AMOUNTS WERE DEPOSITED WITHIN DUE DATE U/S 139 AND HENCE THE SAME ARE ALLOWABLE IN THE YEAR UNDER CONSIDERATION IN VI EW OF THE JUDGMENTS OF HON. KOLKATTA HIGH COURT IN THE CASE OF CIT VS. VIR GIN CREATIONS AND HON. GUJARAT HIGH COURT IN THE CASE OF CIT VS. J.K. CONS TRUCTION COMPANY (SUPRA). 4.4. THE HON. GUJARAT HIGH COURT HAS DISMISSED THE APPEAL OF THE REVENUE BY OBSERVING AS UNDER:- . 'PLAINLY SPEAKING, ASSESSEE HAD TO MAKE DEDUCTION B EFORE 31' MARCH OF THE YEAR IN QUESTION AND AS LONG AS SUCH AMOUNTS WERE DEPOS ITED BEFORE LAST DATE OF FILING OF THE RETURN, REQUIREMENTS OF LAW W OULD BE FULFILLED. IT WAS OFT ITA NO. 2776/AHD/2013 ASST. YEAR 2006-07 5 THIS BASIS THAT TRIBUNAL WAS OF (HE OPINION (HAT (H E ASSESSEE COMMITTED NO WRONG AND WAS THEREFORE, ENTITLED TO SEEK DEDUCTION OF RS.32,94,14 FROM THE INCOME WHICH AMOUNT THE ASSESSEE HAD DEDUCTED FRO M PAYMENTS OF CONTRACTORS AND HAD ALSO DEPOSITED WITH REVENUE BEF ORE T HE LAST DATE OF FILING OF THE RETURN. WE DO NOT FIND ANY ILLEGALITY IN ORDER OF TRIBUNAL. APPEAL IS THEREFORE DISMISSED'. IN VIEW OF THE JUDGMENTS OF THE HON. COURT'S CITED ABOVE THE CONTROVERSY WITH REGARD TO DEPOSIT OF THE TDS AMOUNT BEFORE EN D OF THE DUE DATE OF FILING OF THE RETURN OF INCOME IS SETTLED DUE TO RE TROSPECTIVE EFFECT OF THE AMENDMENT TAKEN PLACE AS HELD. IN THE PRESENT CASE AS PER THE DETAILS SUBMITTED BY THE A.R. THE DEPOSITS OF THE TDS WERE WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME U/S. 139 (1) I. T . ACT AND HENCE THERE WAS NO VIOLATION OF THE PROVISIONS. IN VIEW OF THE ABOVE NO DISALLOWANCE UNDER SECTION 40(A)(IA) IS CALLED FOR. THE DISALLOWANCE M ADE BY THE A.O. IS DELETED SUBJECT TO VERIFICATION OF TDS DEPOSITS MADE ON AF ORESAID DATES FROM CHALLANS AND OTHER RECORDS. THE GROUND OF THE APPEL LANT IS ALLOWED FOR STATISTICAL PURPOSES. 8. WE FURTHER OBSERVE THAT IN THE JUDGMENT OF HON. GUJARAT HIGH COURT IN THE CASE OF CIT VS. OMPRAKASH R. CHAUDHARY (SUPRA) RELIED ON BY THE ASSESSEE IT HAS BEEN HELD THAT AMENDMENT INTRODUCED BY THE FINANCE ACT 2010 IN SECTION 40(A)(IA) OF THE AC T IS NOT JUST CURATIVE BUT IS RETROSPECTIVE IN NATURE. HON. JURISDICTIONAL HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL AND DECIDED IN FAVOUR OF ASSESSEE BY OBSERVING AS FOLLOWS :- 17. THE CORE ISSUE AS TO WHETHER THE AMENDMENT MADE BY THE FINANCE ACT 2010 TO SECTION 40 [A](IA) OF THE ACT IS RETROSPECTIVE FROM THE DATE O F INSERTION OF THE PROVISION IE.1 ST APRIL 2005 THEREFORE NEEDS TO BE ANSWERED IN AFFIRMATION. IT C AN BE SEEN THAT THE AMENDMENT MADE BY THE FINANCE ACT 2010 ALLOWS ADDITIONAL TIME UPTO THE DU E DATE OF TILING OF THE RETURN IN RESPECT OF EVEN THOSE INSTANCES WHERE TDS HAS BEEN DEDUCTED DU RING THE FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR. THE ADDITIONAL TIME TILL THE DUE DAT E OF FILING OF THE RETURN, IN CASE OF TDS MADE DURING THE LAST MONTH OF THE PREVIOUS YEAR WAS ALREADY AVAILABLE BY THE AMENDMENT MADE BY FINANCE ACT 2008. THUS, IT IS APPARENT THAT THE RELAXATION MADE BY THE AMENDMENT MADE UNDER THE FINANCE ACT, 2010 BRINGS THE LAW IN PARITY WITH THE AFOREMENTIONED SITUATION AND ACCORDINGLY, FOR THE TDS DEDUCTED ALL THROUGHOUT THE YEAR, TIME IS EXTENDED ITA NO. 2776/AHD/2013 ASST. YEAR 2006-07 6 FROM PAYMENT TILL THE FILING OF RETURN. IT IS THUS APPARENT THAT WHEN THE AMENDMENT INTRODUCED BY THE FINANCE ACT, 2008 OF RELAXING THE TIME FOR DEPOSIT OF TDS WAS MADE RETROSPECTIVE FROM THE YEAR 2005 [1 ST APRIL 2005], THE AMENDMENT BY FINANCE ACT 2010 WITH REGARD TO OTHER LIMB OF TIME LIMIT FOR PAYMENT OF TDS HAS TO BE HELD RETROSPECTIVE NOT FROM 1 ST APRIL 2010 ONLY. IF WE RECALL AT THIS STAGE THE SP EECH OF FINANCE MINISTER WHILE INTRODUCING THIS PROVISION BY WAY OF FINANCE ACT, 2010, THIS AMENDMENT ESSENTIALLY HAS BEEN BROUGHT FOR RELAXING THE CURRENT PROVISION ON DISALLOWANCE OF EXPENDITURE. THE TAX, IF IS DEDUCTED AT ANY TIME DURING THE FINANCIA L YEAR AND PAID BEFORE THE DATE OF FILING OF THE RETURN, THE LEGISLATURE INTENDED TO ALLOW DE DUCTION ON SUCH EXPENDITURE WITH AN INTENTION TO PERMIT ADDITIONAL TIME FOR MOST DEDUC. TORS UPTO SEPTEMBER OF THE NEXT FINANCIAL YEAR. 17.1 WE DRAW FURTHER SUPPORT FROM THE FACT THAT T HE RIGOR OF PAYMENT OF INTEREST IS ALSO ENHANCED BY INCREASING THE INTEREST CHARGED ON TAX DEDUCTED, IF ANY DEPOSIT BY THE SPECIFIED DATE I.E., UP TO THE FILING OF THE RETURN IS NOT MADE, FROM 12 % TO 18% PER ANNUM IN THE PROVISION OF SECTION 201 (1A). PRIOR TO THE SAID AMENDMENT OF FINANCE ACT, 2010 UNDER SECTION 201 (1A), ASSESSEE WAS LIABLE TO PA Y SIMPLE INTEREST AT ONE PER CENT FOR EVERY MONTH OR PART OF MONTH, IN CASE OF FAILURE TO DEDUCT TAX ON PAYMENT OF DEDUCTED TAX, INCREASE IS MADE CORRESPONDINGLY FROM ONE PER CENT TO ONE AND HALF P ER CENT FOR EVERY MONTH OR PART OF MONTH FOR DISCOURAGING DELAY IN DE POSIT. 17.1 AS RIGHTLY CONTENDED BY THE RESPONDENTS ARITHM ETICAL DISCREPANCY CAN BE WELL JUDGED FROM THE FACT THAT THE RATES OF TDS MAY VARY BETWEE N 1% TO 10%, WHEREAS, LEGITIMATE BUSINESS EXPENDITURE DENIED IS 100% - RESULTING INT O TAXATION OF GROSS RECEIPTS COUPLED WITH LEVY OF INTEREST AND PENALTY, WHICH WOULD MEAN THAT THE POSSIBILITY CANNOT BE RULED OUT OF BUSINESS OF THE TAX PAYER GETTING CLOSED DOWN PERMA NENTLY, IF THERE IS ABSENCE OF ANY SCOPE OF CLAIMING ANY EXPENSES IN THE NEXT YEAR. 17.2 IT CAN BE THUS SEEN THAT THE AMENDMENT TO SEC TION 40 [A](IA) BY THE FINANCE ACT, 2010 IS ONLY AN AMENDMENT IN CONTINUATION OF THE EARLIER AM ENDMENT MADE IN THE FINANCE BILL, 2008 WITH RETROSPECTIVE EFFECT FROM L BT APRIL 2005. THE LEGISLATURE, WHILE EXTENDING THE TI ME FOR PAYMENT OF TDS DEDUCTED IN THE MONTH OF MARCH TILL DUE DATE OF FILING OF THE RETURN UNDER SECTION 139 (1) OF THE ACT, CONSIDERED THE APPARENT DIFFERENCE WHERE AN UNINTENDED BENEFIT WAS GIVEN TO THE ASSESSEE WHO DEDUCTED THE ENTIRE Y EAR'S TDS IN THE MONTH OF MARCH OF THE PREVIOUS YEAR WHICH WERE ELIGIBLE TO PAY TDS SO DED UCTED TO THE GOVERNMENT BY DUE DATE OF FILING OF THE RETURN UNDER SECTION 139 (1) OF THE A CT. HOWEVER, THE ASSESSES WHO MAY HAVE DEDUCTED THE TAX IN EARLIER MONTHS BEGINNING FROM A PRIL TO THE END OF FEBRUARY OF THE PREVIOUS YEAR, DID NOT GET SUCH BENEFIT OF EXTENDED TIME AND THUS THE SAME WORKED UNREASONABLY FOR SUCH ASSESSES, AND THEREFORE, IT C AN BE SAFELY HELD UPHOLDING THE CONTENTION OF THE RESPONDENTS THAT TO CURE SUCH DEF ECT, AMENDMENT IN THE YEAR 2010 HAS BEEN BROUGHT AND THE BENEFIT OF EXTENDED TIME TO AV OID HARDSHIP WAS GIVEN TO THE ASSESSEE AND THEREFORE, AMENDMENT OF 2010 IS IN CONTINUATION TO THE AMENDMENT OF 2008, AND THEREFORE, CURATIVE IN NATURE AND THE SAME HAS TO B E HELD RETROSPECTIVE IE., WITH EFFECT FROM 1 ST APRIL 2005. 17.3 WE NOTICE THAT WITHOUT CHALLENGING THE CONSTIT UTIONAL VALIDITY OF THIS PROVISION OF SECTION 40 [A](IA) OF THE ACT, DELHI HIGH COURT HAS READ DOWN A SIMILAR PROVISION, AS ITA NO. 2776/AHD/2013 ASST. YEAR 2006-07 7 REPORTED IN CASE OF COMMISSIONER OF INCOME-TAX V. ORACLE SOFTWARE INDIA LIMITED, REPORTED IN 293ITR 353. 17.4 WE ALSO NOTICE THAT THE CALCUTTA HIGH COURT IN CASE OF CIT V. VIRGIN CREATIONS [SUPRA], RELYING ON THE DECISION IN CASES OF ALLIED MOTORS PRIVATE LIMITED AND ALOM EXTRUSIONS LIMITED [SUPRA], HELD THAT THE SAID PROVISION WOULD HAVE RE TROSPECTIVE APPLICATION. IN WORDS OF THE BENCH - 'THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESS EE HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PERIOD APRIL 1, 2005 AND A PRIL 28, 2006 AND THE SAME WERE PAID BY THE ASSESSEE IN JULY AND AUGUST 2006, IE., 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 PRIVATE LIMITED AND ALSO IN THE CA SE OF ALORN EXTRUSIONS LIMITED HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HAS RE TROSPECTIVE 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 PROVISIONS WORKABLE , REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTIO N CAN BE GIVEN TO THE SELECTION AS WELL. IN VIEW OF THE AUTHORITATIVE PRONOUNCEMENT OF THE S UPREME COURT, THIS COURT CANNOT DECIDE OTHERWISE. HENCE, WE DISMISS THE APPEAL WITH OUT ANY ORDER AS TO COSTS.' 17.5 DELHI HIGH COURT IN CASE OF H. S MOHINDRA TRADERS V. I.T.O, WARD 39 (2), NEW DELHI [SUPRA] HAS HELD THE AMENDMENT BROUGHT ABOUT BY WAY OF THE FINANCE ACT 2010 AS RETROSPECTIVE IN NATURE. 17.6 THIS COURT IN CASE OF CIT V. ROYAL BUILDERS [SUPRA], OF COURSE, WITHOUT ELABORATING THE ISSUE, FOLLOWED DELHI HIGH COURT IN THE FOLLOWI NG FASHION :- 'ISSUE PERTAINS TO DEDUCTION OF TAX AT SOURCE, WHIC H THE ASSESSEE DID DEDUCT, AS REQUIRED BEFORE 31 HT MARCH 2006. THE SAME WAS, HOWEVER, DEPOSITED WITH THE REVENUE ON 30 TH MAY 2006. WE ARE CONCERNED WITH THE ASSESSMENT YEA R 2006- 07. REVENUE CONTENDS THAT SUCH DEPOSIT OF THE TAX A T SOURCE WAS BEYOND THE TIME PRESCRIBED AND THEREFORE, PROVISION OF SECTION 40[A ](IA) OF THE ACT WOULD APPLY. THE TRIBUNAL, HOWEVER, RULED IN FAVOUR OF THE ASSES SEE RELYING ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN CASE OF H.S MOHI NDRA TRADERS V. INCOME-TAX OFFICER, WARD 39 (2), NEW DELHI, REPORTED IN [2010] 132 TTJ 701 (DELHI). COUNSEL FOR THE REVENUE CANDIDLY POINTED OUT THAT S UCH DECISION OF THE TRIBUNAL IN CASE OF H.S MOHINDRA TRADERS WAS CARRIED IN APPE AL BY THE REVENUE BEFORE THE DELHI HIGH COURT. THE DELHI HIGH COURT DISMISSED TH E REVENUE'S APPEAL, MAKING FOLLOWING OBSERVATIONS:- 'THE ASSESSEE HAD DEDUCTED THE TAX AT SOURCE IN THE MONTH OF MARCH, 2007 FOR THE EXPENDITURE INCURRED IN FEBRUARY 2007, BUT THE SAME WAS DEPOSITED WITH THE INCOME TAX DEPARTMENT IN APRIL 2007 IE., MUCH BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION ( 1) OF SECTION 139 OF THE INCOME TAX ACT FOR FILING THE RE TURN. ITA NO. 2776/AHD/2013 ASST. YEAR 2006-07 8 IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THA T THE INCOME TAX APPELLATE TRIBUNAL [HEREINAFTER REFERRED TO AS, 'THE TRIBUNAL'] HAS RIGHTLY INTERPRETED THE PROVISION OF SECTION 40 (A)(IA) AND PARTICULARLY, SUB-CLAUSE (A) THEREOF WHICH CLEARLY GIVES THE TIME TO THE ASSESSEE TO DEPOSIT THE IDS ON OR BEFORE THE DUE DA TE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 OF THE ACT. THE ENTIRE CASE SOUGHT TO B E MADE IN THIS APPEAL IS THAT THE TRIBUNAL WRONGLY RELIED UPON THE AMENDMENT WHICH CA ME INTO EFFECT FROM 1.04.2010. THIS IS CLEARLY ERRONEOUS IN AS MUCH AS SECTION 40 (A)(IA) WAS AMENDED BY THE FINANCE ACT, 2008 WITH EFFECT FROM 01.05.2005 WHEREBY THE W ORDS 'ON OR BEFORE THE DUE DATE SPECIFIED IN EUB-ECCTION (1) OF SECTION 139' WAS SU BSTITUTED BY THE WORDS, 'HAS NOT BEEN PAID DURING THE PREVIOUS YEAR, OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200' OF THE ACT. WE, THUS, FIND NO MERIT IN THIS APPEAL. THIS APPEAL IS ACCORDINGLY DISMISSED.' WE ARE BROADLY IN AGREEMENT WITH THE VIEW EXPRESSED BY THE DELHI HIGH COURT. THE ISSUE BEING IDENTICAL, THE PRESENT TAX APPEAL I S ALSO DISMISSED.' 18. FROM THE DISCUSSION HELD HEREINABOVE, WE ANSWER THE SUBSTANTIAL QUESTION OF LAW RAISED IN THESE APPEALS IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY HOLDING THE AMENDMENT MADE IN SECTION 40 (A)(IA) OF THE INCOME TAX ACT, 1 961 BY THE FINANCE ACT 2010, AS RETROSPECTIVE IN OPERATION, HAVING EFFECT FROM 1 ST APRIL 2005 IE., FROM THE DATE OF INSERTION OF SECTION 40 (A) (IA) OF THE ACT. 19. RESULTANTLY, WE HOLD THAT THE TRIBUNAL RIGHTLY DECIDED THE SAID ISSUE FOLLOWING THE CALCUTTA HIGH COURT'S DECISION IN CASE OF VIRGIN CREATIONS [SUPRA] BY HOLDING THAT THE DISALLOWANCE MADE UNDER SECTION 40 (A)(IA) BY THE C IT [A] EVEN FOR THE AMOUNT FOR WHICH THE TDS HAD BEEN DEDUCTED BEFORE I 5T MARCH 2005, HOLDING AMENDMENT BROUGHT ON 1 ST APRIL 2010 AS RETROSPECTIVE IN NATURE. 9. FROM GOING THROUGH THE JUDGMENT OF HON. JURISDIC TIONAL HIGH COURT IN THE CASE OF CIT VS. OMPRAKASH R. CHAUDHARY (SUPRA) AND THE APPELLATE ORDER OF LD. CIT(A) AND VARIOUS OTHER JUDICIAL PRONOUNCEMENTS IT IS NOW SETTLED ISSUE THAT AMENDME NT U/S 40(A)(IA) OF THE ACT, BY THE FINANCE ACT, 2010 IS ONLY AN AME NDMENT IN CONTINUATION OF EARLIER AMENDMENT MADE IN 2008 WITH RETROSPECTIVE EFFECT FROM 1.4.2005 AND AMENDMENT IN THE YEAR 2010 HAS BEEN BROUGHT TO CURE THE DEFECT SO THAT BENEFIT OF THE E XTENDED TIME OF DEPOSITING TDS BEFORE THE DUE DATE OF FILING RETURN IS GIVEN TO THE ASSESSEE. ITA NO. 2776/AHD/2013 ASST. YEAR 2006-07 9 10. RESPECTFULLY FOLLOWING THE JUDGMENT OF HON. JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. OMPRAKASH R. CHAUDHARY (SUPRA) WE FIND THAT FACTS OF THE ASSESSEE ARE SQUARELY COVERE D BY THIS JUDGMENT AND AS OBSERVED BY LD. CIT(A) IN A RIGHT PERSPECTIV E, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A ) AND UPHOLD THE SAME. THIS GROUND OF REVENUE IS DISMISSED. 10. OTHER GROUNDS ARE OF GENERAL NATURE, WHICH NEE D NO ADJUDICATION. 11. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2016 SD/- SD/- (R.P. TOLANI) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 23/12/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 2776/AHD/2013 ASST. YEAR 2006-07 10 1. DATE OF DICTATION: 15/12/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 15/12/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 23/12/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: