DCIT, CIR-5(1), KOLKATA, Kolkata V. M/s Saraf Services Pvt. Ltd., Kolkata

ITA 456/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0857 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 16-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTCAHRJ EE
• Keywords: Retrospective amendment
• Section: 139

Judgement Text

ITA NO.456/KOL/2016 DCIT VS M/S. SARAF SERVICES PVT. L TD. A.Y.2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEV AN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO. 456/KOL/2016 ASSESSMENT YEAR : 2006-07 D.C.I.T., CIRCLE- 5(1) -VS.- M/S. SARAF S ERVICES PVT. LTD. HOOGHLY HOOGHLY. [PAN : AAECS 1111 P] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ARINDAM BHATTCAHRJ EE, ADDL. CIT FOR THE RESPONDENT : SHRI SOUMITRA CHOUD HURY, ADVOCATE DATE OF HEARING : 27.11.2017. DATE OF PRONOUNCEMENT : 01.12.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 22.01.2016 OF CIT(A)-2, KOLKATA RELATING TO AY 2006-07. 2. THE ASSESSEE IS A COMPANY. IN THE ASSESSMENT CO MPLETED U/S.147/143(3) OF THE ACT DATED 29.3.2014, THE AO DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF RS. 41,34,215 WHICH WAS TDS ON RENTS PAID U/S.40(A)(IA) OF THE INCOME TAX ACT, 1961 (ACT). THE AFORESAID SUM WAS RENT FOR THE PERIOD FROM APRI L, 2005 TO FEBRUARY, 2006. THE ASSESSEE OUGHT TO HAVE DEPOSITED THE TAX DEDUCTED A T SOURCE TO THE CREDIT OF THE CENTRAL GOVERNMENT ON OR BEFORE 31.3.2006 AS PER THE LAW AS IT PREVAILED AT THE RELEVANT POINT OF TIME. SINCE THE ASSESEE DEPOSITED THE TAX DEDUCTED TO THE CREDIT OF THE CENTRAL GOVERNMENT ONLY IN APRIL AND MAY, 2006, THE AO DISA LLOWED THE AFORESAID SUM WHICH WAS CLAIMED AS A DEDUCTION WHILE COMPUTING INCOME B Y INVOKING THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT. ITA NO.456/KOL/2016 DCIT VS M/S. SARAF SERVICES PVT. L TD. A.Y.2006-07 2 3. ON APPEAL BY THE ASSESSEE, THE CIT(A) FOLLOWING THE DECISION OF THE HONBLE CALCUTTA HIGH COURT DECISION IN THE CASE OF CIT VS. VIRGIN CREATIONS ITAT NO.302/2011 (GA 3200/2011) DATED 23.11.2011 HELD THAT THE AMEND MENT TO SEC.40(A)(IA) OF THE ACT BY THE BY THE FINANCE ACT, 2010 WITH EFFECT FROM 01.04 .2010 IS RETROSPECTIVE FROM 01.04.2005. THE AMENDMENT PROVIDED THAT ANY PAYMEN T OF TAX DEDUCTED AT SOURCE ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME FOR A PARTICULAR YEAR SHOULD BE ALLOWED AS A DEDUCTION. THE ADMITTED FACTS IN THE PRESENT CASE IS THAT THE ASSESSEE PAID THE TAX DEDUCTED AT SOURCE ON OR BEFORE THE DUE DATE FOR FI LLING RETURN OF INCOME FOR AY 2006-07. FOLLOWING THE SAID DECISION, THE CIT(A) DELETED THE ADDITION MADE BY THE AO. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF THE CIT(A ). 4. THE QUESTION FOR OUR CONSIDERATION IS AS TO WHET HER SECTION 40(A)(IA) AMENDED BY THE FINANCE ACT, 2010 WITH EFFECT FROM 01.04.2010 I S RETROSPECTIVE FROM 01.04.2005 OR PROSPECTIVE FROM THE DATE SPECIFIED. 5. IN ORDER TO FIND ANSWER TO THIS QUESTION IT WOUL D BE RELEVANT TO NOTE DOWN THE LEGISLATIVE HISTORY OF THE PROVISION. SECTION 40 HA S CERTAIN CLAUSES PROVIDING FOR THE AMOUNTS WHICH ARE NOT DEDUCTIBLE. SUB-CLAUSE (IA) O F CLAUSE (A) OF SECTION 40 WAS INSERTED BY THE FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 1 ST APRIL, 2005 READING AS UNDER:- 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SE CTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTED THE INCOM E CHARGEABLE UNDER THE HEAD `PROFITS AND GAINS OF BUSINESS OR PROFESSION. .. (IA) ANY INTEREST, COMMISSION OR BROKERAGE, FEES FO R PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AM OUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT AN Y WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON OR, AFTER DED UCTION, 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 : ITA NO.456/KOL/2016 DCIT VS M/S. SARAF SERVICES PVT. L TD. A.Y.2006-07 3 PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR, HAS BEEN DEDUCTED IN THE PR EVIOUS YEAR BUT PAID IN ANY SUBSEQUENT YEAR AFTER THE EXPIRY OF THE TIME PRESCR IBED UNDER SUB-SECTION (1) OF SECTION 200, SUCH SUM SHALL BE ALLOWED AS A DEDUCTI ON IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. EXPLANATION. FOR THE PURPOSES OF THIS SUB-CLAUSE, - (I) COMMISSION OR BROKERAGE SHAL L HAVE THE SAME MEANING AS IN CLAUSE (I) OF THE EXPLANATION TO SECTION 194H; (II) FEES FOR TECHNICAL SERVICES S HALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9; (III) PROFESSIONAL SERVICES SHALL HAV E THE SAME MEANING AS IN CLAUSE (A) OF THE EXPLANATION TO SECTION 194J; (IV) WORK SHALL HAVE THE SAME MEANIN G AS IN EXPLANATION III TO SECTION 194C; 6. THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL EXPLAINED THE RATIONALE OF THE INSERTION OF THE NEW PROVISION IN FOLLOWING WORDS :- WITH A VIEW TO AUGMENT COMPLIANCE OF TDS PROVISIONS, IT IS PROPOSED TO EXTEND THE PROVISIONS OF SECTION 40(A)(I) TO PAYMENTS OF I NTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESSIONAL SERVICES OR FEES F OR TECHNICAL SERVICES TO RESIDENTS, AND PAYMENTS TO A RESIDENT CONTRACTOR OR SUB-CONTRA CTOR FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK), ON WHICH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION, HAS NOT BEEN PAID BEFO RE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200 AND IN ACCORDANCE WITH THE OTHER PROVISIONS OF CHAPTER XVII-B. IT IS ALSO PROPOSED T O PROVIDE THAT WHERE IN RESPECT OF PAYMENT OF ANY SUM, TAX HAS BEEN DEDUCTED UNDER CHAPTER XVII-B OR PAID IN ANY SUBSEQUENT YEAR, THE SUM OF PAYMENT SHALL BE AL LOWED IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS B EEN PAID. THE PROPOSED AMENDMENT WILL TAKE EFFECT FROM 1ST DA Y OF APRIL, 2005 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YE AR 2005- 2006 AND SUBSEQUENT YEARS. [CLAUSE 11] ITA NO.456/KOL/2016 DCIT VS M/S. SARAF SERVICES PVT. L TD. A.Y.2006-07 4 7. THEREAFTER THE FINANCE ACT, 2008 MADE AMENDMENT TO CLAUSE (A) IN SUB-CLAUSE (IA) IN SECTION 40 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005. THE SECTION AS AMENDED BY THE FINANCE ACT, 2008 READ AS UNDER:- (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYI NG OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SU CH TAX HAS NOT BEEN PAID,- (A) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, ON OR BEFORE T HE DUE DATE SPECIFIED IN SUB- SECTION (1) OF SECTION 139 ; OR (B) IN ANY OTHER CASE, ON OR BEFORE THE LAST D AY OF THE PREVIOUS YEAR. PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCT ED- (A) DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE SAID DUE DATE ; OR (B) DURING ANY OTHER MONTH OF THE PREVIOUS YEA R BUT PAID AFTER THE END OF THE SAID PREVIOUS YEAR, SUCH SUM SHALL BE ALLOWED A S A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. ; 8. THE FINANCE ACT, 2008 BROUGHT OUT AMENDMENT TO S ECTION 40(A)(IA) W.R.E.F. 1.4.2005 BY RELAXING EARLIER POSITION TO SOME EXTEN T. IT MADE TWO CATEGORIES OF DEFAULTS CAUSING DISALLOWANCE ON THE BASIS OF THE PERIOD OF THE PREVIOUS YEAR IN WHICH TAX WAS DEDUCTIBLE. THE FIRST CATEGORY OF DISALLOWANCES INC LUDED THE CASES IN WHICH TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONT H OF THE PREVIOUS YEAR BUT THERE WAS FAILURE TO PAY SUCH TAX ON OR BEFORE THE DUE DATE S PECIFIED IN SUB-SECTION (1) OF SECTION 139 OF THE ACT. IN OTHER WORDS, IF ANY AMOUNT ON WH ICH TAX WAS DEDUCTIBLE DURING LAST MONTH OF THE PREVIOUS YEAR, THAT IS MARCH 2005, BUT WAS PAID BEFORE 31 ST OCTOBER, 2005, BEING THE DUE DATE U/S 139(1), THE DEDUCTIBILITY OF THE AMOUNT WAS KEPT INTACT. THE SECOND ITA NO.456/KOL/2016 DCIT VS M/S. SARAF SERVICES PVT. L TD. A.Y.2006-07 5 CATEGORY INCLUDED CASES OTHER THAN THOSE GIVEN IN C ATEGORY FIRST. TO PUT IT SIMPLY, IF TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR, THAT IS, UP TO FEBRUARY, 2005, THE DISALLOWANCE WAS TO BE MADE IF THE ASSESSEE FAILED TO PAY IT BEFORE 31 ST MARCH, 2005. 9. THEN CAME THE AMENDMENT TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2010. THE PROVISION SO AMENDED, NOW READS AS UNDER :- (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYI NG OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SU CH TAX HAS NOT BEEN DEDUCTED OR; AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB- SECTION (1) OF SECTION 139 PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING TH E PREVIOUS 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 THE PREVI OUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. 10. FROM THE ABOVE PROVISION AS AMENDED BY THE FINA NCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2010 IT CAN BE SEEN THAT THE ONLY DIFFERENCE WHICH THIS AMENDMENT HAS MADE IS DISPENSING WITH THE EARLIER TWO CATEGOR IES OF DEFAULTS AS PER THE FINANCE ACT, 2008, AS DISCUSSED IN THE EARLIER PARA, CAUSING DIS ALLOWANCE ON THE BASIS OF THE PERIOD OF THE PREVIOUS YEAR DURING WHICH TAX WAS DEDUCTIBLE. THE FIRST CATEGORY OF DISALLOWANCES INCLUDED THE CASES IN WHICH TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT THERE WAS FAILURE TO PAY S UCH TAX ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139. THE FI NANCE ACT, 2010 HAS NOT TINKERED WITH THIS POSITION. THE SECOND CATEGORY OF THE FINANCE A CT, 2008 WHICH REQUIRED THE DEPOSIT OF TAX BEFORE THE CLOSE OF THE PREVIOUS YEAR IN CASE O F DEDUCTION DURING THE FIRST ELEVEN MONTHS, AS A PRE-CONDITION FOR THE GRANT OF DEDUCTI ON IN THE YEAR OF INCURRING EXPENDITURE, ITA NO.456/KOL/2016 DCIT VS M/S. SARAF SERVICES PVT. L TD. A.Y.2006-07 6 HAS BEEN ALTERED. THE HITHERTO REQUIREMENT OF THE A SSESSEE DEDUCTING TAX AT SOURCE DURING THE FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR AND PA YING IT BEFORE THE CLOSE OF THE PREVIOUS YEAR UP TO 3 1 ST MARCH OF THE PREVIOUS YEAR AS A REQUIREMENT FOR GRA NT OF DEDUCTION IN THE YEAR OF INCURRING SUCH EXPENDITURE, HAS BEEN EASED TO EXTEND SUCH TIME FOR PAYMENT OF TAX UP TO DUE DATE U/S 139(1) OF THE ACT. AS PER THE NE W AMENDMENT, THE DISALLOWANCE WILL BE MADE IF AFTER DEDUCTING TAX AT SOURCE, THE ASSESSEE FAILS TO PAY THE AMOUNT OF TAX ON OR BEFORE THE DUE DATE SPECIFIED IN SUBSECTION (1) OF SECTION 139 OF THE ACT. THE EFFECT OF THIS AMENDMENT IS THAT NOW THE ASSESSEE DEDUCTING TAX EI THER IN THE LAST MONTH OF THE PREVIOUS YEAR OR FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR SH ALL BE ENTITLED TO DEDUCTION OF THE EXPENDITURE IN THE YEAR OF INCURRING IT, IF THE TAX SO DEDUCTED AT SOURCE IS PAID ON OR BEFORE THE DUE DATE U/S 139(1). THIS IS THE ONLY DIFFERENC E WHICH HAS BEEN MADE BY THE FINANCE ACT, 2010. 11. THE QUESTION AS TO WHETHER THE AMENDMENT BY THE FINANCE ACT, 2010 AS AFORESAID IS PROSPECTIVE OR RETROSPECTIVE FROM 1.4.2005 CAME UP FOR CONSIDERATION BEFORE THE MUMBAI SPECIAL BENCH ITAT IN THE CASE OF BHARATI SH IPYARD LTD. BEFORE THE SPECIAL BENCH IT WAS ARGUED THAT THE AMENDMENT WAS MADE WIT H A VIEW TO REMOVE THE UNNECESSARY HARDSHIP CAUSED TO THE ASSESSEE BY THE EARLIER PROVISION. THE SPECIAL BENCH BY ITS ORDER DATED 9.9.2011 HOWEVER HELD THAT THE A MENDMENT CARRIED OUT BY THE FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM ASSESSMENT YEAR 2010- 2011 CANNOT BE HELD TO BE RETROSPECTIVE FROM ASSESSMENT YEAR 2005-2006. THE SPECIAL BENCH HELD THAT THE AMENDMENT BROUGHT OUT BY THE FINANCE ACT, 2010 TO S ECTION 40(A)(IA) W.E.F. 01.04.2010, IS NOT REMEDIAL AND CURATIVE IN NATURE. 12. PRIOR TO THE DECISION OF THE SPECIAL BENCH, IDE NTICAL ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE ITAT KOLKATA BENCH IN THE CASE OF VIRGIN CREATIONS VS. ITO, WARD 32(4), KOLKATA ITA NO. 267/KOL/2009 FOR AY 05- 06 THE ISSUE THAT AROSE FOR CONSIDERATION WAS DISALLOWANCE OF EXPENSES U/S.40(A )(IA)CLAIMED AS DEDUCTION WHILE ITA NO.456/KOL/2016 DCIT VS M/S. SARAF SERVICES PVT. L TD. A.Y.2006-07 7 COMPUTING INCOME FROM BUSINESS BEING EMBROIDERY CHA RGES, DYEING CHARGES, INTEREST ON LOAN AND FREIGHT CHARGES WITHOUT DEDUCTING TAX AT S OURCE. THE EMBROIDERY CHARGES WERE PAID BETWEEN 22 ND MAY, 2004 TO 30.11.2004. TAX HAD BEEN DEDUCTED AT SOURCE BUT WERE PAID TO THE GOVERNMENT ONLY ON 28.10.2005 AND NOT W ITHIN THE TIME CONTEMPLATED BY SECTION 200(1) OF THE ACT. THE DYEING CHARGES WERE PAID BETWEEN 5.4.2004 TO 20.8.2004. TAX WAS DEDUCTED AT SOURCE BUT WAS PAID TO THE GOVE RNMENT ONLY ON 28.10.2005. FRIEGHT OUTWARD CHARGES WERE PAID WITHOUT DEDUCTION OF TAX AT SOURCE. INTEREST ON LOANS WERE CREDITED TO THE CREDITORS ACCOUNT ON 31.3.2005 TO T HE EXTENT THEY WERE PAID AFTER THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT, THE DISALLOWANCE WAS MADE U/S.40(A)(IA) OF THE ACT. BEFORE THE TRIBUNAL, THE ASSESSEE CONTENTED THAT THE AMENDMENT BY THE FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2010 WHEREBY AMOUNT OF TAX DEDUCTED AT THE TIME OF MAKING PAYMENT IN RE SPECT OF EXPENDITURE REFERRED TO IN SEC.40(A)(IA) OF THE ACT, IF PAID TO THE GOVERNMENT ON OR BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME DUE DATE U/S 139(1) OF THE ACT SHO ULD BE ALLOWED AS A DEDUCTION. IN OTHER WORDS IT WAS ARGUED THAT THE AMENDMENT BY THE FINANCE ACT, 2010 TO THE PROVISIONS OF SEC.40(A)(IA) HAS TO BE HELD TO BE RETROSPECTIVE W.E.F. 1-4-2005. THE ITAT KOLKATA BENCH BY ITS ORDER DATED 15.12.2010, HELD AS FOLLOW S: 8. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAR EFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT TH AT THOUGH THE LD.D.R. SUBMITTED THAT THE DECISIONS OF THE COORDINATE BENCHES ARE NO T BINDING AND THE KOLKATA BENCHES MAY TAKE A DIFFERENT VIEW, SINCE MUMBAI BEN CH AFTER ANALYZING THE PROVISIONS OF SEC.40(A)(IA) SINCE ITS INCEPTION AND VARIOUS AMENDMENTS MADE TO THE SAME INCLUDING THE SUGGESTION MADE BY THE INDUS TRY IN THE FORM OF REPRESENTATION IN THEIR PRE-BUDGET MEMORANDUM TO TH E HONBLE FINANCE MINISTER AND BY APPLYING THE DECISION OF THE HONBLE APEX CO URT IN THE CASE OF ALOM EXTRUSIONS LTD., HAS OBSERVED THAT THE PROVISIONS OF SECTION 40(A)(IA) AS STOOD PRIOR TO THE AMENDMENTS MADE BY THE FINANCE ACT 201 0 THUS WERE RESULTING INTO UNINTENDED CONSEQUENCES AND CAUSING GRAVE AND GENUI NE HARDSHIPS TO THE ASSESSES WHO HAD SUBSTANTIALLY COMPLIED WITH THE RE LEVANT TDS PROVISIONS BY DEDUCTING THE TAXS AT SOURCE AND BY PAYING THE SAME TO THE CREDIT OF THE GOVERNMENT BEFORE THE DUE DATE OF FILING OF THEIR R ETURNS U/S.139(1). IN ORDER TO REMEDY THIS POSITION AND TO REMOVE THE HARDSHIPS WH ICH WAS BEING CAUSED TO THE ITA NO.456/KOL/2016 DCIT VS M/S. SARAF SERVICES PVT. L TD. A.Y.2006-07 8 ASSESSEE BELONGING TO SUCH CATEGORY, AMENDMENTS HAV E BEEN MADE IN THE PROVISIONS OF SECTION 40(A)(IA) BY THE FINANCE ACT, 2010. THE SAID AMENDMENTS, IN OUR OPINION, THUS ARE CLEARLY REMEDIAL/CURATIVE IN NATURE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS PVT.LTD. (SUPRA) AND MOM EXTRUSIONS LTD. (SUPRA) AND THE SAME THEREFORE WOULD APPLY RET ROSPECTIVELY W.E.F. 1 ST APRIL, 2005. IN THE CASE OF R.B.JODHA MAL KUTHIALA 82 ITR 570, IT WAS HELD BY THE HONBLE SUPREME COURT THAT A PROVISO WHICH IS INSER TED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION WORKABLE, RE QUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INT ERPRETATION CAN BE GIVEN TO THE SECTION AS A WHOLE. IN THE PRESENT CASE, THE AMOUN T OF TAX DEDUCTED AT SOURCE FROM THE FREIGHT CHARGES DURING THE PERIOD 01/04/2005 TO 28/02/2006 WAS PAID BY THE ASSESSEE IN THE MONTH OF JULY AND AUGUST 2006 I.E. , WELL BEFORE THE DUE DATE OF FILING OF ITS RETURN OF INCOME FOR THE YEAR UNDER C ONSIDERATION. THIS BEING THE UNDISPUTED POSITION, WE HOLD THAT THE DISALLOWANCE MADE BY THE A.O. AND CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF FREIG HT CHARGES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IS NOT SUSTAINABLE AS PER THE AMENDMENTS MADE IN THE SAID PROVISIONS BY THE FINANCE ACT, 2010 WHICH, BEING REMEDIAL/CURATIVE IN NATURE, HAVE RETROSPECTIVE APPLICATION, WE FIND NO REASON TO DEVIATE FROM THE DECISIONS OF THE ITATS MUMBAI BENCH AND AHMEDABAD BENCH, IN THE ABSENCE OF A CONTRARY VIEW, EXCEPT THE OTHER BENCHES DECISIONS O R ANY OTHER HIGH COURT. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE COORDINATE BENCHES (SUPRA), WE ALLOW THE GROUND NOS. I TO 3 OF THE ASSESSEES A PPEAL. 13. AS AGAINST THE AFORESAID DECISION THE REVENUE P REFERRED APPEAL BEFORE THE HONBLE CALCUTTA HIGH COURT. THE HONBLE CALCUTTA HIGH COU RT IN ITA NO. 302 OF 2011 GA 3200/2011 DECIDED ON 23.11.2011, HELD AS FOLLOWS: WE HAVE HEARD MR. NIZAMUDDIN AND GONE THROUGH THE IMPUGNED JUDGMENT AND ORDER. WE HAVE ALSO EXAMINED THE POINT FORMULATED F OR WHICH THE PRESENT APPEAL IS SOUGHT TO BE ADMITTED. IT IS ARGUED BY MR. NIZAMUDD IN THAT THIS COURT NEEDS TO TAKE DECISION AS TO WHETHER SECTION 40(A)(IA) IS HAVING RETROSPECTIVE OPERATION OR NOT. THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSE E HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PERIOD APRIL 1, 2 005 AND APRIL 28, 2006 AND THE SAME WERE PAID BY THE ASSESSEE IN JULY AND AUGUST 2 006, I.E. 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 COUR T, AS HAS BEEN RECORDED BY THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT. LTD. AND ALSO IN THE CASE OF ITA NO.456/KOL/2016 DCIT VS M/S. SARAF SERVICES PVT. L TD. A.Y.2006-07 9 ALOM EXTRUSIONS LTD., HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HAS RETROSPECTIVE APPLICATION. AGAIN, IN THE CASE REPOR TED IN 82 ITR 570, THE SUPREME COURT HELD THAT THE PROVISION, WHICH HAS INSERTED T HE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL. IN V IEW OF THE AUTHORITATIVE PRONOUNCEMENT OF THE SUPREME COURT, THIS COURT CANN OT DECIDE OTHERWISE. HENCE WE DISMISS THE APPEAL WITHOUT ANY ORDER AS TO COSTS . 14. IN VIEW OF THE AFORESAID DECISION, WE ARE OF TH E VIEW THAT THE ORDER OF THE CIT(A) IS JUST AND PROPER AND CALLS FOR NO INTERFERENCE. THE APPEAL OF THE REVENUE IS THEREFORE DISMISSED. 15. IN THE RESULT, APPEAL BY THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 01.12.2017. SD/- SD/- [DR.A.L.SAINI] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 01.12.2017. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.M/S SARAF SERVICES PVT. LTD., 4/1, RED CROSS PLAC E, KOLKATA-700001. 2. D.C.I.T., CIRCLE-5(1), KOLKATA. 3. C.I.T. (A)-2, KOLKATA. 4. C.I.T.-2, KOL KATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SR. PRIVATE SECRETARY HEAD OF OFFI CE/DDO,, ITAT, KOLKATA BENCHES