M/S. Debdutta Construction, Paschim Medinipur V. I.T.O,Wd-2(1), Medinipur, Midnapore

ITA 422/KOL/2009

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0528 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 20-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 18-03-2009
• Court: TRIBUNAL
• Department Lawyers: K L KANAK
• Assessee Lawyers: M D SHAH
• Keywords: Business expenditure; Retrospective amendment
• Section: 43B; 40A(3); 143(3); 194C; 201(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI B. P. JAIN, AM ] I.T.A NO S . 422 & 423 /KOL/2009 ASSESSMENT YEAR S : 2005 - 06 & 2006 - 07 M/S. DEBDUTTA CONSTRUCTION VS. INCOME - TAX OFFICER, WD - 2( 1 ), MEDINIPUR (PAN:A ADFC5929M ) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 12 .0 6 .2015 DATE OF PRONOUNCEMENT: 17 . 0 6 . 2015 FOR THE APPELLANT: SHRI M. D. SHAH, FCA FOR THE RESPONDENT: S HRI K. L. KANAK, JCIT, SR. DR ORDER PER SHRI MAHAVIR SINGH, JM: BOTH THESE APPEAL S BY ASSESSEE ARE ARISING OUT OF SEPARATE ORDER S OF CIT (A) - X XXVII , KOLKATA VIDE APPEAL NO S . 170 /CIT(A) - XX X VII/2(1)MID/07 - 08 AND 112/CIT(A) - XXXVII/2(1) MID/08 - 09 BOTH 07.01.2009 . ASSESSMENT S W ERE FRAMED BY I TO, WARD - 2( 1 ), MEDINIPUR U/S. 143(3) OF THE INCOME - TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR S 2005 - 06 AND 2006 - 07 VIDE HIS SEPARATE ORDER S DATED 06.12.2007 AND 2 6 . 1 1 .20 08 . 2. THE FIRST COMMON ISSUE IN THESE TWO APPEALS OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF PAYMENT TO LABOUR CONTRACTORS FOR NON - DEDUCTION OF TDS U/S. 194C OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. FOR THIS, ASSESSEE RAISED COMMON GROUNDS IN BOTH THE ASSESSM ENT YEARS I.E. GROUND NOS. 2 TO 6 FOR AY 2005 - 06 AND GROUND NOS. 4 TO 8 FOR AY 2006 - 07, EXCEPT VARIANCE IN AMOUNT. FOR THE SAKE OF CONVENIENCE AND BREVITY, WE WILL TAKE UP ITA NO. 422/KOL/2009 AND REPRODUCE THE GROUNDS RAISED IN THIS APPEAL I.E. GROUND NOS . 2 TO 6, WHICH READ AS UNDER: 2. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.T.(A) WAS WRONG IN DITTOING THE ORDER OF THE A.O. AND CONFIRMING THE ADDITION U/S. 40(A)(IA) OF THE INCOME TAX ACT AMOUNTING TO RS. 41,98,736/- WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 3. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.LT.(A) WAS WRONG IN CONFIRMING THE DISALLOWANCE U/S. 40(A)(IA) AMOUNTING TO RS.41,98,736/ - WITHOUT CONSIDERING THE FACTS THAT THE TAN WAS NOT ALLOTTED TO ASSESSEE IN THE SAID FINANCI AL YEAR, THEREFORE, THE DISALLOWANCE U/S. 40(A)(IA) AMOUNTING TO RS.41,98,736/ - IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 2 I TA NO S . 422 & 423 /K/20 09 DEBDUTTA CONSTRUCTION AY 200 5 - 0 6 TO 200 6 - 0 7 4. FOR THAT ON THE FACTS OF THE CASE, THE LD. CIT(A) WAS WRONG IN CONFIRMING THE DISALLOWANCE U/S. 40(A)(IA) AMOUNTING TO RS. 41,98,736/ - WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS U/S. 194C AS THE I.T. DEPARTMENT HAS NOT ALLOTTED ANY TAN NO., THEREFORE, EVEN IF TDS WAS DEDUCTED IT COULD NOT BE DEPOSITED, THEREFORE, THERE WAS NO LIABILITY TO DEDUC T TDS U/S. 194C AND THE ADDITION MADE U/S. 40(A)(IA) SHOULD BE DELETED. 5. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.I.T.(A) WAS WRONG IN CONFIRMING THE ADDITION U/S. 40(A)(IA) AMOUNTING TO RS.41,98,736/- WITHOUT CONSIDERING THE LETTER/ORDER DATED 15.0 5.2008 PASSED BY C.I.T.(A)XXXVII, KOLKATA FOR NON ALLOTMENT OF TAN BY DEPARTMENT, THEREFORE, THE ORDER PASSED BY THE LD. C.I.T.(A)WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 6. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.I.T.(A) WAS WRONG IN CONFIRMING THE ADDITION U/S. 40 (A)(IA) OF THE I.T. ACT AMOUNTING TO RS.41,98,736/ - ALTHOUGH THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS ON PAYMENT TO CONTRACTORS U/S. 194C OF THE I.T. ACT WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE CLAIMED LABOUR CONTRACT PAYMENT AMOUNTING TO RS. 41,98,738/ - TO THE FOLLOWING LABOUR CONTRACTORS: 1. NIMAI DAS MANDAL (HUF) RS. 14,60,884/ - 2. DEBDUTTA MANDAL RS. 2,37,325/ - 3, NIMAI DAS MANDAL RS. 2,28,944/ - 4. MRS. BINITA MANDAL RS. 3,07,262/ - 5. M/S. SANTOSH KR. RAY RS. 4,81,196/ - 6. M/S. R & K BROTHERS RS. 5,56,139/ - 7. M/S. MANDAL ASSOCIATES RS. 9,26,986/ - RS.41,98,736/ - AS THE ASSESSEE FAILED TO DEDUCT TDS ON PAYMENT TO LABOUR CONTRACTORS U/S. 1 9 4 C OF THE A CT, THE AO APPLYING THE PROVISIONS OF SECTION 40(A)(IA) OF THE A CT DISALLOWED THE ENTIRE PAYMENT TO LABOUR CONTRACTORS. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTIO N OF AO. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STATED THAT HE CONCEDED THAT HE HAS NOT DEDUCTED TAX AT SOURCE BUT HE IS ARGUING THAT IN VIEW OF THE AMENDMENT BROUGHT IN THE ACT BY 2 ND PROVISO AS INSERTED BY THE FINANCE ACT, 2012 IN SECTION 40 (A)(IA) OF THE ACT, WHICH IS RETROSPECTIVE, THE ASSESSEE CAN BE GIVEN OPPORTUNITY TO PRODUCE THAT TH ESE LABOUR PAYMENT S HAVE BEEN DECLARED IN RESPECTIVE RETURNS OF THE PAYEES AND HAVE PAID THE TAXE S. LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF COORDINATE BENCH IN THE CASE OF SANTOSH KUMAR KEDIA VS. ITO, IN ITA NO. 1905/KOL/2014 FOR AY 2007 - 08 DATED 04.03.2015 , WHEREIN IT HAS BEEN HELD AS UNDER: 5. I HAVE HEARD RIVAL CONTENTIONS AND GON E THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. I FIND FROM FIRST ARGUMENT MADE BY LD. COUNSEL FOR THE ASSESSEE THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT INSERTED BY THE FINANCE ACT, 2012 WOULD APPLY IN 3 I TA NO S . 422 & 423 /K/20 09 DEBDUTTA CONSTRUCTION AY 200 5 - 0 6 TO 200 6 - 0 7 THE INSTANT CASE. ACCORDING TO HIM, THE SECOND PROVISO IS CURATIVE IN NATURE INTENDED TO SUPPLY AN OBVIOUS OMISSION, TAKE CARE OF AN UNINTENDED CONSEQUENCE AND MAKE THE SECTION WORKABLE. SECTION 40(A)(IA) WITHOUT THE SECOND PROVISO RESULTED IN THE UNINTENDED CONSEQUENCE OF DISALLOWANCE OF LE GITIMATE BUSINESS EXPENDITURE EVEN IN A CASE WHERE THE PAYEE IN RECEIPT OF THE INCOME HAD PAID TAX. ACCORDING TO HIM, IT HAS FOR LONG BEEN THE LEGAL POSITION THAT IF THE PAYEE HAS PAID TAX ON HIS INCOME, NO RECOVERY OF ANY TAX CAN BE MADE FROM THE PERSON W HO HAD FAILED TO DEDUCT THE INCOME TAX AT SOURCE FROM SUCH AMOUNT. IN GRINDLAYS BANK V CIT , (1992) 193 ITR 457 (CAL) DECIDED ON SEPTEMBER 5, 1989, IT WAS HELD BY THE HON'BLE CALCUTTA HIGH COURT AS FOLLOWS AT PAGES 469 - 470 OF THE REPORTS: A POINT HAS BEEN MADE BY THE ASSESSEE THAT AS A RESULT OF THIS DEDUCTION THE DEPARTMENT IS REALIZING THE TAX TWICE ON THE SAME INCOME. IT DOES NOT APPEAR THAT THIS POINT WAS AGITATED BEFORE THE TRIBUNAL. WE, HOWEVER, MAKE IT CLEAR THAT IF THE AMOUNT OF TAX HAS ALREADY BEE N REALISED FROM THE EMPLOYEES CONCERNED DIRECTLY, THERE CANNOT BE ANY QUESTION OF FURTHER REALISATION OF TAX AS THE SAME INCOME CANNOT BE TAXED TWICE. IF THE TAX HAS BEEN REALISED ONCE, IT CANNOT BE REALISED ONCE AGAIN, BUT THAT DOES NOT MEAN THAT THE ASSE SSEE WILL NOT BE LIABLE FOR PAYMENT OF INTEREST OR ANY OTHER LEGAL CONSEQUENCE FOR THEIR FAILURE TO DEDUCT OR TO PAY TAX IN ACCORDANCE WITH LAW TO THE REVENUE. (EMPHASIS SUPPLIED) THAT SUCH WAS THE LEGAL POSITION WAS ACCEPTED BY THE CENTRAL BOARD OF DIR ECT TAXES IN ITS CIRCULAR NO.275/201/95 - IT(B) DATED JANUARY 29, 1997. REFERENCE IN THIS BEHALF MAY ALSO BE MADE TO THE JUDGMENT OF THE HON'BLE SUPREME COURT IN HINDUSTAN COCA COLA BEVERAGE P. LTD. V CIT , (2007) 293 ITR 226 (SC) WHERE THE SAME VIEW WAS TAKE N. I FIND THAT THE AFORESAID SETTLED POSITION IN LAW HAS ALSO BEEN LEGISLATIVELY RECOGNIZED BY INSERTION OF A PROVISO IN SUB - SECTION (1) OF SECTION 201 OF THE ACT BY THE FINANCE ACT, 2012. THUS, THE SETTLED POSITION IN LAW IS THAT IF THE DEDUCTEE/PAYEE HAS PAID THE TAX, NO RECOVERY CAN BE MADE FROM THE PERSON RESPONSIBLE FOR PAYING OF INCOME FROM WHICH HE FAILED TO DEDUCT TAX AT SOURCE. IN A CASE WHERE THE DEDUCTEE/PAYEE HAS PAID THE TAX ON SUCH INCOME, THE PERSON RESPONSIBLE FOR PAYING THE INCOME IS NO LON GER REQUIRED TO DEDUCT OR DEPOSIT ANY TAX AT SOURCE. IN THE SIMILAR CIRCUMSTANCES, I FIND THAT THE FIRST PROVISO TO SECTION 40(A)(IA) INSERTED BY THE FINANCE ACT, 2010, WHICH HAS BEEN HELD TO BE CURATIVE AND THEREFORE, RETROSPECTIVE IN ITS OPERATION BY TH E HON'BLE CALCUTTA HIGH COURT IN ITAT NO. 302 OF 2011, GA 3200/2011 , CIT V VIRGIN CREATIONS DECIDED ON NOVEMBER 23, 2011 PROVIDES FOR ALLOWANCE OF THE EXPENDITURE IN ANY SUBSEQUENT YEAR IN WHICH TAX HAS BEEN DEDUCTED AND DEPOSITED. THE INTENTION OF THE LEGISLATURE CLEARLY IS NOT TO DISALLOW LEGITIMATE BUSINESS EXPENDITURE. THE ALLOWANCE OF SUCH EXPENDITURE IS SOUGHT TO BE MADE SUBJECT TO DEDUCTION AND PAYMENT OF TAX AT SOURCE. HOWEVER, IN A CASE WHERE THE DEDUCTEE/PAYEE HAS PAID TAX AND AS SUCH THE PERSON RESPONSIBLE FOR PAYING IS NO LONGER REQUIRED TO DEDUCT OR PAY ANY TAX, LEGITIMATE BUSINESS E XPENDITURE WOULD STAND DISALLOWED SINCE THE SITUATION CONTEMPLATED BY THE FIRST PROVISO VIZ. DEDUCTION AND PAYMENT OF TAX IN A SUBSEQUENT YEAR WOULD NEVER COME ABOUT. SUCH UNINTENDED CONSEQUENCE HAS BEEN SOUGHT TO BE TAKEN CARE OF BY THE SECOND PROVISO INS ERTED IN SECTION 40(A)(IA) BY THE FINANCE ACT, 2012. THERE CAN BE NO DOUBT THAT THE SECOND PROVISO WAS INSERTED TO SUPPLY AN OBVIOUS OMISSION AND MAKE THE SECTION WORKABLE. THE INSERTION OF SECOND PROVISO WAS EXPLAINED BY MEMORANDUM EXPLAINING THE PROVISIO N IN FINANCE BILL, 2012, REPORTED IN 342 ITR (STATUTES)234 AT 260 & 261, WHICH READS AS UNDER: - E.RATIONALIZATION OF TAX DEDUCTION AT SOURCE (TDS) AND TAX COLLECTION AT SOURCE (TCS) PROVISIONS I. DEEMED DATE OF PAYMENT OF TAX BY THE RESIDENT PAYEE . UNDER T HE EXISTING PROVISIONS OF CHAPTER XVII - B OF THE INCOME - TAX ACT, A PERSON IS REQUIRED TO DEDUCT TAX ON CERTAIN SPECIFIED PAYMENTS AT THE SPECIFIED RATES IF THE 4 I TA NO S . 422 & 423 /K/20 09 DEBDUTTA CONSTRUCTION AY 200 5 - 0 6 TO 200 6 - 0 7 PAYMENT EXCEEDS SPECIFIED THRESHOLD. IN CASE OF NON - DEDUCTION OF TAX IN ACCORDANCE WITH THE PROVI SIONS OF THIS CHAPTER, HE IS DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) IN RESPECT OF THE AMOUNT OF SUCH NON - DEDUCTION. HOWEVER, SECTION 191 OF THE ACT PROVIDES THAT A PERSON SHALL BE DEEMED TO BE ASSESSEE IN DEFAULT IN RESPECT OF NON/SHORT DEDUCTION OF TAX ONLY IN CASES WHERE THE PAYEE HAS ALSO FAILED TO PAY THE TAX DIRECTLY. THEREFORE, THE DEDUCTOR CANNOT BE TREATED AS ASSESSEE IN DEFAULT IN RESPECT OF NON/SHORT DEDUCTION OF TAX IF THE PAYEE HAS DISCHARGED HIS TAX LIABILITY. THE PAYER IS L IABLE TO PAY INTEREST UNDER SECTION 201(1A) ON THE AMOUNT OF NON/SHORT DEDUCTION OF TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH THE PAYEE HAS DISCHARGED HIS TAX LIABILITY DIRECTLY. AS THERE IS NO ONE - TO - ONE CORRELATION BETWEEN THE TAX TO BE DEDUCTED BY THE PAYER AND THE TAX PAID BY THE PAYEE, THERE IS LACK OF CLARITY AS TO WHEN IT CAN BE SAID THAT PAYER HAS PAID THE TAXES DIRECTLY. ALSO, THERE IS NO CLARITY ON THE ISSUE OF THE CUT - OFF DATE, I.E., THE DATE ON WHICH IT CAN BE SAID THAT THE PAYEE HAS DISCHARGED HIS TAX LIABILITY. IN ORDER TO PROVIDE CLARITY REGARDING DISCHARGE OF TAX LIABILITY BY THE RESIDENT PAYEE ON PAYMENT OF ANY SUM RECEIVED BY HIM WITHOUT DEDUCTION OF TAX, IT PROPOSED TO AMEND SECTION 201 TO PROVIDE THAT THE P AYER WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX ON THE PAYMENT MADE TO A RESIDENT PAYEE SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEALT IN RESPECT OF SUCH TAX IF SUCH RESIDENT PAYEE - (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139 ; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETURN OF INCOME ; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, AND THE PAYER FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY E PRES CRIBED. THE DATE OF PAYMENT OF TAXES BY THE RESIDENT PAYEE SHALL BE DEEMED TO BE THE DATE ON WHICH RETURN HAS BEEN FURNISHED BY THE PAYER. IT IS ALSO PROPOSED TO PROVIDE THAT WHERE THE PAYER FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX ON THE PAYMEN T MADE TO A RESIDENT AND IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) ON ACCOUNT OF PAYMENT OF TAXES BY THE SUCH RESIDENT, THE INTEREST UNDER SECTION 201(1A)(I) SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH RESIDENT PAYEE. AMENDMENTS ON SIMILAR LINES ARE ALSO PROPOSED TO BE MADE IN THE PROVISIONS OF SECTION 206C RELATING TO TCS FOR CLARIFYING THE DEEMED DATE OF DISCHARGE OF TAX LIABILITY BY THE BUYER OR LINCENSEE OR LESSEE. THESE AMENDMENTS WILL TAKE EFFECT FROM 1 ST JULY, 2012. II. DISALLOWANCE OF BUSINESS EXPENDITURE ON ACCOUNT OF NON - DEDUCTION OF TAX ON PAYMENT TO RESIDENT PAYEE. A RELATED ISSUE TO THE ABOVE IS THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF CERTAIN BUSIN ESS EXPENDITURE LIKE INTEREST, COMMISSION, BROKERAGE, PROFESSIONAL FEE, ETC. DUE TO NON - DEDUCTION OF TAX. IT HAS BEEN PROVIDED THAT IN CASE THE TAX IS DEDUCTED IN SUBSEQUENT PREVIOUS YEAR, THE EXPENDITURE SHALL BE ALLOWED IN THAT SUBSEQUENT PREVIOUS YEAR O F DEDUCTION IN ORDER TO RATIONALIZE THE PROVISIONS OF DISALLOWANCE ON ACCOUNT OF NON - DEDUCTION OF TAX FROM THE PAYMENTS MADE TO A RESIDENT PAYEE, IT IS PROPOSED TO AMEND SECTION 5 I TA NO S . 422 & 423 /K/20 09 DEBDUTTA CONSTRUCTION AY 200 5 - 0 6 TO 200 6 - 0 7 40(A)(IA) TO PROVIDE THAT WHERE AN ASSESSEE MAKES PAYMENT OF THE NATURE SPEC IFIED IN THE SAID SECTION TO A RESIDENT PAYEE WITHOUT DEDUCTION OF TAX AND IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) ON ACCOUNT OF PAYMENT OF TAXES BY THE PAYEE, THE, FOR THE PURPOSE OF ALLOWING DEDUCTION OF SUCH SUM, IT SHALL BE DEE MED THAT THE ASSESSEE HAD DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE. THESE BENEFICIAL PROVISIONS ARE PROPOSED TO BE APPLICABLE ONLY IN THE CASE OF RESIDENT PAYEE. THESE AMENDMENTS WILL TAKE EFFECT FROM 1 ST APRIL, 2013 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR 2013 - 14 AND SUBSEQUENT ASSESSMENT YEARS. 6. THAT CURATIVE AMENDMENTS HAVE RETROSPECTIVE OPERATION IS THE SETTLED POSITION IN LAW. RELIANCE IN THIS BEHALF IS PLACED ON THE JUDGMENTS OF THE HON'BLE SUPREME COURT IN ALLIED MOTORS (P) LTD. V. CIT, (1997) 224 ITR 677 (SC) AND CIT V. ALOM EXTRUSIONS, (200 9) 319 ITR 466 (SC). HON'BLE SUPREME COURT IN THE CASE OF ALLIED MOTORS (P) LTD. (SUPRA) HELD THAT THE FIRST PROVISO, WHICH WAS INSERTED W.E.F. 01.04.1988 BY THE FINANCE ACT, 1987 IS 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. HON'BLE SUPREME COURT HELD AS UNDER: SECTION 43B WAS, THEREFORE, CLEARLY AIMED AT CURBING THE ACTIVITIES OF THOSE TAXPAYERS, WHO DID NOT DISCHARGE THEIR STATUTORY LIABILITY OF PAYMENT OF EXCISE DUTY, EMPLOYER S CONTRIBUTION TO PROVIDENT FUND, ETC., FOR LONG PERIODS OF TIME BUT CLAIMED DEDUCTIONS IN THAT REGARD FROM THEIR INCOME ON THE GROUND THAT THE LIABILITY TO PAY THESE AMOUNTS HAD BEEN INCURRED BY THEM IN THE RELEVANT PREVIOUS YEAR. IT WAS TO STOP THIS MISCHIEF THAT SECTION 43B WAS INSERTED. IT WAS CLEARLY NOT REALISED THAT THE LANGUAGE IN WHICH SECTION 43B WAS WORDED, WOULD CAUSE HARDSHIP TO THOSE TAXPAYERS WHO HAD PAID SALES TAX WITHI N THE STATUTORY PERIOD PRESCRIBED FOR THIS PAYMENT, ALTHOUGH THE PAYMENT SO MADE BY THEM DID NOT FALL IN THE RELEVANT PREVIOUS YEAR. THIS WAS BECAUSE THE SALES TAX COLLECTED PERTAINED TO THE LAST QUARTER OF THE RELEVANT ACCOUNTING YEAR. IT COULD BE PAID ON LY IN THE NEXT QUARTER WHICH FELL IN THE NEXT ACCOUNTING YEAR. THEREFORE, EVEN WHEN THE SALES TAX HAD IN FACT BEEN PAID BY THE ASSESSEE WITHIN THE STATUTORY PERIOD PRESCRIBED FOR ITS PAYMENT AND PRIOR TO THE FILING OF THE INCOME TAX RETURN, THESE ASSESSEES WERE UNWITTINGLY PREVENTED FROM CLAIMING A LEGITIMATE DEDUCTION IN RESPECT OF THE TAX PAID BY THEM. THIS WAS NOT INTENDED BY SECTION 43B. HENCE, THE FIRST PROVISO WAS INSERTED IN SECTION 43B. THE AMENDMENT WHICH WAS MADE BY THE FINANCE ACT OF 1987 IN SECT ION 43B BY INSERTING, INTER ALIA, THE FIRST PROVISO, 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. 7. RECENT LY, HON'BLE SUPREME COURT IN THE CASE OF CIT V. VATIKA TOWNSHIP P. LTD., (2014) 367 ITR 466 (SC) HAS HELD AS UNDER: WE WOULD ALSO LIKE TO POINT OUT, FOR THE SAKE OF COMPLETENESS, THAT WHERE A BENEFIT IS CONFERRED BY A LEGISLATION, THE RULE AGAINST RETRO SPECTIVE CONSTRUCTION IS DIFFERENT. IF A LEGISLATION CONFERS A BENEFIT ON SOME PERSONS BUT WITHOUT INFLICTING A CORRESPONDING DETRIMENT ON SOME OTHER PERSON OR ON THE PUBLIC GENERALLY, AND WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEGISLATORS OBJECT, THEN THE PRESUMPTION WOULD BE THAT SUCH A LEGISLATION, GIVING IT A PURPOSIVE CONSTRUCTION, WOULD WARRANT IT TO BE GIVEN A RETROSPECTIVE EFFECT. THIS EXACTLY IS THE JUSTIFICATION TO TREAT PROCEDURAL PROVISIONS AS RETROSPECTIVE. IN GOVERNMENT OF IN DIA V. INDIAN TOBACO ASSOCIATION, THE DOCTRINE OF FAIRNESS WAS HELD TO BE RELEVANT FACTOR TO CONSTRUE A STATUTE CONFERRING A BENEFIT, IN THE CONTEXT OF IT TO BE GIVEN A RETROSPECTIVE OPERATION. THE SAME DOCTRINE OF FAIRNESS, TO HOLD THAT A STATUTE WAS RET ROSPECTIVE IN NATURE, WAS APPLIED IN THE CASE OF VIJAY V. STATE 6 I TA NO S . 422 & 423 /K/20 09 DEBDUTTA CONSTRUCTION AY 200 5 - 0 6 TO 200 6 - 0 7 OF MAHARASHTRA. IT WAS HELD THAT WHERE A LAW IS ENACTED FOR THE BENEFIT OF COMMUNITY AS A WHOLE, EVEN IN THE ABSENCE OF A PROVISION THE STATUTE MAY BE HELD TO BE RETROSPECTIVE IN NATURE. HOWE VER, WE ARE CONFRONTED WITH ANY SUCH SITUATION HERE. IN SUCH CASES, RETROSPECTIVELY IS ATTACHED TO BENEFIT THE PERSONS IN CONTRADISTINCTION TO THE PROVISION IMPOSING SOME BURDEN OR LIABILITY WHERE THE PRESUMPTION ATTACHES TOWARDS PROSPECTIVITY. IN THE IN STANT CASE, THE PROVISO ADDED TO SECTION 113 OF THE ACT IS NOT BENEFICIAL TO THE ASSESSEE. ON THE CONTRARY, IT IS A PROVISION WHICH IS ONEROUS TO THE ASSESSEE. THEREFORE, IN A CASE LIKE THIS, WE HAVE TO PROCEED WITH THE NORMAL RULE OF PRESUMPTION AGAINST RETROSPECTIVE OPERATION. THUS, THE RULE AGAINST RETROSPECTIVE OPERATION IS A FUNDAMENTAL RULE OF LAW THAT NO STATUTE SHALL BE CONSTRUED TO HAVE A RETROSPECTIVE OPERATION UNLESS SUCH A CONSTRUCTION APPEARS VERY CLEARLY IN THE TERMS OF THE ACT OR ARISES BY NECESSARY AND DISTINCT IMPLICATION. DOGMATICALLY FRAMED, THE RULE IS NO MORE THAN A PRESUMPTION, AND THUS COULD BE DISPLACED BY OUT WEIGHING FACTORS. I FIND THAT THE HON'BLE SUPREME COURT INTERPRETED THE RETROSPECTIVITY THAT AN AMENDMENT MADE TO A TAXI NG STATUTE CAN BE SAID TO BE INTENDED TO REMOVE HARDSHIPS ONLY OF THE ASSESSEE, NOT OF THE DEPARTMENT. WHERE BENEFIT IS CONFERRED BY LEGISLATION, THE RULE AGAINST RETROSPECTIVE CONSTRUCTION IS DIFFERENT. IF LEGISLATION CONFERS A BENEFIT ON SOME PERSONS B UT WITHOUT INFLICTING A CORRESPONDING DETRIMENT ON SOME OTHER PERSON OR ON THE PUBLIC GENERALLY, AND WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEGISLATORS OBJECT, THEN THE PRESUMPTION WOULD BE THAT SUCH A LEGISLATION, GIVING IT A PURPOSIVE CONS TRUCTION, WOULD WARRANT IT TO BE GIVEN A RETROSPECTIVE EFFECT. THIS EXACTLY IS THE JUSTIFICATION TO TREAT PROCEDURAL PROVISIONS AS RETROSPECTIVE. ACCORDING TO HON'BLE SUPREME COURT, WHERE A LAW IS ENACTED FOR THE BENEFIT OF COMMUNITY AS A WHOLE, EVEN IN TH E ABSENCE OF A PROVISION THE STATUTE MAY BE HELD TO BE RETROSPECTIVE IN NATURE. SIMILARLY, AS ARGUED BY LD. COUNSEL FOR THE ASSESSEE IN THE PRESENT CASE BEFORE ME, THAT THE INSERTION OF 2 ND PROVISO BY THE FINANCE ACT, 2012 IS REMEDIAL IN NATURE, DESIGNED TO ELIMINATE UNINTENDED CONSEQUENCES WHICH MAY CAUSE UNDUE HARDSHIP TO THE ASSESSEE. 8. FURTHER, SPECIAL BENCH OF THIS TRIBUNAL IN BHARTI AUTO PRODUCTS V. CIT, (2013) 145 ITD 1 RECENTLY HELD THE FIRST PROVISO INSERTED IN SECTION 206C (6A) WITH EFFECT FROM JULY 1, 2012 SIMILAR TO THE PROVISO INSERTED IN SECTION 201(1) WAS RETROSPECTIVE IN ITS OPERATION. FURTHER, IN RAJEEV KUMAR AGARWAL V ADDL. CIT (2014) 149 ITD 363, AGRA BENCH OF THIS TRIBUNAL HAS TAKEN THE VIEW THAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM APRIL 1, 2005 WHEN SUB - CLAUSE (IA) WAS INSERTED IN SECTION 40(A) OF THE ACT. BUT THE QUESTION WHETHER SECOND PROVISO TO SECTION 40(A))(IA) OF THE ACT WAS CURATIVE DID NOT FALL FOR CON SIDERATION OF THE HON'BLE CALCUTTA HIGH COURT IN CIT V. CRESCENT EXPORTS SYNDICATE (2013) 216 TAXMAN 258 (CAL). IN THAT CASE THE FOLLOWING SUBMISSION WAS MADE ON BEHALF OF ONE OF THE ASSESSEES: - 5. MS. ROY CHOWDHURY, LEARNED ADVOCATE APPEARING FOR THE AS SESSEE - RESPONDENT IN ITAT NO. 20 OF 2013 REITERATED THE REASONS ADVANCED BY THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS WHICH WE HAVE ALREADY NOTICED. SHE ADDED THAT IF THE PROVISO IS TAKEN INTO ACCOUNT, IT WOULD LEAD TO THE ONLY CONCLUS ION THAT THE MAIN PROVISION CONTAINED IN CLAUSE (IA) RELATES TO A CASE WHERE THE PAYMENT IS OUTSTANDING. SHE SUBMITTED THAT THERE IS A POSSIBILITY OF DOUBLE JEOPARDY IN THE EVENT IT IS HELD THAT CLAUSE (IA) IS ALSO APPLICABLE TO THOSE CASES WHERE THE MONEY HAS ALREADY BEEN PAID. SHE DEVELOPED HER SUBMISSION BY CITING AN EXAMPLE. TAKE FOR INSTANCE THAT A SUM OF RS.100 WAS PAID ON ACCOUNT OF PROFESSIONAL FEES WITHOUT DEDUCTING TDS. THE AFORESAID EXPENDITURE SHALL NOT IN THAT CASE BE ALLOWED TO BE DEDUCTED. TH E RECIPIENT OF THE AFORESAID SUM OF RS.100 MAY HAVE OFFERED THE SAME FOR TAXATION. THEREFORE, THE INCOME IN THE HANDS OF THE RECIPIENT HAS BEEN TAXED BUT THE PAYER DID NOT GET THE BENEFIT THEREOF. SHE CONCLUDED BY SUBMITTING THAT A SECOND PROVISO TO CLAUSE (IA) IS INTENDED TO BECOME 7 I TA NO S . 422 & 423 /K/20 09 DEBDUTTA CONSTRUCTION AY 200 5 - 0 6 TO 200 6 - 0 7 EFFECTIVE FROM 1ST APRIL, 2013 WHICH WAS ENACTED TO LESSEN THE RIGOUR OF CLAUSE (IA) WHICH PROVIDES AS FOLLOWS : THE FOLLOWING SECOND PROVISO SHALL BE INSERTED IN SUB - CLAUSE (IA) OF CLAUSE (A) OF SECTION 40 BY THE FINANCE ACT, 2012, W.E.F. 1.4.2013: PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII - B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO S UB - SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE OF THIS SUB - CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO . 6 . SHE SUBMITTED THAT CONSIDERING THAT THE LEGISLATURE WAS NOT IN FAVOUR OF CREATING UNDUE HARDSHIP FOR AN ASSESSEE, CLAUSE (IA) SHOULD ONLY BE CONSTRUED TO APPLY TO THOSE CASES WHERE THE PAYMENT IS OUTSTANDING. (EMPHASIS SUPPLIED) THE AFORESAID SUBMISSION WAS DEALT WITH IN PARAGRAPH 21 OF THE JUDGMENT AS FOLLOWS: . A FEW WORDS ARE NOW NECESSARY TO DEAL WITH THE SUBMISSION OF MR. BAGCHI AND MS. ROYCHOWDHURI. THERE CAN BE NO DENIAL THAT THE PROVISION IN QUESTION IS HARSH. BUT THAT IS NO GROUND T O READ THE SAME IN A MANNER WHICH WAS NOT INTENDED BY THE LEGISLATURE. THIS IS OUR ANSWER TO THE SUBMISSION OF MR. BAGCHI. THE SUBMISSION OF MS. ROYCHOWDHURI THAT THE SECOND PROVISO SOUGHT TO BECOME EFFECTIVE FROM 1 ST APRIL, 2013 SHOULD BE HELD TO HAVE ALREADY BECOME OPERATIVE PRIOR TO THE APPOINTED DATE CANNOT ALSO BE ACCEDED TO FOR THE SAME REASON INDICATED ABOVE. THE LAW WAS DELIBERATELY MADE HARSH TO SECURE COMPLIANCE OF THE PROVISIONS REQUIRING DEDUCTIONS OF TAX A T SOURCE. IT IS NOT THE CASE OF AN INADVERTENT ERROR. (EMPHASIS SUPPLIED) FURTHER, HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V. M/S PEERLESS HOSPITEX HOSPITAL AND RESEARCH CENTRE LTD. IN TAX APPEAL NO.126 OF 2013 GA NO. 4 361 OF 2013 DATED 30 - 04 - 2014, WHEREIN THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD: - MR. BAGCHI S SECOND SUBMISSION WAS THAT THE SUPREME COURT IN THE CASE OF ALLIED MOTORS (P) LTD., VS. CIT, REPORTED IN 224 ITR 677, HELD THAT WHEN ANY PROVISION IN A STATUTE IS INTRODUCED BY WAY OF A CURATIVE MEASURE, THE PROVISION SHOULD BE HELD TO HAVE A RETROSPECTIVE EFFECT. HE SUBMITTED THAT THE SAME VIEW WAS REITERATED BY THE APEX COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD., REPORTED IN 319 ITR 306. HE ADDED THAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS CERTAINLY INTENDED TO LESSEN THE RIGOUR OF SECTION 40(A)(IA) IN A CASE WHERE THE ASSESSEE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT. THERE IS NO FA CTUAL BACKGROUND BEFORE US ON THE BASIS OF WHICH IT CAN BE SAID THAT IT WAS EVER THE CONTENTION OF THE ASSESSEE THAT HE COULD NOT IN THIS CASE BE CONSIDERED AS AN ASSESSEE IN DEFAULT. THEREFORE, THE CASE OF THE ASSESSEE DOES NOT EVEN COME WITHIN THE SECOND PROVISO INTRODUCED WITH EFFECT FROM 1 ST APRIL 2013. WE, AS SUCH, HAVE NO OCCASION TO CONSIDER WHETHER THE AFORESAID PROVISO IS RETROSPECTIVE OR CAN BE HELD TO BE RETROSPECTIVE THE CONTENTIONS ADVANCED BY MR. BAGCHI ARE ALL WITHOUT ANY MERIT AND ARE, THER EFORE, REJECTED. THE ORDERS OF THE LEARNED TRIBUNAL AND CIT(A), BEING PATENTLY CONTRARY TO THE LAW VIEWS EXPRESSED BY THIS COURT INDICATED ABOVE, ARE SET ASIDE. FROM THE ABOVE, JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PEERLEES HOS PITAX HOSPITAL AND RESEARCH CENTRE LTD. KOLKATA (SUPRA) IT IS CLEAR THAT HON'BLE JURISDICTIONAL HIGH COURT HAS NOT CONSIDERED THAT THE SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT AS INSERTED BY THE FINANCE ACT, 2012 IS RETROSPECTIVE OR PROSPECTIVE. 8 I TA NO S . 422 & 423 /K/20 09 DEBDUTTA CONSTRUCTION AY 200 5 - 0 6 TO 200 6 - 0 7 9. IT WOULD THUS APPEAR THAT NO SUBMISSION WAS MADE BEFORE HON'BLE CALCUTTA HIGH COURT THAT THE SECOND PROVISO WAS CURATIVE OR RETROSPECTIVE IN OPERATION. ON THE OTHER HAND, SUBMISSION WAS THAT THE SECOND PROVISO EFFECTIVE FROM APRIL 1, 2013 WENT TO SHOW THAT TH E LEGISLATURE WAS NOT IN FAVOUR OF CREATING UNDUE HARDSHIP FOR ASSESSEE AND THAT CLAUSE (IA) SHOULD NOT BE CONSTRUED AS CREATING SUCH HARDSHIP. THE SAID LIMITED SUBMISSION OF THE ASSESSEE WAS DEALT WITH BY THE HON'BLE HIGH COURT IN PARAGRAPH 21OF ITS JUDGM ENT. THE QUESTION BEFORE HON'BLE CALCUTTA HIGH COURT WAS AS TO, WHETHER CLAUSE (IA) ONLY APPLIED TO AMOUNT OUTSTANDING AT THE END OF THE YEAR AND NOT IN RESPECT OF PAYMENTS ACTUALLY MADE DURING THE PREVIOUS YEAR OR NOT? HON'BLE CALCUTTA HIGH COURT WAS PLEA SED TO HOLD THAT CLAUSE (IA) WAS APPLICABLE NOT ONLY IN RESPECT TO OUTSTANDING AMOUNTS BUT ALSO AMOUNTS PAID. IN DECIDING THE SAID CONTROVERSY, THE HON'BLE CALCUTTA HIGH COURT WAS PLEASED TO REJECT THE SUBMISSION ON BEHALF OF THE ASSESSEE THAT THE OBJECT B EHIND THE INSERTION OF THE SECOND PROVISO WITH EFFECT FROM APRIL 1, 2013 SHOULD ALSO GUIDE THE INTERPRETATION OF THE PARENT CLAUSE (IA). IT WAS ARGUED BY LD. COUNSEL FOR THE ASSESSEE THAT THE OBSERVATIONS OF THE HON'BLE HIGH COURT IN PARAGRAPH 21 OF ITS JU DGMENT DEALT WITH THE LIMITED ARGUMENT MADE ON BEHALF OF THE ASSESSEE RECORDED IN PARAGRAPHS 5 AND 6 OF THE JUDGMENT AND CANNOT BE READ AS DECIDING THE QUESTION AS TO WHETHER THE SECOND PROVISO IS CURATIVE AND CLARIFICATORY OF THE LAW FROM ITS INCEPTION. T HE QUESTION WHETHER THE SECOND PROVISO IS CURATIVE AND CLARIFICATORY DID NOT ARISE FOR CONSIDERATION IN CRESCENT S CASE, WAS NOT DEBATED BEFORE THE HON'BLE CALCUTTA HIGH COURT. HON'BLE SUPREME COURT IN THE CASE OF IN STATE OF HARYANA V. RANBIR , (2006) 5 SCC 167, HAS DISCUSSED THE CONCEPT OF THE OBITER DICTUM THUS: 'A DECISION, IT IS WELL SETTLED, IS AN AUTHORITY FOR WHAT IT DECIDES AND NOT WHAT CAN LOGICALLY BE DEDUCED THEREFROM. THE DISTINCTION BETWEEN A DICTA AND OBITER IS WELL KNOWN. OBITER DICTA IS MORE OR LESS PRESUMABLY UNNECESSARY TO THE DECISION. IT MAY BE AN EXPRESSION OF A VIEWPOINT OR SENTIMENTS WHICH HAS NO BINDING EFFECT. 10. SECONDLY, I AM OF THE VIEW THAT THE INSERTION OF SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT IS CURATIVE AND IT HAS RETROSPECTIVE EFFECT W.E.F. 1 ST APRIL, 2005, BEING A DATE FROM WHICH SEC. 40(A)(IA) OF THE ACT WAS INSERTED BY THE FINANCE (NO. 2) ACT, 2004. IN VIEW OF THIS, I AM OF THE VIEW THAT MATTER NEEDS FRESH ADJUDICATION IN THE LIGHT OF THE FACT THAT THE AO WILL CARRY OUT NECESSARY VERIFICATION IN REGARD TO RELATED PAYMENTS HAVING BEEN TAKEN INTO ACCOUNT BY THE RECIPIENT IN COMPUTATION OF ITS INCOME AND VERIFICATION OF PAYMENT OF TAXES IN RESPECT OF SUCH INCOME AND ALSO FILING OF INCOME TAX RETURN BY THE RECIPIEN T. IN TERM OF THE ABOVE, THE SECOND ASPECT ARGUED BY LD. COUNSEL IS RESTORED BACK TO THE FILE OF THE AO AND ASSESSEE WILL PROVIDE ALL THE DETAILS IN TERMS OF SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT. HENCE, FOLLOWING THE AFORESAID DECISION CITED SU PRA, WE RESTORE THE ISSUE BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN TERMS OF THE ABOVE DIRECTIONS AS IS GIVEN PARA 10 OF THE ORDER OF SANTOSH KUMAR KEDIA, SUPRA . 5. SIMILAR ARE THE FACTS IN AY 2006 - 07 IN ITA NO. 423/K/2009 , I N RESPECT OF THE ISSUE OF DISALLOWANCE OF LABOUR CONTRACT PAYMENT AMOUNTING TO RS.55,85,498/ - , TAKING A CONSISTENT VIEW, WE DIRECT THE AO TO DECIDE THE SAME IN TERM OF THE ABOVE DECISION. 9 I TA NO S . 422 & 423 /K/20 09 DEBDUTTA CONSTRUCTION AY 200 5 - 0 6 TO 200 6 - 0 7 6. THE NEXT ISSUE IN ITA NO.422/K/2009 IS AS REGARDS TO THE ORDER O F CIT(A) CONFIRMING THE DISALLOWANCE OF LABOUR CHARGES ON ESTIMATE BASIS. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.7: 7. FOR THAT ON THE FACTS OF THE CASE, THE LD. CIT(A) WAS WRONG IN CONFIRMING LABOUR CHARGES ON ESTIMATE BASIS @ 1% AMOUNTING T O RS.1,13,288/ - WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND THAT OF THE ORDER OF CIT(A) AND FOUND THAT NONE OF THE AUTHORITIES BELOW HAS GIVEN ANY BASIS FOR MAKING ESTIMATED DISALLOWANCE OF LABOUR CHARGES AT 1%. BEFORE US ALSO ASSESSEE CONTENDED THAT ALL THE LABOURERS ARE UN RELATED AND VOUCHERS ARE MADE BY THE ASSESSEE ON WHICH THE THUMB IMPRESSION OR SIGNATURES ARE TAKEN FROM THEM AFTER MAKING PAYMENTS. APART FROM THIS SELF MADE VOUCHERS, THERE CANNOT BE ANY ALTERNATIVE TO THE ASSESSEE BECAUSE ALL THE LABOURERS ARE ILLITERATE PEOPLE. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE THAT F IRSTLY NO ESTIMATED DISA LLOWANCE AT 1% CAN BE MADE. SECONDLY, THE ASSESSEE HAS PRODUCED SELF MADE VOUCHERS WHICH ARE SIGNED OR THUMB IMPRESSION BY THE LABOURERS. IN TERMS OF THE ABOVE, WE DELETE THE DISALLOWANCE AND THIS ISSUE OF ASSESSEE S APPEAL IS ALLOWED. 8. THE NEXT THREE ISSUES I.E. DISALLOWANCE U/S. 40A(3) OF THE ACT AMOUNTING TO RS.23,200/ - , DISALLOWANCE ON ACCOUNT OF SURCHARGE ON SALES TAX AMOUNTING TO RS.2,23,961/ - AND ADDITIONAL SUNDRY CREDITORS BALANCES AMOUNTING TO RS.1,21,357/ - . LD. COUNSEL FOR THE ASSESSEE STATE D THAT HE IS NOT INTERESTED IN PROSECUTING GROUND NOS. 8, 9 AND 10. AS THE ASSESSEE IS NOT INTERESTED IN PROSECUTING THESE GROUNDS THE SAME ARE DISMISSED AS NOT PRESSED. 9. THE NEXT ISSUE IN ITA NO. 423/K/2009 IS AS REGARDS TO DISALLOWANCE U/S. 40A(3) AM OUNTING TO RS.1,11,212/ - AND ESTIMATED DISALLOWANCE OF CONVEYANCE EXPENSES AMOUNTING TO RS.13,916/ - , THE LD. COUNSEL FOR THE ASSESSEE STATED THAT HE IS NOT INTERESTED IN PROSECUTING THESE TWO GROUNDS I.E. GROUND NOS. 2 AND 5 . AS THE ASSESSEE IS NOT PROSEC UTING THESE TWO GROUNDS, THE SAME ARE DISMISSED AS NOT PRESSED. 10. THE NEXT ISSUES IN RESPECT OF GROUND NOS. 9,10,11 AND 12 IN ITA NO. 423/K/2009 IS AS REGARDS TO THE DISALLOWANCE OF CARRIAGE OF MORUM AND SAND EXPENSES AMOUNTING TO RS.4,95,163/ - , DISALLOWANCE OF MACHINERY HIRE CHARGES AT RS.3,68,689/ - AND 10 I TA NO S . 422 & 423 /K/20 09 DEBDUTTA CONSTRUCTION AY 200 5 - 0 6 TO 200 6 - 0 7 DISALLOWANCE OF CARRIAGE EXPENSES PAID TO RAILWAYS ON ESTIMATE AMOUNTING TO RS.54,578/ - AND DISALLOWANCE OF GENERAL CHARGES EXPENSES ESTIMATED AT RS.23,156/ - , THE LD. COUNSEL FOR THE ASSESSEE STATED THAT HE IS NOT INTERESTED IN PROSECUTING THESE GROUNDS OF APPEAL. . AS T HE ASSESSEE IS NOT PROSECUTING THESE TWO GROUNDS, THE SAME ARE DISMISSED AS NOT PRESSED. 1 1 . IN THE RESULT, BOTH THE APPEAL S OF ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 12 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 17.06.2015 SD/ - SD/ - ( B. P. JAIN ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 17TH JUNE , 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT M/S. DEBDUTTA CONSTRUCTION, MALANCHA ROAD, NIMPURA, KHARAGPUR, DIST. PASCHIM MEDINIPUR. 2 RESPONDENT I TO, WARD - 2( 1 ) , MEDINIPUR . 3 . THE C I T (A), KOLKATA 4. 5. C I T, KOLKATA . DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .