Om Sri Nilamadhab Builders Pvt. Ltd., Bhubaneswar V. ITO, Ward-1(3), Bhubaneswar

ITA 296/CTK/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4380 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 31-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J K LENKA
• Assessee Lawyers: S K AGARWA L LA
• Keywords: Retrospective amendment; TDS; Set aside
• Section: 43B; 40(a)(ia); 201; 191

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 296 /CTK/201 8 ( / ASSESSMENT YEAR : 20 1 4 - 201 5 ) OM SRI NILAMADHAB BUILDERS PVT. LTD., PLOT NO.288, BAPUJI NAGAR, BHUBANESWAR - 751009, ODISHA VS. ITO, WARD - 1(3), BHUBANESWAR ./ PAN NO. : A A BCO 2822 N ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI S.K.AGARWALLA, CA /REVENUE BY : SHRI J.K.LENKA , DR / DATE OF HEARING : 15 / 11 /2019 / DATE OF PRONOUNCEMENT : 26 / 11 /2019 / O R D E R PER L.P.SAHU , A M : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1 , BHUBANESWAR , DATED 16.05.2018 FOR THE ASSESSMENT YEAR 201 4 - 201 5 ON THE FOLLOWING GROUNDS OF APPEAL : - 1. THAT, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS WRONGLY INTERPRETED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND HAS COMMITTED AN ERR OR OF LAW IN CONFIRMING THE DISALLOWANCE OF RS. 35,46,286 OUT OF RS. 39 ,62,695 AND THEREFORE THE DISALL OWANCE OF EXPENSES IS LIABLE TO BE DELETED. 2. THAT, THE LD. AUTHORITIES BELOW ERRED IN FACTS AND IN LAW IN DISALLOWING THE EXPENSES U/S 40(A)(IA) OF T HE ACT WHICH ARE LIABLE TO BE DELETED. 3. THAT, THE APPELLANT CRAVES TO ALTER, AMEND, MODIFY OR ADD ANY OTHER GROUND THAT MAY BE CONSIDERED NECESSARY IN THE COURSE OF APPEAL PROCEEDING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY IS ENGAG ED IN THE BUSINESS OF REAL ESTATE AND FILED ITS RETURN OF INCOME ITA NO. 296 /CTK/201 8 2 ELECTRONICALLY ON 31.03.2015 DECLARING TOTAL INCOME OF RS.20,40,420/ - . THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY UNDER CASS AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED EXPLANATION, DETAILS AND DOCUMENTARY EVIDENCE AS REQUIRED BY THE AO WHICH WAS EXAMINED AT LENGTH. THE AO FOUND THAT THE ASSESSEE HAS CLAIMED LABOUR CHARGES OF RS.32,05,050/ - , ARCHITECT FEES OF RS.75000/ - AND RS.3,85,645/ - TOWARDS EXPENSES UNDER THE HEAD COMMISSION, WHICH ARE IN THE NATURE OF PAYMENTS MADE TOWARDS CONTRACT PAYMENT U/S.194C OF THE ACT, PROFESSIONAL FEES PAYMENT U/S.194H OF THE ACT AND COMMISSION PAYMENT U/S.194H OF THE ACT. FINALLY, THE AO FOUND THAT THE ASSESSEE HAS FAILED TO DEPOSIT THE TDS AMOUNT SO DEDUCTED FROM THE PAYMENTS MADE TOWARDS EXPENSES ON ACCOUNT OF LABOUR CHARGES, PROFESSIONAL FEES AND COMMISSION TO THE CENTRAL GOVT. A/C WITHIN THE SPECIFIED TIME LIMIT, THEREFORE, HE DISALLOW ED RS.39,62,695/ - U/S.40(A)(IA) OF THE ACT AND PASSED ASSESSMENT ORDER U/S.143(3) OF THE ACT VIDE DATED 23.12.2016. 3. FEELING AGGRIEVED FROM THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), HOWEVER, THE CIT(A) AFTER CONSIDERING THE S UBMISSIONS OF THE ASSESSEE AND FINDINGS OF AO, THE CIT(A) OBSERVED THAT AS THE ASSESSEE HAS NOT CLAIMED EXPENSES OF RS.4,16,409/ - WHILE COMPUTING THE TAXABLE INCOME IN THE PROFIT AND LOSS ACCOUNT, THEREFORE, THE SAME CANNOT BE DISALLOWED U/S.40(A)(IA) OF THE ITA NO. 296 /CTK/201 8 3 ACT AND ACCORDINGLY, THE CIT(A) RESTRICTED THE DISALLOWANCE TO RS.35,46,286/ - AS AGAINST THE ADDITION MADE BY THE AO AT RS.39,62,685/ - AND UPHELD THE BALANCE ADDITION. 4. AGGRIEVED FURTHER FROM THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 5. LD. AR, BEFORE US, SUBMITTED THAT THE AO HAS WRONGLY MADE ADDITION OF RS.39,62,695/ - TOWARDS THE EXPENSES OF LABOUR CHARGES, PROFESSIONAL FEES AND COMMISSION PAYMENTS U/S.40(A)(IA) OF THE ACT FOR DEPOSIT OF TDS WITHIN THE STIPULATED TIME LIMIT. IT WAS ALSO THE CONTENTION OF LD. AR THAT OUT OF RS.39,62,695/ - , THE ASSESSEE HAS CLAIMED ONLY EXPENSES OF RS.35,46,286/ - IN ITS PROFIT AND LOSS ACCOUNT, WHICH HAS BEEN ACCEPTED BY THE CIT(A) IN THE APPELLATE ORDER AT PARA 3.2 AND A FTER DEDUCTING THE SAME, UPHELD THE BALANCE ADDITION MADE BY THE AO, WHICH AMOUNTS TO 100% OF DISALLOWANCE. IT WAS FURTHER CONTENDED BY THE LD. AR THAT THE BENEFIT OF TDS DEPOSIT MADE AGAINST THIS DISALLOWANCE HAS NOT BEEN TAKEN IN THE COMPUTATION OF INCOM E FOR A.Y.2015 - 2016, COPY OF COMPUTATION OF INCOME WAS ALSO FILED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS. HOWEVER, AS PER THE AMENDED PROVISIONS OF SECTION 40(A)(IA) OF THE ACT VIDE FINANCE ACT, 2014 W.E.F. 1 ST APRIL, 2015, 100% DISALL OWANCE MADE U/S.40(A)(IA) OF THE ACT HAS BEEN RESTRICTED TO 30% AND THIS AMENDMENT IS CURATIVE ONE HAVING RETROSPECTIVE EFFECT. THEREFORE, THE ACTUAL ADDITION (100% ITA NO. 296 /CTK/201 8 4 DISALLOWANCE) UPHELD BY THE CIT(A) MAY KINDLY BE RESTRICTED TO 30%. IN THIS REGARD, LD. AR RELIED ON THE FOLLOWING CASE LAWS : - I) TRIPURA STATE ELECTRICITY CORPORATION LTD., (2019) 33 NYPTTJ 741(GAU)/IT A NOS.30,31,32/GAU/2015, ORDER DATED 18.10.2019; II) DIPAK PARUI VS. JCIT, ITA NO.767/KOL/2016, ORDER DATED 20.07.2018; AND III) SMT. KANTA YA DAV VS. ITO, IT A NO.6312/DEL/2016, ORDER DATED 12.05.2017 6. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF AO. LD. DR FURTHER STATED THAT AMENDMENT IN THE ACT IS VERY CLEAR AND AMENDMENT IS W.E.F. 01.04.2015, THEREFORE, BENEFIT OF 30% DISALLOWANCE AS AGAINST 100% DISALLOWANCE CANNOT BE GRANTED IN FAVOUR OF THE ASSESSEE GIVING EFFECT RETROSPECTIVELY. ACCORDINGLY, LD. DR SUBMITTED THAT THE ORDER OF CIT(A) SHOULD BE RESTORED. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY PER USING THE ENTIRE MATERIAL AVAILABLE ON RECORD AS WELL AS THE CASE LAWS CITED BY THE LD. AR OF THE ASSESSEE, WE FIND THAT THE ASSESSEE HAS ACTUALLY CLAIMED EXPENSES OF RS.35,46,286/ - IN THE PROFIT AND LOSS ACCOUNT AS AGAINST THE ADDITION MADE BY THE AO OF R S.39,62,695/ - , WHICH HAS BEEN ACCEPTED BY THE CIT(A) AT PARA 3.2 OF THE APPELLATE ORDER. ON PERUSAL OF BOTH ASSESSMENT AND APPELLATE ORDER, IT IS VIVID THAT THE TOTAL ADDITION MADE BY THE AO INCLUDES RS.4,16,409/ - WHICH WAS NOT CLAIMED BY THE ASSESSEE AS E XPENDITURE IN ITS PROFIT AND LOSS ACCOUNT. THEREFORE, IN OUR CONSIDERED OPINION, THE DISALLOWANCE OF ITA NO. 296 /CTK/201 8 5 RS.35,46,286/ - UPHELD BY THE CIT(A) IS T O BE HELD AS 100% DISALLOWANCE, WHICH HAS BEEN CLAIMED BY THE ASSESSEE AS EXPENDITURE IN ITS PROFIT AND LOSS ACCOUN T. HOWEVER, AS PER THE AMENDMENT BROUGHT TO THE FINANCE ACT, 2014 IN SECTION 40(A)(IA) OF THE ACT W.E.F. 01.04.2015, IF 100% DISALLOWANCE MADE U/S.40(A) (IA) OF THE ACT, THAT WOULD BE RESTRICTED TO 30% ONLY. NOW, THE MOOT QUESTION ARISES BEFORE US AS TO WHE THER THE SAID AMENDMENT IS HAVING THE RETROSPECTIVE EFFECT OR NOT. LD. AR BEFORE US SUBMITTED THAT THE ABOVE PROVISO INSERTED IN THE ACT TO BE A CURATIVE ONE HAVING RETROSPECTIVE EFFECT AND THE ASSESSEE IS ENTITLED THE BENEFIT OF 30% DISALLOWANCE AS AGAINS T 100% DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE CIT(A). I N THIS REGARD, HE PLACED RELIANCE ON THE DECISION RENDERED BY THE GAUHATI BENCH OF THE TRIBUNAL IN CASE OF TRIPURA STATE ELECTRICITY CORPORATION LTD. (SUPRA), WHEREIN IT IS HELD AS UNDER : - 6. MR. GOENKA VEHEMENTLY SUBMITS DURING THE COURSE OF HEARING THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN DISALLOWING ASSESSEE'S IMPUGNED EXPENDITURE CLAIM(S) ON ACCOUNT OF NON - DEDUCTION OF TDS. HIS CASE IS THAT THE ASSESSEE HAD NOT AVAILED ANY TECHNICAL SERVICES FROM ITS PAYEES. THE FACT REMAINS THAT THIS TAXPAYER HAS NOT TENDERED ANY DETAILS OF THE ACTUAL NATURE OF EXPENDITURE. WE THEREFORE FIND NO REASON TO DISAGREE WITH THE LOWER AUTHORITIES' CONCLUSION QUOTING ASSESSEE'S FAILURE IN FILING THE RELEVAN T DETAILS. COUPLED WITH THIS, THE FACT ALSO REMAINS THAT THE LEGISLATURE HAS ITSELF AMENDED SECTION 40(A)(IA) VIDE THE FINANCE ACT , 2014 W.E.F. 01.04 .2015 RESTRICTING A DISALLOWANCE MADE U/S 40(A)(IA) FROM 100% TO 30% ONLY. THIS TRIBUNAL'S ORDER IN ITA NO. 767/ KOL/2016 DIPAK PARUI VS. JCIT DECIDED ON 20.07.2018 HOLDS THE ABOVE PROVISO INSERTED IN T HE ACT TO BE A CURATIVE ONE HAVING RETROSPECTIVE EFFECT. WE THEREFORE, DIRECT THE ASSESSING OFFICER TO RESTRICT THE IMPUGNED DISALLOWANCE TO THE EXTENT OF 30% ONLY. NECESSARY COMPUTATION TO FOLLOW. THIS FIRST SUBSTANTIVE GROUND IS TAKEN AS PARTLY ACCEPTED IN FOREGOING TERMS. ITA NO. 296 /CTK/201 8 6 SIMILARLY, THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF DIPAK PARUI (SUPRA), WHEREIN IT HAS BEEN HELD THAT THE AMENDMENT W.E.F. 01.04.2015 TO BE RETROSPECTIV E EFFECT BEING CURATIVE NATURE AND OBSERVED AS UNDER: - 5. LATTER ISSUE B EFORE US IS THAT OF CORRECTNESS OF SECTION 40 (A)(IA) DISALLOWANCE OF RS.1.79,800/ - OUT OF ASSESSEE'S TOTAL CLAIM OF RS.,3,05,364/ - . HIS ONLY ARGUMENT BEFORE US IS THAT SECTION 40(A)(IA) AS AMENDED BY FINANCE ACT 2014 W.E.F. 01.04.2015 PRESCRIBING SUCH DISALLOWANCE TO BE RESTRICTED TO 30% ONLY THAN THE ENTIRE AMOUNT OF RS.1,79,800/ - ; APPLIES WITH RE TROSPECTIVE EFFECT. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OPPOSES THIS LEGAL PLEA. HE PLEADS THAT THE SAID PROVISO DOES NOT CARRY ANY RETROSPECTIVE EFFECT. WE FIND NO FORCE IN REVENUE'S INSTANT ARGUMENTS AS A COORDINATE BENCH OF THIS TRIBUNAL IN S HRI RAJENDRA YADAV IN ITA NO.895/JP/2012 DECIDED ON 29.01.2016 ALREADY CONCLUDES THE ABOVE AMENDMENT W.E.F. 01.04.2015 TO BE RETROSPECTIVE EFFECT BEING CURATIVE IN NATURE. WE THEREFORE DIRECT THE ASSESSING OFFICER TO RESTRICT THE IMPUGNED DISALLOWANCE TO 3 0% ONLY TO BE FOLLOWED BY NECESSARY ITA NO.767/KOL/2016 DIPAK PARUI A.Y.2011 - 12 3 COMPUTATION AS PER LAW. THIS LATTER SUBSTANTI VE GROUND IS TREATED AS PARTLY ACCEPTED IN ABOVE TERMS. FURTHER , THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SMT. KANTA YAD AV (SUPRA) WHILE CONSIDERING THE SIMILAR ISSUE HAS HELD AS UNDER : - 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND FIND THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF ITAT JAIPUR BENCH IN THE CASE OF SHRI RAJENDRA YADAV VS. ITO AND SMT. SONU KHANDELWAL VS. ITO. IN THESE ORDERS IT WAS HELD THAT THE DISALLOWANCE U/S 40(A)(IA) TO BE RESTRICTED TO 30% OF THE ADDITION. IN THESE ORDERS THE TRIBUNAL HAS CONSIDERED THE AMENDED PROVISIONS OF SECTION 40(A)(IA) OF I.T. ACT. IN THESE ORDERS THE ASSESSMENT YEAR'S INVOLVE WAS 2007 - 08 AND 2008 - 09. IN ITA NO. 6312/ DEL/2016 SMT. KANTA YADAV VS. ITO THE PRESENT APPEAL THE ASSESSMENT YEAR IS 2012 - 13. THEREFORE FACTS ARE IDENTICAL. IN THIS VIEW OF THE MATTER AND FOLLOWING THE ABOVE DECISIONS OF JAIPUR BENCH, WE SET ASIDE AND MODIFY THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO RES TRICT THE ADDITION TO 30% OF THE TOTAL ADDITION MADE ON ACCOUNT OF DEDUCTION OF TDS U/S 40(A)(IA) OF THE ACT. 8. FROM THE ABOVE OBSERVATIONS OF THE DIFFERENT BENCH ES OF THE TRIBUNAL, WE FIND THAT THE 100% DISALLOWANCE MADE U/S.40(A)(IA) OF THE ACT HAS B EEN DIRECTED TO BE RESTRICTED TO THE EXTENT OF 30% ONLY GIVING ITA NO. 296 /CTK/201 8 7 RETROSPECTIVE EFFECT . LD. DR BEFORE US SUBMITTED THAT THERE IS NO MENTION IN THE AMENDMENT THAT THE SAME SHALL BE APPLIED RETROSPECTIVELY , HOWEVER, I N OUR CONSIDERED OPINION, I F A STATUTE IS CU RATIVE OF THE PREVIOUS LAW, RETROSPECTIVE OPERATION IS GENERALLY INTENDED. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. CALCUTTA EXPORT COMPANY, [2018] 93 TAXMANN.COM 51 (SC), WHILE DECIDING THE ISSUE AS TO W HETHER AMENDMENT MADE BY FINANCE ACT, 2010, TO PROVISIONS OF SECTION 40(A)(IA) IS CURATIVE IN NATURE AND IT SHOULD BE GIVEN RETROSPECTIVE OPERATION FROM DATE OF INSERTION OF SAID PROVISION I.E. WITH EFFECT FROM ASSESSMENT YEAR 2005 - 06, HAS HELD AS UNDER : - THE PURPOSE FOR BRINGING SAID AMENDMENT IS TO ENSURE TAX COMPLIANCE. THE FACT THAT THE INTENTION OF THE LEGISLATURE WAS NOT TO PUNISH THE ASSESSEE IS FURTHER REFLECTED FROM A BARE READING OF THE PROVISIONS OF SECTION 40(A)(IA). IT ONLY RESULTS IN SHIFTING OF THE YEAR IN WHICH THE EXPENDITURE CAN B E CLAIMED AS DEDUCTION. IN A CASE WHERE THE TAX DEDUCTED AT SOURCE WAS DULY DEPOSITED WITH THE GOVERNMENT WITHIN THE PRESCRIBED TIME, THE SAID AMOUNT CAN BE CLAIMED AS A DEDUCTION FROM THE INCOME IN THE PREVIOUS YEAR IN WHICH THE TDS WAS DEDUCTED. HOWEVER, WHEN THE AMOUNT DEDUCTED IN THE FORM OF TDS WAS DEPOSITED WITH THE GOVERNMENT AFTER THE EXPIRY OF PERIOD ALLOWED FOR SUCH DEPOSIT THEN THE DEDUCTIONS CAN BE CLAIMED FOR SUCH DEPOSITED TDS AMOUNT ONLY IN THE PREVIOUS YEAR IN WHICH SUCH PAYMENT WAS MADE TO THE GOVERNMENT. [PARA 16] 9. ON CAREFUL PERUSAL OF THE AMENDMENT BROUGHT TO THE SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2014 W.E.F. 01.04.2015 , IT IS CLEAR THAT THE INTENT OF LEGISLATURE TO REDUCE THE HARDSHIP, IT IS PROPOSED THAT IN CASE OF NON - DEDUCTION OR NON - PAYMENT OF TDS ON PAYMENTS MADE TO RESIDENTS AS SPECIFIED IN SECTION 40(A)(IA) OF THE ACT, THE DISALLOWANCE SHALL BE RESTRICTED TO 30% OF THE AMOUNT OF EXPENDITURE ITA NO. 296 /CTK/201 8 8 CLAIMED. THE HONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS (P) LTD. [ 1997] 224 ITR 677 (SC) HAS HELD THAT AMENDMENT WAS REMEDIAL IN NATURE, DESIGNED TO ELIMINATE UNINTENDED CONSEQUENCES WHICH MAY CAUSE UNDUE HARDSHIP TO THE ASSESSEE AND WHICH MADE THE PROVISION UNWORKABLE OR UNJUST IN A SPECIFIC SITUATION. FINALLY, AFTER C ONSIDERING VARIOUS CASE LAWS, THE HONBLE SUPREME COURT HELD THAT THE PURPOSE OF AMENDMENT WOULD NOT SERVE ITS OBJECT IN SUCH A SITUATION UNLESS, IT IS CONSTRUED AS RETROSPECTIVE AFTER OBSERVING AS UNDER : - 10. THEREFORE, IN THE WELL - KNOWN WORDS OF JUDGE L EARNED HAND, ONE CANNOT MAKE A FORTRESS OUT OF THE DICTIONARY; AND SHOULD REMEMBER THAT STATUTES HAVE SOME PURPOSE AND OBJECT TO ACCOMPLISH WHOSE SYMPATHETIC AND IMAGINATIVE DISCOVERY IS THE SUREST GUIDE TO THEIR MEANING. IN THE CASE OF R.B. JODHA MAL KUTH IALA V. CIT [1971] 82 ITR 570 , THIS COURT SAID THAT ONE SHOULD APPLY THE RULE OF REASONABLE INTERPRETATION. A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONSEQUENC ES 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 R EASONABLE INTERPRETATION CAN BE GIVEN TO THE SECTION AS A WHOLE. 11. THIS VIEW HAS BEEN ACCEPTED BY A NUMBER OF HIGH COURTS. IN THE CASE OF CIT V. CHANDULAL VENICHAND [1 994] 209 ITR 7/ 73 TAXMAN 349 , THE GUJARAT HIGH COURT HAS HELD THAT THE FIRST PROVISO TO SECTION 43B 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 THE ASSESSMENT YEAR 1984 - 85. THE CALCUTTA HIGH COURT IN THE CASE OF CIT V. SRI JAGANNATH STEEL CORPN. [1991] 191 ITR 676 , HAS TAKEN A SIMILAR VIEW HOLDING THAT THE STA TUTORY LIABILITY FOR SALES - TAX ACTUALLY DISCHARGED AFTER THE EXPIRY OF THE ACCOUNTING YEAR IN COMPLIANCE WITH THE RELEVANT STATUTE IS ENTITLED TO DEDUCTION UNDER SECTION 43B. THE HIGH COURT HAS HELD THE AMENDMENT TO BE CLARIFICATORY AND, THEREFORE, RETROSP ECTIVE. THE GUJARAT HIGH COURT IN THE ABOVE CASE HELD THE AMENDMENT TO BE CURATIVE AND EXPLANATORY AND HENCE RETROSPECTIVE. THE PATNA HIGH COURT HAS ALSO HELD THE AMENDMENT INSERTING THE FIRST PROVISO TO BE EXPLANATORY IN THE CASE OF JAMSHEDPUR MOTOR ACCES SORIES STORES V. UNION OF INDIA [1991] 189 ITR 70/ 54 TAXMAN 521 . IT HAS HELD THE AMENDMENT INSERTING FIRST PROVISO TO BE RETROSPECTIVE. THE SPECIAL LEAVE PETITION FROM THIS DECISION OF THE PATNA HIGH COURT WAS DISMISSED. THE VIEW OF THE DELHI HIGH COURT, THEREFORE, THAT THE FIRST PROVISO TO SECTION 43B WILL BE AVAILABLE ONLY PROSPECTIVELY DOES NOT APPEAR TO BE ITA NO. 296 /CTK/201 8 9 CORRECT. AS OBSERVED BY G.P. SINGH IN HIS PRINCIPLES OF STAT UTORY INTERPRETATION, FOURTH EDN., PAGE 291, 'IT IS 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 NOT SERVE ITS OBJECT IN SUCH A SITUATION UN LESS IT IS CONSTRUED AS RETROSPECTIVE. THE VIEW, THEREFORE, TAKEN BY THE DELHI HIGH COURT CANNOT BE SUSTAINED. 10. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF THE TRIBUNAL AS WELL AS HONBLE SUPREME COURT, WE DIRECT THE AO TO RESTRICT THE 100% DISALLOWAN CE CONFIRMED BY THE CIT(A) TO THE EXTENT OF 30% ONLY TAKING INTO ACCOUNT THE ACTUAL CLAIM OF THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT . WE ORDER ACCORDINGLY. THUS, THE SOLE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 26 / 1 1 / 201 9 . SD/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 26 / 1 1 /201 9 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - OM SRI NILAMADHA B BUILDERS PVT. LTD., PLOT NO.288, BAPUJI NAGAR, BHUBANESWAR - 751009, ODISHA 2. / THE RESPONDENT - ITO, WARD - 1(3), BHUBANESWAR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT , CUTTACK 6. / GUARD FILE. //TRUE COPY//