M/s. Balasore Co-operative Urban Bank Ltd., Balasore V. ACIT, Balasore Circle, Balasore

ITA 467/CTK/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4988 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 01-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Assessee Lawyers: S N SAHUSOMNATH SAHOO ADVS
• Keywords: Recovery proceedings; Retrospective amendment; Question of law; Non-deduction of tax; Bad and doubtful debts; Corroborative evidences; Tax effect; TDS; CHAPTER IV
• Section: 43B; 40A(3); 40(a)(ia); 194C; 201; 191; 264; 192; 139(1); 44AB; 43; 13; 22; 28; 15

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 467 /CTK/20 1 7 ( / ASSESSMENT YEAR : 2012 - 2013 ) M/S BALASORE COOPERATIVE BANK L IMITED, BIBEKANANDA MARG, BALASORE - 756001 VS. ACIT, BALASORE CIRCLE, BALASORE PAN NO. : A A CCB 7823 M ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI S.N.SAHU/SOMNATH SAHOO , ADVS /REVENUE BY : SHRI M.K.GAUTAM, CIT - DR / DATE OF HEARING : 13 / 0 8 /20 20 / DATE OF PRONOUNCEMENT : 12 / 10 /20 20 / O R D E R PER L.P.SAHU , A M : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A), CUTT ACK, DATED 04.08.2017 , FOR THE ASSESSMENT YEAR 2012 - 2013 , ON THE FOLLOWING GROUNDS OF APPEAL : - 1) THAT THE ORDER OF THE ID. CIT(APPEALS) CONFIRMING THE ADDITIONS AND DISALLOWANCES MADE BY THE A.O. IS ILLEGAL, ARBITRARY, UNJUSTIFIED AND NOT IN ACCORDANC E WITH LAW. 2) THAT THE ADDITION OF RS. 36,79,148/ - U/S. 40(A)(IA) OF THE I.T. ACT, 1961 CONFIRMED BY CIT(APPEALS) TO THE EXTENT OF RS. 36,30,998/ - IS ILLEGAL, ARBITRARY, UNCALLED FOR AND NOT IN ACCORDANCE WITH LAW AND THE SAME SHOULD HAVE BEEN DELETED BY THE LEARNED CIT(APPEALS). 3) THAT THE DISALLOWANCE U/S 40(A)(IA) OF RS. 36,79,148/ - AS DETAILED BELOW IS ILLEGAL, ARBITRARY AND UNJUSTIFIED AND HENCE SHOULD HAVE BEEN DELETED BY THE LEARNED CIT(A) AS THE GENUINENESS IS NOT IN DOUBT. NON - DEDUCTION OF TDS IS A SEPARATE ISSUE. A) COMMISSION PAYMENT TO DLDS COLLECTION AGENTS RS. 33,45,248/ - B) LEGAL EXPENSES RS. 2,52,000/ - C) AUDIT FEES RS. 81,900/ - ITA NO. 467 /CTK/201 7 2 4) T HAT IT IS NOT CORRECT TO SAY THAT THE AMENDMENT TO SECOND PROVISION TO SECTION 40(A)(IA) WITH EFFECT FROM 1.4.2013 IS NOT APPLICABLE. IT IS SETTLED LAW, THAT THE AMENDMENT BENEFICIAL TO THE ASSESSEE HAS RETROSPECTIVE EFFECT HAS BEEN DECIDED BY HONOURABLE S UPREME COURT IN THE CASE OF CIT VS. DORAISAMY CHETTY [1990] 183 ITR 559 (SC). 5) THAT THE AUTHORITIES BELOW SHOULD HAVE ALLOWED SUFFICIENT OPPORTUNITY TO THE APPELLANT TO FURNISH FORM 26A FROM RECIPIENTS, IN THE GREATER INTEREST OF JUSTICE AND FAIR PLAY. 6) THAT THE DISALLOWANCE OF EPF OF RS. 1,15,570/ - U/S.43B IS UNJUSTIFIED, ILLEGAL, ARBITRARY AND THEREFORE THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE SAME. 7) THAT THE DISALLOWANCE OF GRATUITY PAYMENT TO STAFF AMOUNTING TO RS. 2,70,00 0/ - DISALLOWED BY THE AO SHOULD NOT HAVE BEEN CONFIRMED BY THE CIT(APPEALS). 8) THAT STATEMENT OF FACTS AND GROUNDS OF APPEAL FILED BEFORE THE CIT(APPEALS) MAY KINDLY BE CONSIDERED AS A PART OF GROUNDS OF APPEAL BEFORE I.T.A.T. 9) THAT OTHER GROUNDS IF ANY WILL BE URGED AT THE TIME OF HEARING OF APPEAL. 2. THE ASSESSEE HAS TAKEN TOTAL NINE GROUNDS OUT OF WHICH GROUND NO.1 IS GENERAL IN NATURE AND GROUND NO.9 IS RESIDUARY GROUND, THEREFORE, THE SAME ARE NOT REQUIRED FOR ANY SEPARATE ADJUDICATION. NOW, WE HAVE TO DECIDE THE REMAINING EFFECTIVE GROUNDS AS GROUND NOS.2 TO 8. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COOPERATIVE BANK AND FILED ITS RETURN OF INCOME ELECTRONICALLY ON 22.02.2013 FOR THE A.Y.2012 - 2013 DECLARING AT RS.29,39,180/ - . TH E CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY BASED ON CASS. THEREAFTER STATUTORY NOTICES WERE ISSUED AND DULY SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS CLAIMED THE EXPENSES TOWARDS PROVISI ON MADE ON NPA AT RS.20,28,849/ - DEBITED TO THE PROFIT AND LOSS ACCOUNT, DETAILS OF WHICH ARE AS UNDER : - ITA NO. 467 /CTK/201 7 3 A) PROVISION AGAINST STANDARD ASSETS : RS.28,849/ - B) PROVISION AGAINST DOUBTFUL ASSETS : RS.20,00,000/ - THE AO ASKED THE ASSESSEE TO JUSTIFY THE AL LOWABILITY OF THE ABOVE PROVISION CLAIMED, HOWEVER, THE ASSESSEE COULD NOT FURNISH THE SUITABLE EXPLANATION FOR ALLOWABILITY OF THE SAID PROVISIONS. ACCORDINGLY, THE AO DISALLOWED THE SAME AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. FURTHER THE AO ON GOING THROUGH THE LEDGER OF LEGAL EXPENSES CLAIMED BY THE ASSESSEE, FOUND THAT THE ASSESSEE HAS CLAIMED FOLLOWING EXPENSES IN THE PROFIT AND LOSS ACCOUNT : - A) COMMISSION TO D.L.D.S. COLL AGENT : RS.33,45,248/ - B) LEGAL EXPENSE : RS.2,87,975/ - C) AUD IT FEE : RS.81,900/ - IN REPLY TO THE NOTICE ISSUED BY THE AO, THE ASSESSEE ADMITTED THAT NO TDS HAS BEEN MADE OUT OF THE ABOVE PAYMENTS. ON GOING THROUGH THE LEDGER OF LEGAL EXPENSES, THE AO FOUND THAT OUT OF RS.2,87,975/ - , THE ASSESSEE HAS PAID AN AM OUNT OF RS.2,52,000/ - TO P.K.PARHI OF RS.87,500/ - AND TUSHAR KANTI SATPATHY OF RS.1,64,500/ - WHICH IS MORE THAN THE PRESCRIBED LIMIT OF TDS. ACCORDINGLY, THE AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS NO TDS HAS BEEN DEDUCTED ON THE ABOVE PAYMENTS. THE ASSESSEE HAS ALSO CLAIMED GRATUITY TO STAFF OF RS.2,70,000/ - DURING THE YEAR UNDER CONSIDERATION. THE AO FOUND THAT THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE OF BEING DEPOSITED INTO APPROVED GRATUITY FUND AS PER THE PROVISIONS OF SECTION 36(1)(V) OF THE ACT. THEREFORE, THE AO DISALLOWED THE SAME AND ADDED ITA NO. 467 /CTK/201 7 4 BACK TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE HAS ALSO CLAIMED EPF PAID TO STAFF OF RS.5,00,244/ - DURING THE YEAR UNDER CONSIDERATION. THE ASKED THE ASSESSEE TO PRODUCE THE DETAILS PAYMENT OF EPF TO STAFF WITH SUPPORTING EVIDENCES AND THE ASSESSEE PRODUCED ONLY THE CHALLAN COPIES AMOUNTING TO RS.3,84,674/ - AND COULD NOT PRODUCE THE CHALLAN COPY OF RS.1,15,570/ - WHICH WAS PAYMENT IN ARREAR FROM 2007 - 2008. THEREFORE, THE AO DISALLOWED RS.1,15,570/ - UNDER SECTION 43B OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ACCORDINGLY, THE AO MADE TOTAL ADDITION OF RS. 60 , 93 , 567 / - AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS. 90,32,740/ - . 4 . AGAINST THE ABOVE ORDER OF AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND THE CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FINDINGS OF AO, DELETED THE ADDITION MADE ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS AND PARTLY CONFIRMED THE ADDITION MADE U/S.40(A)(IA) OF THE ACT TO THE EXTENT OF RS. 36 , 30,998/ - AND DELETED THE ADDITION OF RS.48,150/ - OUT OF THE TOTAL ADDITION MADE BY THE AO OF RS.37,79,148/ - . THE CIT(A) HAS ALSO CONFIRMED THE ADDITIONS MADE U/S.43B AND U/S.36(1)(V) OF THE ACT, RESPECTIVEL Y. ACCORDINGLY, THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5 . NOW, THE ASSESSEE IS FURTHER APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL AGAINST THE ADDITIONS CONFIRMED BY THE CIT(A). ITA NO. 467 /CTK/201 7 5 6 . LD. AR BEFORE US FILED HIS WRITTEN SUBMISSIONS WHICH REA D AS UNDER : - THE FOLLOWING ADDITIONS HAVE BEEN SUSTAINED BY THE LEARNED CIT(APPEALS) IN HIS ORDER DATED 04.08.2017. A) DISALLOWANCE U/S.40(A)(IA) RS.33,45,248/ - B) DISALLOWANCE OF PAYMENT OF GRATUITY. RS. 2,70,000/ - C) DISALLOWANCE OF EPF TO STAFF. RS. 1,15,570/ - DISALLOWANCE U/S.40(A)(IA) OF RS.33,45,248/ - REMUNERATION IN THE NAME OF COMMISSION PAYMENT HAS BEEN MADE TO DLDS (DHANA LAXM I DEPOSIT SCHEME) AMOUNTING TO RS.33,45,248/ - . THE DETAILS OF PAYMENT MADE TO DIFFERENT PERSONS FOR BRINGING THE DEPOSITS TO THE BANKS UNDER THE ABOVE SCHEME ARE ENCLOSED IN THE PAPER BOOK. RECIPIENTS HAVE CONFIRMED THE RECEIPTS. THEY HAVE FILED THEIR RESP ECTIVE INCOME TAX RETURN INCLUDING THE SAID RECEIPT IN THE RETURN OF INCOME. THEREFORE THE PROVISION OF SECTION 40(A)(IA) WILL NOT BE APPLICABLE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. MORESO, THE PROVISION HAS BEEN AMENDED FOR REMOVING AN UNINTEND ED CONSEQUENCES TO MAKE THE PROVISION WORKABLE, THEREFORE THOUGH THE AMENDMENT HAS BEEN MADE BY THE FINANCE ACT, 2012 THE AMENDMENT HAS BEEN GIVEN EFFECT PROSPECTIVELY BUT SINCE IT IS INTENDED FOR REMOVING UNINTENDED CONSEQUENCES BY SUBSEQUENT AMENDMENT, I T HAS TO BE TREATED AS RETROSPECTIVE AND NOT WITH STATING THE FACT THAT THE AMENDMENT HAS BEEN GIVEN EFFECT PROSPECTIVELY. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAJINDER KUMAR, 362 ITR 241 WHILE DEALING WITH A SIMILAR CASE HAS HELD THAT PROVISIO N SHOULD BE INTERPRETED IN A FAIR, JUST AND EQUITABLE MANNER AND THEY HAVE DISAPPROVED EARLIER SPECIAL BENCH DECISION OF I.T.A.T. WHICH WAS AGAINST THE ASSESSEE. HON'BLE AGRA BENCH OF I.T.A.T. IN THE CASE OF RAJEEV KUMAR AGARWAL VS. ADDL. CIT IN ITA NO. 3 37/AGRA/2013, ORDER DATED 29.05.2013 ENCLOSED IN THE PAPER BOOK CONSIDERING THE ABOVE DECISION HAVE GIVEN THEIR VERDICT IN FAVOUR OF THE ASSESSEE AND ALLOWED THE APPEAL. THEY HAVE HOLD THAT INSERTION OF SECOND PROVISION TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005 BEING THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE ACT, 2004. IN THE CASE OF KANU BHAI RAMJI BHAI VS. ITO, 135 TTJ 364 HAS ALSO HELD THAT PROVI SION OF SECTION 40(A)(IA) AS AMENDED BY THE FINANCE ACT, 2010 W.E.F. 1 ST APRIL, 2010 IS REMEDIAL IN NATURE, DESIGNED TO ELIMINATE UNINTENDED CONSEQUENCES WHICH MAY CAUSE UNDUE HARDSHIP TO THE TAX PAYERS AND WHICH MADE THE PROVISION UNWORKABLE OR UNJUST IN A SPECIFIC ITA NO. 467 /CTK/201 7 6 SITUATION AND IS OF CLARIFICATORY IN NATURE. AMENDMENT HAS THEREFORE TO BE TREATED AS RETROSPECTIVE W.E.F. 1 ST APRIL, 2005. THE LEARNED CIT(APPEALS) WRITES THAT THE SECOND PROVISION HAS BEEN INSERTED W.E.F. FROM 1.4.2013 AND THEREFORE APPLICABL E FOR AY 2013 - 14 ONWARDS. THE CIT(APPEALS) REQUIRED CERTIFICATES FROM THE RECIPIENTS WHICH IS VERY MUCH AVAILABLE IN THE PAPER BOOK. HENCE, THE SAME MAY KINDLY BE DELETED. IT IS NOT CORRECT TO SAY THAT THE AMENDMENT TO SECOND PROVISION TO SEC 40 (A)(IA) W ITH EFFECT FROM 01.04.2013 IS NOT APPLICABLE. IT IS SETTLED LAW DECIDED BY HONOURABLE SUPREME COURT OF INDIA THAT AMENDMENT BENEFICIAL TO THE ASSESSEE WILL HAVE RETROSPECTIVE EFFECT (CIT VS. DORAISAMY CHETTY (1990) 183 ITR 559 (SC). THE DISALLOWANCE OF EP F OF RS. 1,15,570/ - U/S.43B OF THE IT. ACT, 1961 IS UNJUSTIFIED, ILLEGAL AND ARBITRARY AND THEREFORE THE LEARNED CIT(APPEALS) SHOULD HAVE DELETED THE ENTIRE ADDITION. NECESSARY CHALLANS IN SUPPORT OF PAYMENTS PRODUCED BEFORE THE AUDITOR. AFTER ALL IT IS OR STATUTORY PAYMENT AND SHOULD NOT DOUBTED AND THE ADDITION IS UNCALLED FOR LIABLE TO BE DELETED. SIMILARLY THE EXPENSES UND ER THE 'GRATUITY' AMOUNTING RS. 2,70,000/ - HAS BEEN CLAIMED BY THE ASSESSEE AS PER LAW. THE SAME HAS BEEN DULY SCRUTINIZED BY THE AUD ITOR. GRATUITY AMOUNT IS BEING PARKED WITH THE BANK AND SUBSEQUENTLY PAID TO THE CONCERNED FUND AS PER THE GUIDELINES OF THE RBI. THE SAID AMOUNT HAS ALREADY BEEN PAID BEFORE THE COMPLETION OF THE ASSESSMENT. THIS METHOD OF ACCOUNTS IS CONSTANTLY FOLLOWED BY THE ASSESSEE YEAR AFTER YEAR ACCORDING TO GUIDELINES OF RBI. THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN MAKING SUCH ADDITION. STATEMENT OF FACT, GROUNDS OF APPEAL AND WRITTEN SUBMISSION FILED BEFORE THE CIT(APPEALS) AND GROUNDS OF APPEAL BEFORE HON'BLE TRIBUNAL ENCLOSED IN THIS PAPER BOOK MAY KINDLY BE TREATED AS A PART OF THIS WRITTEN SUBMISSION. PR AYER THEREFORE, IT IS HUMBLY REQUESTED TO CONSIDER THE FACTS STATED ABOVE AND DELETED THE ADDITION MADE BY THE AUTHORITIES BELOW AND OBLIGE. FURTHER, TH E LD. AR OF THE ASSESSEE VIDE LETTER DATED 16.07.2020 HAS FILED HIS ADDITIONAL WRITTEN SUBMISSION, WHICH READS AS UNDER : - THIS WRITTEN SUBMISSION IS IN ADDITION TO WRITTEN SUBMISSION DATED 15/17 - 02 - 2020 FILED ALONG WITH PAPER BOOK IN PAGE - 01 TO 03. THE A PPELLANT IS A PRIMARY CO - OPERATIVE SOCIETY BANK HAS BEEN ESTABLISHED IN THE PRE - INDEPENDENCE PERIOD SINCE THE YEAR 1945. TO ITA NO. 467 /CTK/201 7 7 RAISE CAPITAL FUNDS FOR IMPROVEMENT OF THE FINANCIAL STRENGTH OF BANK, 'DHAN LAXMI DEPOSIT SCHEME' WAS STARTED. THE PERSONS ENGAGED FOR COLLECTION UNDER THE SAID DLDS SCHEME ARE NO OTHER THAN THE MEMBERS, OF THE CO - OPERATIVE SOCIETY ONLY AND NOT OUTSIDERS. HENCE PAYMENT OF REMUNERATION TO THE COLLECTING PERSONS CALLED AS COLLECTION AGENTS WILL NOT ATTRACT THE PROVISION OF SECTION 40(A )(IA) OF THE IT. ACT, 1961. FOR IMPLEMENTATION OF 'DHAN LAXMI DEPOSIT SCHEME' (DLDS) THE SOCIETY ASKED MEMBERS ESPECIALLY TO THE YOUNG MEMBERS TO GIVE THEIR TIME TO COLLECT FUNDS FOR DEVELOPMENT OF THE CO - OPERATIVE BANK. THE PERSON ENGAGED ARE TO GO TO TH E DOOR STEPS OF THE MEMBERS OF THE SOCIETY. THEY ARE REQUIRED TO MOBILIZE THE SOCIETY FOR THIS 'DAILY DEPOSIT SCHEME'. THE INTENTION OF THE SCHEME WAS TO GENERATE EMPLOYMENT AMONGST UN - EMPLOYED YOUNGER GENERATION APART FROM 'COLLECTION OF MONEY' TO STRENGT HEN FINANCIAL CAPACITY OF THE FENK. THAT IS WHY THEY ARE GIVEN SOME RESPONSIBILITY FOR IMPROVEMENT OF THE BANK. IN THE PROCESS THEY ARE PAID HONORARY REMUNERATION CALCULATED @ 2% OF THE AMOUNT COLLECTED. THE MATTER IS INTIMATED TO THE REGISTERING AUTHORITY , CERTIFICATE FROM BANK IN THIS REGARD IS SUBMITTED HEREWITH. THEY ARE PAID HONORARY REMUNERATION AS INCENTIVE. THIS IS NOT COMMISSION BUT AN INCENTIVE THOUGH IT IS NAMED AS AGENTS COMMISSION. THIS IS NOT A NEW SCHEME BUT CONTINUING SINCE LONG. THE LIST O F MEMBERS ENGAGED IN THIS DLDS SCHEME FOR THE YEAR UNDER CONSIDERATION IS ENCLOSED HEREWITH WITH THEIR MEMBERSHIP NOS. ANOTHER LIST IS GIVEN FURNISHING THE DETAILS OF PAYMENT MADE TO THEM. FROM THE DETAILS FURNISHED IT WOULD BE APPARENT THAT NONE OF THE ME MBERS EXCEPT ONE OR TWO HAVE RECEIVED MORE THAN TAXABLE INCOME. BESIDES FOR COLLECTING THE FUNDS THE PERSONS HAVE TO RUN FROM PLACE TO PLACE IN DIFFERENT RURAL AREAS AND THE EXPENSES INCURRED FOR TRAVELLING AND OTHER INCIDENTAL EXPENSES ARE BORNE BY THEM O UT OF THE MONEY THEY RECEIVE, WHICH IS DEDUCTABLE IN COMPUTING THE TAXABLE INCOME, IF ANY. ACTUALLY THE SAID 2% REMUNERATION AND NOT COMMISSION. THERE IS NO CONTRACT OR AGREEMENT FOR THAT IN PURSUANCE OF WHICH IT IS PAID. IT MAY KINDLY BE NOTED THAT WRONG NOMENCLATURE CANNOT DEMOLISH THE ACTUAL FACT. HENCE, THE SAID PAYMENT OF REMUNERATION TO ITS OWN MEMBERS DOES NOT ATTRACT THE PROVISION OF SECTION 40(A)(IA)OF THE I .T. ACT, 1961. SINCE, THERE WAS ALSO NO CONTRACT OR AGREEMENT BETWEEN THE ASSESSEE - AND PAYE E, NO PAYMENT HAS BEEN MADE IN PURSUANCE TO A CONTRACT FOR SPECIFIC PERIOD, QUANTITY OR PRICE. NOTHING HAS BEEN BROUGHT ON RECORD BY THE AO TO PROVE THAT THE PERSONS PAID WERE IN PURSUANCE OF A CONTRACT. THEREFORE, SECTION 40(A)(IA) HAS NO APPLICATION HAS BEEN DECIDED IN THE CASE OF CIT VS. UNITED RICE LAND LTD, 217 CTR 332, 322 ITR 594 (P&H), (PAGE NO. 71 OF THE PAPER BOOK). THE HONOURABLE I.T.A.T., CUTTACK BENCH FOLLOWING THE ITA NO. 467 /CTK/201 7 8 ABOVE CASE LAW HAS DELETED ADDITIONS IN A PLETHORA OF DECISIONS. A FEW OF THEM A RE GIVEN BELOW. I) R.R. CARRYING CORPORATION VS. ACIT, 126 TTJ 240 (CTK) II) CHANDRAKANT THACKER VS. ACIT, 129 TTJ 1 (CTK) III) SANJAY KUMAR PRADHAN VS. ACIT, 14 ITR (TRIB) 150 (CTK) IV) DIPENDRA BAHADUR SINGH VS. ACIT, 38 ITR (TRIB) 67 (CTK) FURTH ER, THE ASSESSEE IS A CO - OPERATIVE SOCIETY AND ITS INCOME IS EXEMPT U/S.80P OF THE IT. ACT, 1961. THOUGH THE CO - OPERATIVE BANK IS IN EXISTANCE FOR THE LAST 75 YEARS. NEVER IN THE PAST SUCH EXPENSES WERE DISALLOWED. MORE SO, THE PROVISION U/S.40(A)(IA) DOES NOT APPLY TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND NON - DEDUCTION IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AND PROFESSION AS THE SAME DOES NOT COME WITHIN THE PURVIEW OF LAW. REGARDING OTHER ADDITIONS, THE APPEL LANT'S SUBMISSION SUBMITTED EARLIER WITH THE PAPER BOOK MAY KINDLY BE PERUSED. PRAYER THEREFORE, IT IS RESPECTFULLY SUBMITTED THAT THE ADDITIONS MADE BY THE LEARNED AO U/S.40(A)(IA) TOGETHER WITH OTHER ADDITIONS MAY KINDLY BE DELETED. AND FOR THIS ACT OF YOUR KINDNESS, THE PETITIONER AS IN DUTY BOUND SHALL EVER PRAY . FURTHER THE LD. AR HAS RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO [1991] 191 ITR 667, 673(SC) AND THE DECISION OF THE COORDINATE BEN CH OF THE TRIBUNAL IN THE CASE OF KANUBHAI RAMJIBAI VS. ITO, 135 TTJ (AHD) 364. 7 . ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON PAYMENTS MADE TO THE RECIPIENTS WHICH WAS OUGHT T O BE DEDUCTED AS PER THE TDS PROVISIONS AS PRESCRIBED IN THE INCOME TAX ACT. HE ALSO SUBMITTED THAT THE AMENDMENT MADE IN SECTION 40(A)(IA) OF THE ACT IS APPLICABLE FROM THE A.Y.2013 - 2014. THE CASE OF THE ASSESSEE FALLS ITA NO. 467 /CTK/201 7 9 BEFORE THE AMENDMENT I.E. W.E.F.01.0 4.2013, HENCE, THE CASE LAW RELIED ON BY THE LD. AR OF THE ASSESSEE IS NOT APPLICABLE IN THE PRESENT CASE. 8 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD AND THE ORDER OF THE AUTHORITIES BELOW, WE NOTICED THAT THE ASSE SSEE HAS VIOLATED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NOT DEDUCTING & DEPOSITING THE TDS . THE AMENDMENT HAS BEEN MADE IN THE SECOND PROVISO OF SECTION 40(A)(IA) OF THE ACT W.E.F. 01.04.2013 AND, THEREFORE, IT IS APPLICABLE FOR THE A.Y.2013 - 2 014 ONWARDS. FOR THIS PURPOSE, WE WOULD LIKE TO RELY ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF SHREE CHOUDHARY TRANSPORT COMPANY VS. ITO [2020] 118 TAXMANN.COM 47 (SC) , WHEREIN THE HONBLE SUPREME COURT WHILE DECIDING THE SIMILAR ISSUE REGARDING APPLICABILITY OF THE AMENDMENT TO SECTION 40(A)(IA) OF THE ACT VIDE FINANCE ACT NO.2 AND OTHER ISSUES, HAS FRAMED FOUR QUESTIONS AND ANSWERED THEM IN THE FOLLOWING MANNER : - 12. HAVING REGARD TO THE SUBMISSIONS MADE BY THE LEARNED COUNSEL FOR THE PARTIES AND THE OBSERVATIONS OCCURRING IN THE ORDERS IMPUGNED, THE PRINCIPAL QUESTIONS ARISING FOR DETERMINATION IN THIS APPEAL COULD BE STATED AS FOLLOWS: - 1. AS TO WHETHER SECTION 194C OF THE ACT DOES NOT APPLY TO THE PRESENT CASE? 2. AS TO WHETHER DISALLOWANCE UNDER SECTION 40( A )(IA) OF THE ACT IS CONFINED/LIMITED TO THE AMOUNT 'PAYABLE' AND NOT TO THE AMOUNT 'ALREADY PAID'; AND WHETHER THE DECISION OF THIS COURT IN PALAM GAS SERVICE V. COMMISSIONER OF INCOME - TAX [2017] 394 ITR 300 REQUIRES RECONSIDERATION? 3. AS TO WHETHER SUB - CLAUSE (IA) OF SECTION 40( A ) OF THE ACT, AS INSERTED BY THE FINANCE (NO. 2) ACT, 2004 WITH EFFECT FROM 1 - 4 - ITA NO. 467 /CTK/201 7 10 2005, IS APPLICABLE ONLY FROM THE FINANCIAL YEAR 2005 - 2006 AND, HENCE, IS NOT APPLICABLE TO THE PRESENT CASE RELATING TO THE FINAN CIAL YEAR 2004 - 2005; AND, AT ANY RATE, WHOLE OF THE RIGOUR OF THIS PROVISION CANNOT BE APPLIED TO THE PRESENT CASE? 4. AS TO WHETHER THE PAYMENTS IN QUESTION HAVE RIGHTLY BEEN DISALLOWED FROM DEDUCTION WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE - APPE LLANT? RELEVANT PROVISIONS 13. FOR DETERMINATION OF THE QUESTIONS AFORESAID, WE NEED TO CLOSELY LOOK AT THE STATUTORY PROVISIONS IN THE ACT OF 1961 WHICH HAVE MATERIAL BEARING ON THIS CASE. 13.1 IT IS NOTICED THAT ELABORATE PROVISIONS HAVE BEEN MADE IN CH APTER XVII OF THE ACT OF 1961 FOR 'COLLECTION AND RECOVERY OF TAX' AND PART B THEREOF CARRIES THE PROVISIONS CONCERNING 'DEDUCTION AT SOURCE'. SECTIONS 194C, 200 AND 201, WHICH HAVE COME IN REFERENCE IN THE PRESENT MATTER, ARE CONTAINED IN THIS PART AND TH E SAME, AS EXISTING AT THE RELEVANT POINT OF TIME PERTAINING TO THE ASSESSMENT YEAR 2005 - 2006, MAY BE USEFULLY NOTICED. 13.1.1 THE LIABILITY AGAINST THE APPELLANT HAS BASICALLY ARISEN BECAUSE OF ITS ALLEGED NON - COMPLIANCE OF THE REQUIREMENTS OF SECTION 194 C OF THE ACT. AT THE RELEVANT POINT OF TIME, THIS PROVISION READ AS UNDER: - '194C. PAYMENTS TO CONTRACTORS AND SUB - CONTRACTORS. - (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CAR RYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND - ( A ) THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT; OR ( B ) ANY LOCAL AUTHORITY; OR ( C ) ANY CORPORATION ESTABLISHED BY OR UNDE R A CENTRAL, STATE OR PROVINCIAL ACT; OR ( D ) ANY COMPANY; OR ( E ) ANY CO - OPERATIVE SOCIETY; OR ( F ) ANY AUTHORITY, CONSTITUTED IN INDIA BY OR UNDER ANY LAW, ENGAGED EITHER FOR THE PURPOSE OF DEALING WITH AND SATISFYING THE NEED FOR HOUSING ACCOMMODATION O R FOR THE PURPOSE OF PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VILLAGES, OR FOR BOTH; OR ( G ) ANY SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 (21 OF 1860) OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF ITA NO. 467 /CTK/201 7 11 INDIA; OR ( H ) ANY TRUST; OR ( I ) ANY UNIVERSITY ESTABLISHED OR INCORPORATED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT AND AN INSTITUTION DECLARED TO BE A UNIVERSITY UNDER SECTION 3 OF THE UNIVERSITY GRANTS COMMISSION ACT, 1956 (3 OF 1956); OR ( J ) AN Y FIRM, SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO - ( I ) ONE PER CENT IN CASE OF A DVERTISING, ( II )IN ANY OTHER CASE TWO PER CENT, OF SUCH SUM AS INCOME - TAX ON INCOME COMPRISED THEREIN. (2) ANY PERSON (BEING A CONTRACTOR AND NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY) RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE SUB - CONTRACTOR) IN PURSUANCE OF A CONTRACT WITH THE SUB - CONTRACTOR FOR CARRYING OUT, OR FOR THE SUPPLY OF LABOUR FOR CARRYING OUT, THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR OR FOR SUPPLYING WHETHER WHOLL Y OR PARTLY ANY LABOUR WHICH THE CONTRACTOR HAS UNDERTAKEN TO SUPPLY SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE SUBCONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PER CENT OF SUCH SUM AS INCOME - TAX ON INCOME COMPRISED THEREIN: PROVIDED THAT AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE ( A ) OR CLAUSE ( B ) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE SUB - CONTRACTOR, SHALL BE LIABLE TO DEDUCT INC OME - TAX UNDER THIS SUB - SECTION. EXPLANATION I. - FOR THE PURPOSES OF SUB - SECTION (2), THE EXPRESSION 'CONTRACTOR' SHALL ALSO INCLUDE A CONTRACTOR WHO IS CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND THE GOVERNMENT OF A FOREIGN STATE OR A FOREIGN ENTERPRISE OR ANY ASSOCIATION OR BODY ESTABLISHED OUTSIDE INDIA. EXPLANATION II. - FOR THE PURPOSES OF THIS SECTION, WHERE ANY SUM REFERRED TO IN SUB - SECTION (1) OR SUB - SECTION (2) IS CREDITED TO ANY ACCOUNT, WHETHER CALLED 'SUSPENSE ACCOUNT' OR BY ANY OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCORDINGLY. ITA NO. 467 /CTK/201 7 12 EXPLANATION III. - FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'WORK' SHALL ALSO INCLUDE - ( A ) ADVERTISING; ( B ) BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; ( C ) CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS; ( D ) CATERING. (3) NO DEDUCTION SHALL BE MADE UNDER SUB - SECTION (1) OR SUB - SECTION (2) FROM - ( I ) THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAI D TO THE ACCOUNT OF, OR TO, THE CONTRACTOR OR SUBCONTRACTOR, IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES: PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR EXC EEDS FIFTY THOUSAND RUPEES, THE PERSON RESPONSIBLE FOR PAYING SUCH SUMS REFERRED TO IN SUB - SECTION (1) OR, AS THE CASE MAY BE, SUB - SECTION (2) SHALL BE LIABLE TO DEDUCT INCOME - TAX UNDER THIS SECTION; OR ( II ) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JUNE, 1972; OR ( III ) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JUNE, 1973, IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A COOPERATIVE SOCIETY OR IN PURSUANCE OF A CONTRACT BETWEEN SUCH CONTRACTOR AND THE SUB - CONTRACTOR IN RELATION TO ANY WOR K (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) UNDERTAKEN BY THE CONTRACTOR FOR THE CO - OPERATIVE SOCIETY.' 13.1.2 SECTIONS 200 AND 201 OF THE ACT, RESPECTIVELY DEALING WITH THE DUTY OF THE PERSON DEDUCTING TAX AND CONSEQUENCES ON FAILURE TO DEDU CT OR PAY, AS APPLICABLE AT THE RELEVANT TIME, COULD ALSO BE REPRODUCED AS UNDER: - '200. DUTY OF PERSON DEDUCTING TAX. (1) ANY PERSON DEDUCTING ANY SUM IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS CHAPTER 9 , SHALL PAY WITHIN THE PRESCRIBED TIME, THE SUM SO DEDUCTED TO THE CREDIT OF THE CENTRAL GOVERNMENT OR AS THE BOARD DIRECTS. (2) ANY PERSON BEING AN EMPLOYER, REFERRED TO IN SUB - ITA NO. 467 /CTK/201 7 13 SECTION (1A) OF SECTION 192 SHALL PAY, WITHIN THE PRESCRIBED TIME, THE TAX TO THE CRE DIT OF THE CENTRAL GOVERNMENT OR AS THE BOARD DIRECTS. 10 (3) ANY PERSON DEDUCTING ANY SUM ON OR AFTER THE 1ST DAY OF APRIL, 2005 IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS CHAPTER OR, AS THE CASE MAY BE, ANY PE RSON BEING AN EMPLOYER REFERRED TO IN SUB - SECTION (1A) OF SECTION 192 SHALL, AFTER PAYING THE TAX DEDUCTED TO THE CREDIT OF THE CENTRAL GOVERNMENT WITHIN THE PRESCRIBED TIME, PREPARE QUARTERLY STATEMENTS FOR THE PERIOD ENDING ON THE 30TH JUNE, THE 30TH SEP TEMBER, THE 31ST DECEMBER AND THE 31ST MARCH IN EACH FINANCIAL YEAR AND DELIVER OR CAUSE TO BE DELIVERED TO THE PRESCRIBED INCOME - TAX AUTHORITY OR THE PERSON AUTHORISED BY SUCH AUTHORITY SUCH STATEMENT IN SUCH FORM AND VERIFIED IN SUCH MANNER AND SETTING F ORTH SUCH PARTICULARS AND WITHIN SUCH TIME AS MAY BE PRESCRIBED. 11 201. CONSEQUENCES OF FAILURE TO DEDUCT OR PAY. (1) IF ANY SUCH PERSON REFERRED TO IN SECTION 200 AND IN THE CASES REFERRED TO IN SECTION 194, THE PRINCI PAL OFFICER AND THE COMPANY OF WHICH HE IS THE PRINCIPAL OFFICER DOES NOT DEDUCT THE WHOLE OR ANY PART OF THE TAX OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT SHALL, WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH HE OR IT MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF THE TAX: PROVIDED THAT NO PENALTY SHALL BE CHARGED UNDER SECTION 221 FROM SUCH PERSON, PRINCIPAL OFFICER OR COMPANY UNLESS THE ASSESSING OFFICER IS SATISFIED THAT SUCH PERSON OR PRINCIP AL OFFICER OR COMPANY, AS THE CASE MAY BE, HAS WITHOUT GOOD AND SUFFICIENT REASONS FAILED TO DEDUCT AND PAY THE TAX. (1A) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB - SECTION (1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPANY AS IS REFERRED TO IN THAT SUB - SECTION DOES NOT DEDUCT THE WHOLE OR ANY PART OF THE TAX OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT SHALL BE LIABLE TO PAY SIMPLE INTEREST AT TWELVE PER CENT PER ANNUM ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHIC H SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID. (2) WHERE THE TAX HAS NOT BEEN PAID AS AFORESAID AFTER IT IS DEDUCTED, THE AMOUNT OF THE TAX TOGETHER WITH THE AMOUNT OF SIMPLE INTEREST THEREON REFERRED TO IN SUB - SECTION (1A) SHALL BE A CHARGE UPON ALL THE ASSETS OF THE PERSON, OR THE COMPANY, AS THE CASE MAY BE, REFERRED TO IN SUB - SECTION (1).' 13.2 CHAPTER IV OF THE ACT OF 1961 DEALS WITH THE SUBJECT 'COMPUTATION OF TOTAL INCOME' AND SECTION 40 OCCURS IN PART D THEREOF, CARRYING T HE PROVISIONS RELATING TO THE 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'. ITA NO. 467 /CTK/201 7 14 EVEN WHEN SECTIONS 30 TO 38 PROVIDE FOR VARIOUS ALLOWANCES AND DEDUCTIONS IN COMPUTATION OF THE INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION, SECTION 40 SPECIFICALLY OR DAINS THAT CERTAIN AMOUNTS SHALL NOT BE DEDUCTED, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE SAID SECTIONS 30 TO 38 OF THE ACT. IN THE PRESENT MATTER, WE ARE CONCERNED WITH THE PROVISIONS CONTAINED IN SUB - CLAUSE (IA) OF CLAUSE ( A ) OF SECTION 40 OF THE ACT, WHICH WAS INSERTED BY THE FINANCE (NO. 2) ACT, 2004 WITH EFFECT FROM 1 - 4 - 2005. HENCE, THE EXTRACTION HEREUNDER IS ESSENTIALLY OF THE PROVISION THAT COULD BE READ AS SECTION 40( A )(IA) OF THE ACT AFTER INSERTION BY THE FINANCE (NO. 2) ACT, 20 04: - '40. AMOUNTS NOT DEDUCTIBLE. - NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', - ( A ) IN THE CAS E OF ANY ASSESSEE - ** ** ** ( IA ) ANY INTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUBCONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK ( INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, 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: PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR, HAS BEEN DEDUCTED IN THE PREVIOUS YEAR BUT PAID IN ANY SUBSEQUENT YEAR AFTER THE EXPIRY OF THE TI ME PRESCRIBED UNDER SUB - SECTION (1) OF SECTION 200, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION 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' SHA LL HAVE THE SAME MEANING AS IN CLAUSE ( I ) OF THE EXPLANATION TO SECTION 194H; ( II ) 'FEES FOR TECHNICAL SERVICES' SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE ( VII ) OF SUB - SECTION (1) OF SECTION 9; ( III ) 'PROFESSIONAL SERVICES' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( A ) OF THE EXPLANATION TO SECTION 194J; ( IV ) 'WORK' SHALL HAVE THE SAME MEANING AS IN EXPLANATION III TO SECTION 194C; ** ** ** ITA NO. 467 /CTK/201 7 15 13.3 SECTION 43 IN THE VERY SAME PART D OF CHAPTER IV OF THE ACT OF 1961 DEFINES VARIOUS TERMS R ELEVANT TO THE INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION; AND CLAUSE (2) THEREOF, CARRYING THE DEFINITION OF THE EXPRESSION 'PAID', HAVING BEEN REFERRED IN THE PRESENT MATTER, COULD ALSO BE USEFULLY REPRODUCED AS UNDER: - '43. DEFINITIONS OF C ERTAIN TERMS RELEVANT TO INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION. IN SECTIONS 28 TO 41 AND IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE REQUIRES - ** ** ** (2) 'PAID' MEANS ACTUALLY PAID OR INCURRED ACCORDING TO THE METHOD OF ACCOUNTIN G UPON THE BASIS OF WHICH THE PROFITS OR GAINS ARE COMPUTED UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'; ** ** ** 13.4 FOR THEIR RELEVANCE IN RELATION TO ANOTHER SEGMENT OF ARGUMENTS, WE MAY ALSO TAKE NOTE OF THE MEANING ASSIGNED TO THE EXPRESSION 'ASSESSMENT YEAR' IN CLAUSE (9) OF SECTION 2; AND TO THE EXPRESSION 'PREVIOUS YEAR' IN SECTION 3 OF THE ACT OF 1961 AS FOLLOWS: - '2. DEFINITIONS. - IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, - ** ** ** (9) 'ASSESSMENT YEAR' MEANS T HE PERIOD OF TWELVE MONTHS COMMENCING ON THE 1ST DAY OF APRIL EVERY YEAR; ** ** ** '3. 'PREVIOUS YEAR' DEFINED. - FOR THE PURPOSES OF THIS ACT, 'PREVIOUS YEAR' MEANS THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR: ** ** ** 14. WE MAY NOW TAKE UP THE QUESTIONS INVOLVED IN THIS MATTER AD SERIATIM. QUESTION NO. 1 15. IN ORDER TO MAINTAIN THAT THE APPELLANT WAS UNDER NO OBLIGATION TO MAKE ANY DEDUCTION OF TAX AT SOURCE, IT HAS BEEN ARGUED THAT THERE WAS NO ORAL OR WRITTEN CONTRACT OF THE APPE LLANT WITH THE TRUCK OPERATORS/OWNERS, WHOSE VEHICLES WERE ENGAGED TO EXECUTE THE WORK OF TRANSPORTATION OF THE GOODS ONLY ON FREELANCE AND NEED BASIS. THE SUBMISSION HAS BEEN THAT THE QUESTION OF TDS UNDER SECTION 194C(2) WOULD HAVE ARISEN ONLY IF THE PAY MENT WAS MADE TO A 'SUB - CONTRACTOR' AND THAT TOO, IN PURSUANCE OF A CONTRACT FOR THE PURPOSE OF 'CARRYING WHOLE OR ANY PART OF WORK UNDERTAKEN BY THE CONTRACTOR'. IN OUR VIEW, THE SUBMISSIONS SO MADE REMAIN ENTIRELY BASELESS. 15.1 THE NATURE OF CONTRACT EN TERED INTO BY THE APPELLANT WITH THE CONSIGNOR COMPANY MAKES IT CLEAR THAT THE APPELLANT WAS TO TRANSPORT ITA NO. 467 /CTK/201 7 16 THE GOODS (CEMENT) OF THE CONSIGNOR COMPANY; AND IN ORDER TO EXECUTE THIS CONTRACT, THE APPELLANT HIRED THE TRANSPORT VEHICLES, NAMELY, THE TRUCKS FRO M DIFFERENT OPERATORS/OWNERS. THE APPELLANT RECEIVED FREIGHT CHARGES FROM THE CONSIGNOR COMPANY, WHO INDEED DEDUCTED TAX AT SOURCE WHILE MAKING SUCH PAYMENT TO THE APPELLANT. THEREAFTER, THE APPELLANT PAID THE CHARGES TO THE PERSONS WHOSE VEHICLES WERE HIR ED FOR THE PURPOSE OF THE SAID WORK OF TRANSPORTATION OF GOODS. THUS, THE GOODS IN QUESTION WERE TRANSPORTED THROUGH THE TRUCKS EMPLOYED BY THE APPELLANT BUT, THERE WAS NO PRIVITY OF CONTRACT BETWEEN THE TRUCK OPERATORS/OWNERS AND THE SAID CONSIGNOR COMPAN Y. INDISPUTABLY, IT WAS THE RESPONSIBILITY OF THE APPELLANT TO TRANSPORT THE GOODS (CEMENT) OF THE COMPANY; AND HOW TO ACCOMPLISH THIS TASK OF TRANSPORTATION WAS A MATTER EXCLUSIVELY WITHIN THE DOMAIN OF THE APPELLANT. HENCE, HIRING THE SERVICES OF TRUCK O PERATORS/OWNERS FOR THIS PURPOSE COULD HAVE ONLY BEEN UNDER A CONTRACT BETWEEN THE APPELLANT AND THE SAID TRUCK OPERATORS/OWNERS. WHETHER SUCH A CONTRACT WAS REDUCED INTO WRITING OR NOT CARRIES HARDLY ANY RELEVANCE. IN THE GIVEN SCENARIO AND SET UP, THE SA ID TRUCK OPERATORS/OWNERS ANSWERED TO THE DESCRIPTION OF 'SUB - CONTRACTOR' FOR CARRYING OUT THE WHOLE OR PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR ( I.E., THE APPELLANT) FOR THE PURPOSE OF SECTION 194C(2) OF THE ACT. 15.2 THE SUGGESTIONS ON BEHALF OF THE APPELLANT THAT THE SAID TRUCK OPERATORS/OWNERS WERE NOT BOUND TO SUPPLY THE TRUCKS AS PER THE NEED OF THE APPELLANT NOR THE FREIGHT PAYABLE TO THEM WAS PRE - DETERMINED, IN OUR VIEW, CARRY NO MEANING AT ALL. NEEDLESS TO OBSERVE THAT IF A PARTICULAR TRUCK WA S NOT ENGAGED, THERE EXISTED NO CONTRACT BUT, WHEN ANY TRUCK GOT ENGAGED FOR THE PURPOSE OF EXECUTION OF THE WORK UNDERTAKEN BY THE APPELLANT AND FREIGHT CHARGES WERE PAYABLE TO ITS OPERATOR/OWNER UPON EXECUTION OF THE WORK, I.E., TRANSPORTATION OF THE GOO DS, ALL THE ESSENTIALS OF MAKING OF A CONTRACT EXISTED; AND, AS AFORESAID, THE SAID TRUCK OPERATOR/OWNER BECAME A SUB - CONTRACTOR FOR THE PURPOSE OF THE WORK IN QUESTION. THE AO, CIT(A) AND THE ITAT HAVE CONCURRENTLY DECIDED THIS ISSUE AGAINST THE APPELLANT WITH REFERENCE TO THE FACTS OF THE CASE, PARTICULARLY AFTER APPRECIATING THE NATURE OF CONTRACT OF THE APPELLANT WITH THE CONSIGNOR COMPANY AS ALSO THE NATURE OF DEALING OF THE APPELLANT, WHILE HOLDING THAT THE TRUCK OPERATORS/OWNERS WERE ENGAGED BY THE A PPELLANT AS SUB - CONTRACTORS. THE SAME FINDINGS HAVE BEEN ENDORSED BY THE HIGH COURT IN ITS SHORT ORDER DISMISSING THE APPEAL OF THE APPELLANT. WE ARE UNABLE TO FIND ANYTHING OF ERROR OR INFIRMITY IN THESE FINDINGS. 15.3 THE DECISION OF DELHI HIGH COURT IN THE CASE OF HARDARSHAN SINGH ( SUPRA ), IN OUR VIEW, HAS NO APPLICATION WHATSOEVER TO THE FACTS OF THE PRESENT CASE. THE ASSESSEE THEREIN, WHO WAS IN THE BUSINESS OF TRANSPORTING GOODS, HAD FOUR TRUCKS OF HIS OWN AND WAS ALSO ACTING AS A COMMISSION AGENT BY ARRANGING FOR TRANSPORTATION THROUGH OTHER TRANSPORTERS. AS REGARDS THE INCOME OF ASSESSEE RELATABLE TO TRANSPORTATION THROUGH OTHER TRANSPORTERS, IT WAS FOUND THAT THE ASSESSEE HAD MERELY ACTED AS A FACILITATOR OR AS AN INTERMEDIARY BETWEEN THE TWO PARTIE S ( I.E., THE CONSIGNOR COMPANY AND THE TRANSPORTER) AND HAD NO PRIVITY OF CONTRACT WITH EITHER OF SUCH PARTIES ITA NO. 467 /CTK/201 7 17 INASMUCH AS HE ONLY COLLECTED FREIGHT CHARGES FROM THE CLIENTS WHO INTENDED TO TRANSPORT THEIR GOODS THROUGH OTHER TRANSPORTERS; AND THE AMOUNT T HUS COLLECTED FROM THE CLIENTS WAS PAID TO THOSE TRANSPORTERS BY THE ASSESSEE WHILE DEDUCTING HIS COMMISSION. LOOKING TO THE NATURE OF SUCH DEALINGS, THE SAID ASSESSEE WAS HELD TO BE 'NOT THE PERSON RESPONSIBLE' FOR MAKING PAYMENTS IN TERMS OF SECTION 194C OF THE ACT AND HENCE, HAVING NO OBLIGATION TO DEDUCT TAX AT SOURCE. IN CONTRADISTINCTION TO THE SAID CASE OF HARDARSHAN SINGH, THE APPELLANT OF THE PRESENT CASE WAS NOT ACTING AS A FACILITATOR OR INTERMEDIARY BETWEEN THE CONSIGNOR COMPANY AND THE TRUCK OP ERATORS/OWNERS BECAUSE THOSE TWO PARTIES HAD NO PRIVITY OF CONTRACT BETWEEN THEM. THE CONTRACT OF THE COMPANY, FOR TRANSPORTATION OF ITS GOODS, HAD ONLY BEEN WITH THE APPELLANT AND IT WAS THE APPELLANT WHO HIRED THE SERVICES OF THE TRUCKS. THE PAYMENT MADE BY THE APPELLANT TO SUCH A TRUCK OPERATOR/OWNER WAS CLEARLY A PAYMENT MADE TO A SUB - CONTRACTOR. 15.4 THOUGH THE DECISION OF THIS COURT IN THE CASE OF PALAM GAS SERVICE ( SUPRA ) ESSENTIALLY RELATES TO THE INTERPRETATION OF SECTION 40( A )(IA) OF THE ACT AND W HILE THE RELEVANT ASPECTS CONCERNING THE SAID PROVISION SHALL BE EXAMINED IN THE NEXT QUESTION BUT, FOR THE PRESENT PURPOSE, THE FACTS OF THAT CASE COULD BE USEFULLY NOTICED, FOR BEING AKIN TO THE FACTS OF THE PRESENT CASE AND BEING OF APPOSITE ILLUSTRATIO N. THEREIN, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF LPG CYLINDERS WHOSE MAIN CONTRACT FOR CARRIAGE OF LPG CYLINDERS WAS WITH INDIAN OIL CORPORATION, BADDI WHEREFOR, THE ASSESSEE RECEIVED FREIGHT PAYMENTS FROM THE PRINCIPAL. THE ASS ESSEE GOT THE TRANSPORTATION OF LPG DONE THROUGH THREE PERSONS TO WHOM HE MADE THE FREIGHT PAYMENTS. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD ENTERED INTO A SUB - CONTRACT WITH THE SAID THREE PERSONS WITHIN THE MEANING OF SECTION 194C OF THE ACT. SUC H FINDINGS OF AO WERE CONCURRENTLY UPHELD UP TO THE HIGH COURT AND, AFTER INTERPRETATION OF SECTION 40( A )(IA), THIS COURT ALSO APPROVED THE DECISION OF THE HIGH COURT WHILE DISMISSING THE APPEAL WITH COSTS. LEARNED COUNSEL FOR THE APPELLANT HAS MADE AN ATT EMPT TO DISTINGUISH THE NATURE OF CONTRACT IN PALAM GAS SERVICE BY SUGGESTING THAT THEREIN, THE ASSESSEE'S SUB - CONTRACTORS WERE SPECIFIC AND IDENTIFIED PERSONS WITH WHOM THE ASSESSEE HAD ENTERED INTO CONTRACT WHEREAS THE PRESENT APPELLANT WAS FREE TO HIRE THE SERVICE OF ANY TRUCK OPERATOR/OWNER AND, IN FACT, THE APPELLANT HIRED THE TRUCKS ONLY ON NEED BASIS. IN OUR VIEW, SUCH AN ATTEMPT OF DIFFERENTIATION IS TOTALLY BASELESS AND FUTILE. WHETHER THE APPELLANT HAD SPECIFIC AND IDENTIFIED TRUCKS ON ITS ROLLS O R HAD BEEN PICKING THEM UP ON FREELANCE BASIS, THE LEGAL EFFECT ON THE STATUS OF PARTIES HAD BEEN THE SAME THAT ONCE A PARTICULAR TRUCK WAS ENGAGED BY THE APPELLANT ON HIRE CHARGES FOR CARRYING OUT THE PART OF WORK UNDERTAKEN BY IT ( I.E., TRANSPORTATION OF THE GOODS OF THE COMPANY), THE OPERATOR/OWNER OF THAT TRUCK BECAME THE SUB - CONTRACTOR AND ALL THE REQUIREMENTS OF SECTION 194C CAME INTO OPERATION. 15.5 THUS, WE HAVE NO HESITATION IN AFFIRMING THE CONCURRENT FINDINGS IN REGARD TO THE APPLICABILITY OF SEC TION 194C TO THE PRESENT CASE. QUESTION NO. 1 IS, THEREFORE, ANSWERED IN THE NEGATIVE; AGAINST THE ASSESSEE - APPELLANT AND IN FAVOUR OF THE REVENUE. ITA NO. 467 /CTK/201 7 18 QUESTION NO. 2. 16. WHILE TAKING UP THE QUESTION OF INTERPRETATION OF SECTION 40( A )(IA), IT MAY BE USEFULLY NOTICED THAT SECTION 194C IS PLACED IN CHAPTER XVII OF THE ACT ON THE SUBJECT 'COLLECTION AND RECOVERY OF TAX'; AND SPECIFIC PROVISIONS ARE MADE IN THE ACT TO ENSURE THAT THE REQUIREMENTS OF SECTION 194C ARE MET AND COMPLIED WITH, WHILE ALSO PROVIDING FOR THE CONSEQUENCES OF DEFAULT. AS NOTICED, SECTION 200 SPECIFICALLY PROVIDES FOR THE DUTIES OF THE PERSON DEDUCTING TAX TO DEPOSIT AND SUBMIT THE STATEMENT TO THAT EFFECT. THE CONSEQUENCES OF FAILURE TO DEDUCT OR PAY THE TAX ARE THEN PROVIDED IN SECTION 201 OF THE ACT WHICH, AS NOTICED, PUTS SUCH DEFAULTING PERSON IN THE CATEGORY OF 'THE ASSESSEE IN DEFAULT IN RESPECT OF THE TAX' APART FROM OTHER CONSEQUENCES WHICH HE OR IT MAY INCUR. THE ASPECT RELEVANT FOR THE PRESENT PURPOSE IS THAT SECTION 40 OF THE ACT, AND PARTICULARLY THE PROVISION CONTAINED IN SUB - CLAUSE (IA) OF CLAUSE ( A ) THEREOF, INDEED PROVIDES FOR ONE OF SUCH CONSEQUENCES. 16.1 SECTION 40( A )(IA) PROVIDES FOR THE CONSEQUENCES OF DEFAULT IN THE CASE WHERE TAX IS DEDUCTIBLE AT SOURCE ON ANY INTEREST, COMMISSION, BROKERAGE OR FEES BUT HAD NOT BEEN SO DEDUCTED, OR HAD NOT BEEN PAID AFTER DEDUCTION (DURING THE PREVIOUS YEAR OR IN THE SUBSEQUENT YEAR BEFORE EXPIRY OF THE PRESCRIBED TIME) IN THE MANNER THAT THE AMOUNT OF SUCH INTEREST, COMMISSION, BROKERAGE OR FEES SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'. IN OTHER WORDS, IT SHALL BE COMPUTED AS INCOME OF THE ASSESSEE BECAUSE OF HIS DEFAULT IN NOT DEDUCTING THE TAX AT SOURCE. 16.2 IN THE OVE RALL SCHEME OF THE PROVISIONS RELATING TO COLLECTION AND RECOVERY OF TAX, IT IS EVIDENT THAT THE OBJECT OF LEGISLATURE IN INTRODUCTION OF THE PROVISIONS LIKE SUB - CLAUSE (IA) OF CLAUSE ( A ) OF SECTION 40 HAD BEEN TO ENSURE STRICT AND PUNCTUAL COMPLIANCE OF T HE REQUIREMENT OF DEDUCTING TAX AT SOURCE. IN OTHER WORDS, THE CONSEQUENCES, AS PROVIDED THEREIN, HAD THE UNDERLYING OBJECTIVE OF ENSURING COMPLIANCE OF THE REQUIREMENTS OF TDS. IT IS ALSO NOTEWORTHY THAT IN THE PROVISO ADDED TO CLAUSE (IA) OF SECTION 40( A ) OF THE ACT, IT WAS PROVIDED THAT WHERE IN RESPECT OF THE SUM REFERABLE TO TDS REQUIREMENT, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID IN ANY SUBSEQUENT YEAR AFTER THE EXPIRY OF THE TIME PRESCRIBED IN SECTION 200(1), SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. 16.3 THE PURPOSE AND COVERAGE OF THIS PROVISION AS ALSO PROTECTION THEREIN HAVE BEEN TERSELY EXPLAINED BY THIS COURT IN THE CASE OF CALCUTTA EXPORT COMPANY ( SUPRA ), WHICH HAS BEEN CITED BY LEARNED COUNSEL FOR THE APPELLANT IN SUPPORT OF ANOTHER LIMB OF SUBMISSIONS WHICH WE SHALL BE DEALING WITH IN THE NEXT QUESTION. FOR THE PRESENT PURPOSE, WE MAY NOTICE THE RELEVANT OBS ERVATIONS OF THIS COURT IN CALCUTTA EXPORT COMPANY AS REGARDS SECTION 40( A )(IA) OF THE ACT AS FOLLOWS (AT P. 662 OF ITR): - '16. THE PURPOSE IS VERY MUCH CLEAR FROM THE ABOVE REFERRED EXPLANATION BY THE MEMORANDUM THAT IT CAME WITH A PURPOSE TO ITA NO. 467 /CTK/201 7 19 ENSURE TAX C OMPLIANCE. 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) OF THE INCOME - TAX ACT. IT ONLY RESULTS IN SHIFTING OF THE YEAR IN WHICH THE EXPENDITURE CAN BE 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. HO WEVER, 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 MA DE TO THE GOVERNMENT.' 16.4 TAKING UP THE QUESTION AS TO WHETHER DISALLOWANCE UNDER SECTION 40( A )(IA) OF THE ACT IS CONFINED TO THE AMOUNT 'PAYABLE' AND NOT TO THE AMOUNT 'ALREADY PAID', WE FIND THAT THESE ASPECTS OF INTERPRETATION DO NOT REQUIRE MUCH DILA TION IN VIEW OF THE RATIO OF THE DECISION OF THIS COURT IN THE CASE OF PALAM GAS SERVICE ( SUPRA ). 16.5 IN FACT, THE DECISION IN PALAM GAS SERVICE ( SUPRA ) IS A DIRECT ANSWER TO ALL THE CONTENTIONS URGED ON BEHALF OF THE APPELLANT IN THE PRESENT CASE. IN THA T CASE, THIS COURT APPROVED THE VIEWS OF PUNJAB AND HARYANA HIGH COURT IN THE CASE OF P.M.S. DIESELS AND ORS . V. COMMISSIONER OF INCOME - TAX : (2015) 374 ITR 562 AS REGARDS MANDATORY NATURE OF THE PROVISIONS RELATING TO THE LIABILITY TO DEDUCT TAX AT SOURCE IN THE FOLLOWING WORDS (AT PP. 306 - 308 OF ITR): - '11. THE PUNJAB & HARYANA HIGH COURT IN P.M.S. DIESELS V. CIT [2015] 374 ITR 562 (P&H), HAS HELD THESE PROVISIONS TO BE MANDATORY IN NATURE WITH THE FOLLOWING OBSERVATIONS: 'THE LIABILITY TO DEDUCT TAX AT SO URCE UNDER THE PROVISIONS OF CHAPTER XVII IS MANDATORY. A PERSON RESPONSIBLE FOR PAYING ANY SUM IS ALSO LIABLE TO DEPOSIT THE AMOUNT IN THE GOVERNMENT ACCOUNT. ALL THE SECTIONS IN CHAPTER XVII - B REQUIRE A PERSON TO DEDUCT THE TAX AT SOURCE AT THE RATES SPE CIFIED THEREIN. THE REQUIREMENT IN EACH OF THE SECTIONS IS PRECEDED BY THE WORD 'SHALL'. THE PROVISIONS ARE, THEREFORE, MANDATORY. THERE IS NOTHING IN ANY OF THE SECTIONS THAT WOULD WARRANT OUR READING THE WORD 'SHALL' AS 'MAY'. THE POINT OF TIME AT WHICH THE DEDUCTION IS TO BE MADE ALSO ESTABLISHES THAT THE PROVISIONS ARE MANDATORY. FOR INSTANCE, UNDER SECTION 194C, A PERSON RESPONSIBLE FOR PAYING THE SUM IS REQUIRED TO DEDUCT THE TAX 'AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR A T THE TIME OF THE PAYMENT THEREOF. . '' 12. WHILE HOLDING THE AFORESAID VIEW, THE PUNJAB AND HARYANA HIGH COURT DISCUSSED THE JUDGMENTS OF THE CALCUTTA AND MADRAS HIGH COURTS, WHICH HAD TAKEN THE SAME VIEW, AND CONCURRED WITH THE SAME, WHICH IS CLEAR FROM THE FOLLOWING DISCUSSION CONTAINED IN THE JUDGMENT OF THE PUNJAB AND HARYANA HIGH COURT: 'A DIVISION BENCH OF THE CALCUTTA HIGH COURT IN CIT V. CRESCENT EXPORT SYNDICATE [2013] 216 TAXMAN 258 (CAL) HELD : ITA NO. 467 /CTK/201 7 20 '13. 'THE TERM 'SHALL' USED IN ALL THESE SECTIONS MAKE IT CLEAR THAT THESE ARE MANDATORY PROVISIONS AND APPLICABLE TO THE ENTIRE SUM CONTEMPLATED UNDER THE RESPECTIVE SECTIONS. THESE SECTIONS DO NOT GIVE ANY LEVERAGE TO THE ASSESSEE TO MAKE THE PAYMENT WITHOUT MAKING TDS. ON THE CONTRARY, THE INTENTION O F THE LEGISLATURE IS EVIDENT FROM THE FACT THAT TIMING OF DEDUCTION OF TAX IS EARLIEST POSSIBLE OPPORTUNITY TO RECOVER TAX, EITHER AT THE TIME OF CREDIT IN THE ACCOUNT OF PAYEE OR AT THE TIME OF PAYMENT TO PAYEE, WHICHEVER IS EARLIER.' MS. DHUGGA INVITED O UR ATTENTION TO A JUDGMENT OF THE DIVISION BENCH OF THE MADRAS HIGH COURT IN TUBE INVESTMENTS OF INDIA LTD . V. ASST. CIT (TDS) [2010] 325 ITR 610 (MAD). THE DIVISION BENCH REFERRED TO THE STATISTICS PLACED BEFORE IT BY THE DEPARTMENT WHICH DISCLOSED THAT T DS COLLECTION HAD AUGMENTED THE REVENUE. THE GROSS COLLECTION OF ADVANCE TAX, SURCHARGE, ETC. WAS RS. 2,75,857.70 CRORES IN THE FINANCIAL YEAR 2008 - 09 OF WHICH THE TDS COMPONENT ALONE CONSTITUTED RS. 1,30,470.80 CRORES. THE DIVISION BENCH OBSERVED THAT INT RODUCTION OF SECTION 40( A )(IA) HAD ACHIEVED THE OBJECTIVE OF AUGMENTING THE TDS TO A SUBSTANTIAL EXTENT. THE DIVISION BENCH ALSO OBSERVED THAT WHEN THE PROVISIONS AND PROCEDURES RELATING TO TDS ARE SCRUPULOUSLY APPLIED, IT ALSO ENSURED THE IDENTIFICATION O F THE PAYEES THEREBY CONFIRMING THE NETWORK OF ASSESSEES AND THAT ONCE THE ASSESSEES ARE IDENTIFIED IT WOULD ENABLE THE TAX COLLECTION MACHINERY TO BRING WITHIN ITS FOLD ALL SUCH PERSONS WHO ARE LIABLE TO COME WITHIN THE NETWORK OF TAXPAYERS. THESE OBJECTS ALSO INDICATE THE LEGISLATIVE INTENT THAT THE REQUIREMENT OF DEDUCTING TAX AT SOURCE IS MANDATORY. THE LIABILITY TO DEDUCT TAX AT SOURCE IS, THEREFORE, MANDATORY.' 13. THE AFORESAID INTERPRETATION OF SECTIONS 194C CONJOINTLY WITH SECTION 200 AND RULE 30(2 ) IS UNBLEMISHED AND WITHOUT ANY IOTA OF DOUBT. WE, THUS, GIVE OUR IMPRIMATUR TO THE VIEW TAKEN...' (EMPHASIS IN BOLD SUPPLIED) 16.5.1 HAVING SAID THAT DEDUCTING TAX AT SOURCE IS OBLIGATORY, THIS COURT PROCEEDED TO DEAL WITH THE ISSUE AS TO WHETHER THE WO RD 'PAYABLE' IN SECTION 40( A )(IA) WOULD COVER ONLY THOSE CASES WHERE THE AMOUNT IS PAYABLE AND NOT WHERE IT HAS ACTUALLY BEEN PAID. THIS COURT TOOK NOTE OF THE EXHAUSTIVE INTERPRETATION OF VARIOUS ASPECTS RELATED WITH THIS ISSUE BY THE PUNJAB AND HARYANA H IGH COURT IN THE CASE OF P.M.S. DIESELS ( SUPRA ) AS ALSO BY THE CALCUTTA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX, KOLKATA - XI V. CRESCENT EXPORT SYNDICATE : (2013) 216 TAXMAN 258; AND WHILE APPROVING THE SAME, THIS COURT HELD, AS REGARDS IMPLICAT ION AND CONNOTATION OF THE EXPRESSION 'PAYABLE' USED IN THIS PROVISION, AS FOLLOWS (AT P. 310 OF ITR): - '15. WE APPROVE THE AFORESAID VIEW AS WELL. AS A FORTIORI, IT FOLLOWS THAT SECTION 40( A )(IA) COVERS NOT ONLY THOSE CASES WHERE THE AMOUNT IS PAYABLE BUT ALSO WHEN IT IS PAID. IN THIS BEHALF, ONE HAS TO KEEP IN ITA NO. 467 /CTK/201 7 21 MIND THE PURPOSE WITH WHICH SECTION 40 WAS ENACTED AND THAT HAS ALREADY BEEN NOTED ABOVE. WE HAVE ALSO TO KEEP IN MIND THE PROVISIONS OF SECTIONS 194C AND 200. ONCE IT IS FOUND THAT THE AFORESAID SE CTIONS MANDATE A PERSON TO DEDUCT TAX AT SOURCE NOT ONLY ON THE AMOUNTS PAYABLE BUT ALSO WHEN THE SUMS ARE ACTUALLY PAID TO THE CONTRACTOR, ANY PERSON WHO DOES NOT ADHERE TO THIS STATUTORY OBLIGATION HAS TO SUFFER THE CONSEQUENCES WHICH ARE STIPULATED IN T HE ACT ITSELF. CERTAIN CONSEQUENCES OF FAILURE TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE, WHERE TAX WAS TO BE DEDUCTED AT SOURCE OR FAILURE TO PAY THE SAME TO THE CREDIT OF THE CENTRAL GOVERNMENT, ARE STIPULATED IN SECTION 201 OF THE ACT. THIS SECTION PROVIDES THAT IN THAT CONTINGENCY, SUCH A PERSON WOULD BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX. WHILE STIPULATING THIS CONSEQUENCE, SECTION 201 CATEGORICALLY STATES THAT THE AFORESAID SECTIONS WOULD BE WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH THAT DEFAULTER MAY INCUR. OTHER CONSEQUENCES ARE PROVIDED UNDER SECTION 40( A )(IA) OF THE ACT, NAMELY, PAYMENTS MADE BY SUCH A PERSON TO A CONTRACTOR SHALL NOT BE TREATED AS DEDUCTIBLE EXPENDITURE. WHEN READ IN THIS CONTEXT, IT IS CLEAR T HAT SECTION 40( A )(IA) DEALS WITH THE NATURE OF DEFAULT AND THE CONSEQUENCES THEREOF. DEFAULT IS RELATABLE TO CHAPTER XVII - B (IN THE INSTANT CASE SECTIONS 194C AND 200, WHICH PROVISIONS ARE IN THE AFORESAID CHAPTER). WHEN THE ENTIRE SCHEME OF OBLIGATION TO DEDUCT THE TAX AT SOURCE AND PAYING IT OVER TO THE CENTRAL GOVERNMENT IS READ HOLISTICALLY, IT CANNOT BE HELD THAT THE WORD 'PAYABLE' OCCURRING IN SECTION 40( A )(IA) REFERS TO ONLY THOSE CASES WHERE THE AMOUNT IS YET TO BE PAID AND DOES NOT COVER THE CASES WHERE THE AMOUNT IS ACTUALLY PAID. IF THE PROVISION IS INTERPRETED IN THE MANNER SUGGESTED BY THE APPELLANT HEREIN, THEN EVEN WHEN IT IS FOUND THAT A PERSON, LIKE THE APPELLANT, HAS VIOLATED THE PROVISIONS OF CHAPTER XVII - B (OR SPECIFICALLY SECTIONS 194C A ND 200 IN THE INSTANT CASE), HE WOULD STILL GO SCOT - FREE, WITHOUT SUFFERING THE CONSEQUENCES OF SUCH MONETARY DEFAULT IN SPITE OF SPECIFIC PROVISIONS LAYING DOWN THESE CONSEQUENCES...' (EMPHASIS IN BOLD SUPPLIED) 16.6 WE MAY PROFITABLY OBSERVE THAT IN THE CASE OF P.M.S. DIESELS ( SUPRA ), THE PUNJAB AND HARYANA HIGH COURT HAD EXTENSIVELY DEALT WITH MYRIAD FEATURES OF SECTION 40( A )(IA) OF THE ACT, INCLUDING THE TERM 'PAYABLE' USED THEREIN AS ALSO THE PROVISO THERETO; AND EXPOUNDED ON THE ENTIRE GAMUT OF THIS PROVISION WHILE MAKING REFERENCE TO FINANCE (NO. 2) BILL OF 2004 INTRODUCING THE PROVISION AND WHILE ALSO DRAWING SUPPORT FROM THE VIEWS EXPRESSED BY CALCUTTA HIGH COURT IN THE CASE OF CRESCENT EXPORT SYNDICATE ( SUPRA ). AS REGARDS THE INTERPRETATION OF THE TERM 'PAYABLE', IT WAS OBSERVED IN P.M.S. DIESELS AS UNDER (AT PP. 574 - 575 OF ITR): - '21. SECTION 40( A )(IA), THEREFORE, APPLIES NOT MERELY TO ASSESSEES FOLLOWING THE MERCANTILE SYSTEM BUT ALSO TO ASSESSEES FOLLOWING THE CASH SYSTEM. ITA NO. 467 /CTK/201 7 22 IF THIS VIEW IS CORREC T AND INDEED WE MUST PROCEED ON THE FOOTING THAT IT IS, IT GOES A LONG WAY IN INDICATING THE FALLACY IN THE APPELLANT'S MAIN CONTENTION, NAMELY, IF THE PAYMENTS HAVE ALREADY BEEN MADE BY THE ASSESSEE TO THE PAYEE/CONTRACTING PARTY, THE PROVISIONS OF SECTIO N 40( A )(IA) WOULD NOT BE ATTRACTED EVEN IF THE TAX IS NOT DEDUCTED AND/OR PAID OVER TO THE GOVERNMENT ACCOUNT. 22. SECTION 40( A )(IA) REFERS TO THE NATURE OF THE DEFAULT AND THE CONSEQUENCE OF THE DEFAULT. THE DEFAULT IS A FAILURE TO DEDUCT THE TAX AT SOURC E UNDER CHAPTER XVII - B OR AFTER DEDUCTION THE FAILURE TO PAY OVER THE SAME TO THE GOVERNMENT ACCOUNT. THE TERM 'PAYABLE' ONLY INDICATES THE TYPE OR NATURE OF THE PAYMENTS BY THE ASSESSEES TO THE PERSONS/PAYEES REFERRED TO IN SECTION 40( A )(IA), SUCH AS, CON TRACTORS. IT IS NOT IN RESPECT OF EVERY PAYMENT TO A PAYEE REFERRED TO IN CHAPTER XVII - B THAT AN ASSESSEE IS BOUND TO DEDUCT TAX. THERE MAY BE PAYMENTS TO PERSONS REFERRED TO IN CHAPTER XVII - B, WHICH DO NOT ATTRACT THE PROVISIONS OF CHAPTER XVII - B. THE CON SEQUENCES UNDER SECTION 40( A )(IA) WOULD ONLY OPERATE ON ACCOUNT OF FAILURE TO DEDUCT TAX WHERE THE TAX IS LIABLE TO BE DEDUCTED UNDER THE PROVISIONS OF THE ACT AND IN PARTICULAR CHAPTER XVII - B THEREOF. IT IS IN THAT SENSE THAT THE TERM 'PAYABLE' HAS BEEN U SED. THE TERM 'PAYABLE' IS DESCRIPTIVE OF THE PAYMENTS WHICH ATTRACT THE LIABILITY TO DEDUCT TAX AT SOURCE. IT DOES NOT CATEGORIZE DEFAULTS ON THE BASIS OF WHEN THE PAYMENTS ARE MADE TO THE PAYEES OF SUCH AMOUNTS WHICH ATTRACT THE LIABILITY TO DEDUCT TAX A T SOURCE.' (EMPHASIS IN BOLD SUPPLIED) 16.7 WE FIND THE ABOVE - EXTRACTED OBSERVATIONS AND REASONINGS, WHICH HAVE ALREADY BEEN APPROVED BY THIS COURT IN PALAM GAS SERVICE ( SUPRA ), TO BE PRECISELY IN ACCORD WITH THE SCHEME AND PURPOSE OF SECTION 40( A )(IA) OF THE ACT; AND ARE IN COMPLETE ANSWER TO THE CONTENTIONS URGED BY THE LEARNED COUNSEL FOR THE APPELLANT. IT IS EX FACIE EVIDENT THAT THE TERM 'PAYABLE' HAS BEEN USED IN SECTION 40( A )(IA) OF THE ACT ONLY TO INDICATE THE TYPE OR NATURE OF THE PAYMENTS BY THE A SSESSEES TO THE PAYEES REFERRED THEREIN. IN OTHER WORDS, THE EXPRESSION 'PAYABLE' IS DESCRIPTIVE OF THE PAYMENTS WHICH ATTRACT THE LIABILITY FOR DEDUCTING TAX AT SOURCE AND IT HAS NOT BEEN USED IN THE PROVISION IN QUESTION TO SPECIFY ANY PARTICULAR CLASS O F DEFAULT ON THE BASIS AS TO WHETHER PAYMENT HAS BEEN MADE OR NOT. THE SEMANTICAL SUGGESTION BY THE LEARNED COUNSEL FOR THE APPELLANT, THAT THIS EXPRESSION 'PAYABLE' BE READ IN CONTRADISTINCTION TO THE EXPRESSION 'PAID', SANS MERIT AND COULD ONLY BE REJECT ED. IN A NUTSHELL, WHILE RESPECTFULLY FOLLOWING PALAM GAS SERVICE ( SUPRA ), WE COULD ONLY ITERATE OUR APPROVAL TO THE INTERPRETATION BY THE PUNJAB AND HARYANA HIGH COURT IN P.M.S. DIESELS ( SUPRA ). 16.8 FACED WITH THE POSITION THAT DECLARATION OF LAW IN PALA M GAS SERVICE ( SUPRA ) PRACTICALLY COVERS THIS MATTER, LEARNED COUNSEL FOR THE APPELLANT HAS ENDEAVOURED TO SUBMIT THAT THE DECISION IN PALAM GAS SERVICE, REQUIRES RECONSIDERATION FOR THE REASON THAT CERTAIN ASPECTS OF LAW HAVE NOT BEEN CONSIDERED THEREIN A ND CORRECT PRINCIPLES OF INTERPRETATION HAVE NOT BEEN APPLIED. WE ARE UNABLE TO FIND SUBSTANCE IN ANY OF THESE CONTENTIONS. THE DECISION OF CO - ORDINATE BENCH IN PALAM ITA NO. 467 /CTK/201 7 23 GAS SERVICE ( SUPRA ) ON THE CORE QUESTION OF LAW IS EQUALLY BINDING ON THIS BENCH AND COUL D BE DOUBTED ONLY IF THE VIEW, AS TAKEN, IS SHOWN TO BE NOT IN CONFORMITY WITH ANY BINDING DECISION OF THE LARGER BENCH OR ANY STATUTORY PROVISIONS OR ANY OTHER REASON OF THE LIKE NATURE. WE FIND NONE. IN FACT, A CLOSE LOOK AT THE DECISION OF P.M.S. DIESEL S ( SUPRA ), WHICH HAS BEEN TOTALLY APPROVED BY THIS COURT IN PALAM GAS SERVICE, MAKES IT CLEAR THAT THEREIN, EVERY ASPECT OF THE MATTER, FROM A WIDE RANGE OF ANGLES, WAS EXAMINED BY THE PUNJAB AND HARYANA HIGH COURT WHILE DRAWING SUPPORT FROM THE DECISIONS OF OTHER HIGH COURTS, PARTICULARLY THAT OF THE CALCUTTA HIGH COURT IN THE CASE OF CRESCENT EXPORT SYNDICATE ( SUPRA ). 16.9 WE ARE IN RESPECTFUL AGREEMENT WITH THE OBSERVATIONS IN PALAM GAS SERVICE THAT THE ENUNCIATIONS IN P.M.S. DIESELS HAD BEEN OF CORRECT INTERPRETATION OF THE PROVISIONS CONTAINED IN SECTION 40( A )(IA) OF THE ACT. THE DECISION IN PALAM GAS SERVICE COVERS THE ENTIRE MATTER AND THE SAID DECISION, IN OUR VIEW, DOES NOT REQUIRE ANY RECONSIDERATION. THAT BEING THE POSITION, THE CONTENTION URGED O N BEHALF OF THE APPELLANT THAT DISALLOWANCE UNDER SECTION 40( A )(IA) DOES NOT RELATE TO THE AMOUNT ALREADY PAID STANDS REJECTED. 16.10 ANOTHER CONTENTION IN REGARD TO SECTION 40( A )(IA) OF THE ACT, THAT ITS SCOPE CANNOT BE DECIDED ON THE BASIS OF SECTION 194 C, HAS ONLY BEEN NOTED TO BE REJECTED. THE INTERPLAY OF THESE PROVISIONS IS NOT FAR TO SEEK WHERE SECTION 40( A )(IA) IS NOT A STAND - ALONE PROVISION BUT PROVIDES ONE OF THOSE ADDITIONAL CONSEQUENCES AS INDICATED IN SECTION 201 OF THE ACT FOR DEFAULT BY A PER SON IN COMPLIANCE OF THE REQUIREMENTS OF THE PROVISIONS CONTAINED IN PART B OF CHAPTER XVII OF THE ACT. THE SCHEME OF THESE PROVISIONS MAKES IT CLEAR THAT THE DEFAULT IN COMPLIANCE OF THE REQUIREMENTS OF THE PROVISIONS CONTAINED IN PART B OF CHAPTER XVII O F THE ACT (THAT CARRIES SECTIONS 194C, 200 AND 201) LEADS, INTER ALIA , TO THE CONSEQUENCE OF SECTION 40( A )(IA) OF THE ACT. HENCE, THE CONTOURS OF SECTION 40( A )(IA) OF THE ACT COULD BE APTLY DEFINED ONLY WITH REFERENCE TO THE REQUIREMENTS OF THE PROVISIONS CONTAINED IN PART B OF CHAPTER XVII OF THE ACT, INCLUDING SECTIONS 194C, 200 AND 201. PUTTING IT DIFFERENTLY, WHEN THE OBLIGATION OF SECTION 194C OF THE ACT IS THE FOUNDATION OF THE CONSEQUENCE PROVIDED BY SECTION 40( A )(IA) OF THE ACT, REFERENCE TO THE FOR MER IS INEVITABLE IN INTERPRETATION OF THE LATTER. 16.11 IN VIEW OF THE ABOVE, REFERENCE TO THE DEFINITION OF THE TERM 'PAID' IN SECTION 43(2) OF THE ACT IS OF NO ASSISTANCE TO THE APPELLANT. SIMILARLY, THE OBSERVATIONS IN THE CASE OF J.K. SYNTHETICS ( SUPR A ), AS REGARDS THE DIFFERENCE IN CONNOTATION OF THE EXPRESSIONS 'PAYABLE' AND 'PAID', IN THE CONTEXT OF LIABILITY TO PAY INTEREST ON THE TAX PAYABLE UNDER THE RAJASTHAN SALES TAX ACT, 1954, HAS NO CO - RELATION WHATSOEVER TO THE PRESENT CASE. FURTHER, WHEN I T IS FOUND THAT THE PROCESS OF INTERPRETATION OF SECTION 40( A )(IA) OF THE ACT IN P.M.S. DIESELS ( SUPRA ), AS APPROVED BY THIS COURT IN PALAM GAS SERVICE ( SUPRA ), HAD BEEN WITH DUE APPLICATION OF THE RELEVANT PRINCIPLES, REFERENCE TO THE DECISION IN THE CASE OF INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA ( SUPRA ), ON THE GENERAL PRINCIPLES OF INTERPRETATION, DOES NOT ADVANCE THE CASE OF THE APPELLANT IN ANY MANNER. ITA NO. 467 /CTK/201 7 24 16.12 IN VIEW OF THE ABOVE, QUESTION NO. 2 IS ALSO ANSWERED IN THE NEGATIVE; AGAINST THE ASSESSE E - APPELLANT AND IN FAVOUR OF THE REVENUE. QUESTION NO. 3 17. QUITE CONSCIOUS OF THE POSITION THAT THE DECISION OF THIS COURT IN PALAM GAS SERVICE ( SUPRA ) PRACTICALLY COVERS THE SUBSTANCE OF PRESENT MATTER AGAINST THE ASSESSEE, LEARNED COUNSEL FOR THE ASSES SEE - APPELLANT HAS MADE A FEW ALTERNATIVE ATTEMPTS TO ARGUE AGAINST THE DISALLOWANCE IN QUESTION. 17.1 THE LEARNED COUNSEL WOULD SUBMIT THAT THE SAID SUB - CLAUSE (IA), HAVING BEEN INSERTED TO CLAUSE ( A ) OF SECTION 40 OF THE ACT WITH EFFECT FROM 1 - 4 - 2005 BY F INANCE (NO.2) ACT, 2004, WOULD APPLY ONLY FROM THE FINANCIAL YEAR 2005 - 2006 AND HENCE, CANNOT APPLY TO THE PRESENT CASE PERTAINING TO THE FINANCIAL YEAR 2004 - 2005. THE LEARNED COUNSEL, OF COURSE, DREW SUPPORT TO THIS CONTENTION FROM THE DECISION OF CALCUTT A HIGH COURT IN THE CASE OF PIU GHOSH ( SUPRA ). 17.1.1 BEFORE PROCEEDING FURTHER, IT APPEARS APPOSITE TO OBSERVE, AS INDICATED IN PARAGRAPH 7.3 HEREINBEFORE, THAT IN THE COPY OF ORDER PASSED BY ITAT IN THIS CASE, THERE IS OBVIOUS TYPOGRAPHICAL ERROR ON THE DATE OF COMING INTO FORCE OF THE AMENDMENT TO SECTION 40 OF THE ACT OF 1961 BY THE FINANCE (NO.2) ACT, 2004 INASMUCH AS THE SAID AMENDMENT WAS MADE APPLICABLE WITH EFFECT FROM 1 - 4 - 2005 AND NOT 1 - 4 - 2004, AS APPEARING THE COPY OF THE ORDER OF ITAT. HOWEVER, THIS ERROR IS NOT OF MATERIAL BEARING BECAUSE THE AMENDMENT IN QUESTION WAS APPLICABLE FROM AND FOR THE ASSESSMENT YEAR 2005 - 2006, FOR THE REASONS OCCURRING INFRA. 17.2 REVERTING TO THE CONTENTIONS URGED IN THIS CASE, THERE IS NO DOUBT THAT IN PIU GHOSH ( S UPRA ), THE CALCUTTA HIGH COURT, INDEED, TOOK THE VIEW WHICH THE LEARNED COUNSEL FOR THE APPELLANT HAS CANVASSED BEFORE US. THE CALCUTTA HIGH COURT OBSERVED THAT THE SAID FINANCE (NO.2) ACT, 2004 GOT PRESIDENTIAL ASSENT ON 10 - 9 - 2004 AND IT WAS PROVIDED THAT THE PROVISION IN QUESTION SHALL STAND INSERTED WITH EFFECT FROM 1 - 4 - 2005. ACCORDING TO THE CALCUTTA HIGH COURT, THE ASSESSEE COULD NOT HAVE FORESEEN PRIOR TO 10 - 9 - 2004 THAT ANY AMOUNT PAID TO A CONTRACTOR WITHOUT DEDUCTING TAX AT SOURCE WAS LIKELY TO BECO ME NOT DEDUCTIBLE IN COMPUTATION OF INCOME UNDER SECTION 40 AND THAT THE LEGISLATURE, BEING CONSCIOUS OF THE LIKELY PREDICAMENT, PROVIDED THAT THE PROVISION SHALL BECOME OPERATIVE FROM 1 - 4 - 2005. THE HIGH COURT FURTHER PROCEEDED TO OBSERVE THAT ANY OTHER IN TERPRETATION WOULD AMOUNT TO PUNISHING THE ASSESSEE FOR NO FAULT OF HIS. THE HIGH COURT FURTHER OBSERVED THAT SECTION 11 OF THE SAID FINANCE ACT, INSERTING SUB - CLAUSE (IA), DID NOT PROVIDE THAT THE SAME WAS TO BECOME EFFECTIVE FROM THE ASSESSMENT YEAR 2005 - 2006. WE MAY USEFULLY REPRODUCE THE OPINION OF THE CALCUTTA HIGH COURT IN THE CASE OF PIU GHOSH, AS UNDER (AT P. 326 OF ITR): - '9. ADMITTEDLY, THE FINANCE ACT, 2004 GOT PRESIDENTIAL ASSENT ON SEPTEMBER 10, 2004. THE ASSESSEE COULD NOT HAVE FORESEEN PRIOR TO SEPTEMBER 10, 2004 THAT ANY AMOUNT PAID TO A CONTRACTOR WITHOUT DEDUCTING TAX AT SOURCE WAS LIKELY TO BECOME NOT DEDUCTIBLE UNDER ITA NO. 467 /CTK/201 7 25 SECTION 40. IT IS DIFFICULT TO ASSUME THAT THE LEGISLATURE WAS NOT AWARE OR DID NOT FORESEE THE AFORESAID PREDICAMENT. THE LEGISLATURE THEREFORE PROVIDED THAT THE ACT SHALL BECOME OPERATIVE ON APRIL 1, 2005. ANY OTHER INTERPRETATION SHALL AMOUNT TO 'PUNISHING THE ASSESSEE FOR NO FAULT OF HIS' FOLLOWING THE JUDGMENT IN THE CASE OF HINDUSTAN ELECTRO GRAPHITES LTD . ( SUPRA ). 10. O N TOP OF THAT, SECTION 4 RELIED UPON BY MR. AGARWAL MERELY PROVIDES FOR AN ENACTMENT AS REGARDS RATE OF TAX TO BE CHARGED IN ANY PARTICULAR ASSESSMENT YEAR WHICH HAS NO APPLICATION TO THE CASE BEFORE US. SECTION 11 OF THE FINANCE (NO. 2) ACT, 2004 BY WHICH SUB - CLAUSE (IA) WAS ADDED TO SECTION 40( A ) OF THE INCOME - TAX ACT DOES NOT PROVIDE THAT THE SAME WAS TO BECOME EFFECTIVE FROM THE ASSESSMENT YEAR 2005 - 06. IT MERELY SAYS IT SHALL BECOME EFFECTIVE ON APRIL 1, 2005 WHICH FOR REASONS ALREADY DISCUSSED SHOULD MEAN TO REFER TO THE FINANCIAL YEAR. THERE IS, AS SUCH, NO SCOPE FOR ANY AMBIGUITY NOR IS THERE ANY SCOPE FOR CONFUSION...' 17.3 LEARNED COUNSEL FOR THE APPELLANT HAS SUBMITTED THAT THE REVENUE HAS ACCEPTED THE SAID DECISION AND HAS NOT FILED ANY APPEAL A GAINST THE SAME. IT APPEARS, HOWEVER, THAT THE AMOUNT OF DEDUCTION IN THE SAID CASE WAS ONLY A SUM OF RS. 4,30,386/ - AND OBVIOUSLY, THE NET TAX EFFECT IN THAT CASE, DECIDED ON 12 - 7 - 2016, WAS ON THE LOWER SIDE. IN ANY CASE, THE SAID DECISION CANNOT BE TREAT ED AS FINAL DECLARATION OF LAW ON THE SUBJECT MERELY BECAUSE THE SAME HAS NOT BEEN APPEALED AGAINST. HAVING EXAMINED THE LAW APPLICABLE, WITH RESPECT, WE FIND IT DIFFICULT TO APPROVE THE ABOVE - QUOTED OPINION OF THE CALCUTTA HIGH COURT, PARTICULARLY WHEN IT DOES NOT APPEAR STANDING IN CONFORMITY WITH THE SCHEME OF ASSESSMENT OF INCOME TAX UNDER THE ACT OF 1961 AND WHERE THE HIGH COURT SEEMS TO HAVE NOT NOTICED THE PROVISO TO CLAUSE (IA) OF SECTION 40( A ) OF THE ACT FORMING THE PART OF THE AMENDMENT IN QUESTIO N. 17.4 IT NEEDS HARDLY ANY DETAILED DISCUSSION THAT IN INCOME TAX MATTERS, THE LAW TO BE APPLIED IS THAT IN FORCE IN THE ASSESSMENT YEAR IN QUESTION, UNLESS STATED OTHERWISE BY EXPRESS INTENDMENT OR BY NECESSARY IMPLICATION. AS PER SECTION 4 OF THE ACT OF 1961, THE CHARGE OF INCOME TAX IS WITH REFERENCE TO ANY ASSESSMENT YEAR, AT SUCH RATE OR RATES AS PROVIDED IN ANY CENTRAL ENACTMENT FOR THE PURPOSE, IN RESPECT OF THE TOTAL INCOME OF THE PREVIOUS YEAR OF ANY PERSON. THE EXPRESSION 'PREVIOUS YEAR' IS DEFIN ED IN SECTION 3 OF THE ACT TO MEAN 'THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR'; AND THE EXPRESSION 'ASSESSMENT YEAR' IS DEFINED IN CLAUSE (9) OF SECTION 2 OF THE ACT TO MEAN 'THE PERIOD OF TWELVE MONTHS COMMENCING ON THE 1ST DAY OF APRIL EVERY YEAR'. 17.5 IN THE CASE OF COMMISSIONER OF INCOME - TAX, WEST BENGAL V. ISTHMIAN STEAMSHIP LINES : (1951) 20 ITR 572, A 3 - JUDGE BENCH OF THIS COURT EXPOSITED ON THE FUNDAMENTAL PRINCIPLE THAT 'IN INCOME - TAX MATTERS THE LAW TO BE APPLIED IS THE LAW IN F ORCE IN THE ASSESSMENT YEAR UNLESS OTHERWISE STATED OR IMPLIED.' THIS DECISION AND VARIOUS OTHER DECISIONS WERE CONSIDERED BY THE CONSTITUTION BENCH OF THIS COURT IN THE CASE OF KARIMTHARUVI TEA ESTATE LTD . V. STATE OF KERALA : (1966) 60 ITR ITA NO. 467 /CTK/201 7 26 262 AND THE PRI NCIPLES WERE LAID DOWN IN THE FOLLOWING TERMS (AT PP. 264 - 266 OF ITR): - 'NOW, IT IS WELL - SETTLED THAT THE INCOME - TAX ACT, AS IT STANDS AMENDED ON THE FIRST DAY OF APRIL OF ANY FINANCIAL YEAR MUST APPLY TO THE ASSESSMENTS OF THAT YEAR. ANY AMENDMENTS IN THE ACT WHICH COME INTO FORCE AFTER THE FIRST DAY OF APRIL OF A FINANCIAL YEAR, WOULD NOT APPLY TO THE ASSESSMENT FOR THAT YEAR, EVEN IF THE ASSESSMENT IS ACTUALLY MADE AFTER THE AMENDMENTS COME INTO FORCE. ** ** ** THE HIGH COURT HAS, HOWEVER RELIED UPON A DECISION OF THIS COURT IN COMMISSIONER OF INCOME - TAX V. ISTHMIAN STEAMSHIP LINES , WHERE IT WAS HELD AS FOLLOWS : 'IT WILL BE OBSERVED THAT WE ARE HERE CONCERNED WITH TWO DATUM LINES : (1) THE 1ST OF APRIL, 1940, WHEN THE ACT CAME INTO FORCE, AND (2) THE 1ST OF APRIL, 1939, WHICH IS THE DATE MENTIONED IN THE AMENDED PROVISO. THE FIRST QUESTION TO BE ANSWERED IS WHETHER THESE DATES ARE TO APPLY TO THE ACCOUNTING YEAR OR THE YEAR OF ASSESSMENT. THEY MUST BE HELD TO APPLY TO THE ASSESSMENT YEAR, BECAUSE IN IN COME - TAX MATTERS THE LAW TO BE APPLIED IS THE LAW IN FORCE IN THE ASSESSMENT YEAR UNLESS OTHERWISE STATED OR IMPLIED. THE FIRST DATUM LINE THEREFORE AFFECTED ONLY THE ASSESSMENT YEAR OF 1940 - 41, BECAUSE THE AMENDMENT DID NOT COME INTO FORCE TILL THE 1ST OF APRIL 1940. THAT MEANS THAT THE OLD LAW APPLIED TO EVERY ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR 1939 - 40.' THIS DECISION IS AUTHORITY FOR THE PROPOSITION THAT THOUGH THE SUBJECT OF THE CHARGE IS THE INCOME OF THE PREVIOUS YEAR, THE LAW TO BE APPLIED IS THAT IN FORCE IN THE ASSESSMENT YEAR, UNLESS OTHERWISE STATED OR IMPLIED. THE FACTS OF THE SAID DECISION ARE DIFFERENT AND DISTINGUISHABLE AND THE HIGH COURT WAS CLEARLY IN ERROR IN APPLYING THAT DECISION TO THE FACTS OF THE PRESENT CASE.' (E MPHASIS IN BOLD SUPPLIED) 17.6 WE NEED NOT MULTIPLY ON THE CASE LAW ON THE SUBJECT AS THE PRINCIPLES AFORESAID REMAIN SETTLED AND UNQUESTIONABLE. APPLYING THESE PRINCIPLES TO THE CASE AT HAND, WE ARE CLEARLY OF THE VIEW THAT THE PROVISION IN QUESTION, HAVI NG COME INTO EFFECT FROM 1 - 4 - 2005, WOULD APPLY FROM AND FOR THE ASSESSMENT YEAR 2005 - 2006 AND WOULD BE APPLICABLE FOR THE ASSESSMENT IN QUESTION. PUTTING IT DIFFERENTLY, THE LEGISLATURE CONSCIOUSLY MADE THE SAID SUB - CLAUSE (IA) OF SECTION 40( A ) OF THE ACT EFFECTIVE FROM 1 - 4 - 2005, MEANING THEREBY THAT THE SAME WAS TO BE APPLICABLE FROM AND FOR THE ASSESSMENT YEAR 2005 - 2006; AND NEITHER THERE HAD BEEN EXPRESS INTENDMENT NOR ANY IMPLICATION THAT IT WOULD APPLY ONLY FROM THE FINANCIAL YEAR 2005 - 2006. 17.7 THE O BSERVATIONS OF CALCUTTA HIGH COURT IN THE CASE OF PIU GHOSH ( SUPRA ) AS REGARDS THE LIKELY PREJUDICE TO AN ASSESSEE IN RELATION TO THE FINANCIAL YEAR 2004 - 2005, IN OUR VIEW, DO NOT RELATE TO ANY LEGAL GRIEVANCE OR LEGAL PREJUDICE. THE REQUIREMENT OF DEDUCTI NG TAX AT SOURCE WAS ALREADY EXISTING AS PER SECTION 194C OF THE ACT AND IT WAS THE ITA NO. 467 /CTK/201 7 27 BOUNDEN DUTY OF THE APPELLANT TO MAKE SUCH DEDUCTION OF TDS AND TO MAKE OVER THE SAME TO THE REVENUE. SECTION 201 WAS ALSO IN EXISTENCE WHICH MADE IT CLEAR THAT DEFAULT IN MAKING DEDUCTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT WOULD MAKE THE APPELLANT 'AN ASSESSEE IN DEFAULT'. THE APPELLANT CANNOT SUGGEST THAT EVEN IF THE OBLIGATION OF TDS ON THE PAYMENTS MADE BY HIM WAS EXISTING BY VIRTUE OF SECTION 194C(2), HE WOULD HAVE HONOURED SUCH AN OBLIGATION ONLY IF BEING AWARE OF THE DRASTIC CONSEQUENCE OF DEFAULT THAT SUCH PAYMENT SHALL NOT BE DEDUCTED FOR THE PURPOSE OF DRAWING UP THE ASSESSMENT. 17.7.1. APART FROM THE ABOVE, SIGNIFICANT IT IS TO NOTICE THAT BY THE AMENDMEN T IN QUESTION, CLAUSE (IA) WAS ADDED TO SECTION 40( A ) OF THE ACT WITH A PROVISO TO THE EFFECT THAT WHERE, IN RESPECT OF THE SUM REFERABLE TO TDS REQUIREMENT, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PA ID IN ANY SUBSEQUENT YEAR AFTER EXPIRY OF THE TIME PRESCRIBED IN SECTION 200(1), SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. THE PROVISO EFFECTIVELY TOOK CARE OF THE CASE OF ANY BON AFIDE ASSESSEE WHO WOULD EARNESTLY COMPLY WITH THE REQUIREMENT OF DEDUCTING THE TAX AT SOURCE. IT IS EVIDENT THAT THE SAID PROVISO HAS TOTALLY ESCAPED THE ATTENTION OF CALCUTTA HIGH COURT IN THE CASE OF PIU GHOSH ( SUPRA ). IN FACT, THE RELAXATION BY WAY OF THE PROVISO/S TO SECTION 40( A )(IA) OF THE ACT HAD FURTHER BEEN MODULATED BY WAY OF VARIOUS SUBSEQUENT AMENDMENTS TO FURTHER MITIGATE THE HARDSHIPS OF BONAFIDE ASSESSEES, AS NOTICED HEREAFTER LATER. SUFFICE IT TO OBSERVE FOR THE PRESENT PURPOSE THAT THE SAI D DECISION IN PIU GHOSH CANNOT BE REGARDED AS CORRECT ON LAW. 17.8 IN FACT, IF THE CONTENTION OF LEARNED COUNSEL FOR THE APPELLANT READ WITH THE PROPOSITION IN PIU GHOSH ( SUPRA ) IS ACCEPTED AND THE SAID SUB - CLAUSE (IA) OF SECTION 40( A ) OF THE ACT IS HELD A PPLICABLE ONLY FROM THE FINANCIAL YEAR 2005 - 2006, THE RESULT WOULD BE THAT THIS PROVISION WOULD APPLY ONLY FROM THE ASSESSMENT YEAR 2006 - 2007. SUCH A RESULT IS NEITHER ENVISAGED NOR COULD BE COUNTENANCED. HENCE, THE CONTENTION THAT SUB - CLAUSE (IA), OF CLAU SE ( A ) OF SECTION 40 OF THE ACT WOULD APPLY ONLY FROM THE FINANCIAL YEAR 2005 - 2006 AND CANNOT APPLY TO THE PRESENT CASE PERTAINING TO THE FINANCIAL YEAR 2004 - 2005 STANDS REJECTED. 18. THE SUPPLEMENTAL SUBMISSION THAT IN ANY CASE, DISALLOWANCE CANNOT BE APP LIED TO THE PAYMENTS ALREADY MADE PRIOR TO 10 - 9 - 2004, THE DATE ON WHICH THE FINANCE (NO.2) ACT, 2004 RECEIVED THE ASSENT OF THE PRESIDENT OF INDIA, REMAINS EQUALLY BASELESS. THE SAID DATE OF ASSENT OF THE PRESIDENT OF INDIA TO FINANCE (NO.2) ACT, 2004 IS N OT THE DATE OF APPLICABILITY OF THE PROVISION IN QUESTION, FOR THE SPECIFIC DATE HAVING BEEN PROVIDED AS 1 - 4 - 2005. OF COURSE, THE SAID DATE RELATES TO THE ASSESSMENT YEAR COMMENCING FROM 1 - 4 - 2005 ( I.E., ASSESSMENT YEAR 2005 - 2006). 18.1 EVEN IF IT BE ASSUME D, GOING BY THE SUGGESTIONS OF THE APPELLANT, THAT THE REQUIREMENTS OF SECTION 40( A )(IA) BECAME KNOWN ON 10 - 9 - 2004, THE APPELLANT COULD HAVE TAKEN ALL THE REQUISITE STEPS TO MAKE DEDUCTIONS OR, IN ANY CASE, TO MAKE PAYMENT OF THE TDS AMOUNT TO THE REVENUE DURING THE SAME FINANCIAL YEAR OR EVEN IN THE SUBSEQUENT YEAR, ITA NO. 467 /CTK/201 7 28 AS PER THE RELAXATION AVAILABLE IN THE PROVISO TO SECTION 40( A )(IA) OF THE ACT BUT, THE APPELLANT SIMPLY AVOIDED HIS OBLIGATION AND ATTEMPTED TO SUGGEST THAT IT HAD NO LIABILITY TO DEDUCT THE T AX AT SOURCE AT ALL. SUCH AN APPROACH OF THE APPELLANT, WHEN STANDING AT CONFLICT WITH LAW, THE CONSEQUENCE OF DISALLOWANCE UNDER SECTION 40( A )(IA) OF THE ACT REMAINS INEVITABLE. 19. IN YET ANOTHER ALTERNATIVE ATTEMPT, LEARNED COUNSEL FOR THE APPELLANT HAS ARGUED THAT BY WAY OF FINANCE (NO.2) ACT, 2014, DISALLOWANCE UNDER SECTION 40( A )(IA) HAS BEEN LTD. TO 30% OF THE SUM PAYABLE AND THE SAID AMENDMENT DESERVES TO BE HELD RETROSPECTIVE IN OPERATION. THIS LINE OF ARGUMENT HAS BEEN GRAFTED WITH REFERENCE TO TH E DECISION IN CALCUTTA EXPORT COMPANY ( SUPRA ) WHEREIN, ANOTHER AMENDMENT OF SECTION 40( A )(IA) BY THE FINANCE ACT OF 2010 WAS HELD BY THIS COURT TO BE RETROSPECTIVE IN OPERATION. THE SUBMISSION SO MADE IS NOT ONLY BASELESS BUT IS BEREFT OF ANY LOGIC. NEITHE R THE AMENDMENT MADE BY THE FINANCE (NO.2) ACT, 2014 COULD BE STRETCHED ANTERIOR THE DATE OF ITS SUBSTITUTION SO AS TO REACH THE ASSESSMENT YEAR 2005 - 2006 NOR THE SAID DECISION IN CALCUTTA EXPORT COMPANY HAS ANY CORRELATION WITH THE CASE AT HAND OR WITH TH E AMENDMENT MADE BY THE FINANCE (NO.2) ACT OF 2014. 19.1 BY THE AMENDMENT BROUGHT ABOUT IN THE YEAR 2014, THE LEGISLATURE REDUCED THE EXTENT OF DISALLOWANCE UNDER SECTION 40( A )(IA) OF THE ACT AND LTD. IT TO 30% OF THE SUM PAYABLE. ON THE OTHER HAND, BY THE FINANCE ACT OF 2010, WHICH WAS CONSIDERED IN THE CASE OF CALCUTTA EXPORT COMPANY ( SUPRA ), THE PROVISO TO SECTION 40( A )(IA) OF THE ACT WAS AMENDED SO AS TO PROVIDE RELIEF TO A BONAFIDE ASSESSEE WHO COULD NOT MAKE DEPOSIT OF DEDUCTED TAX WITHIN PRESCRIBED T IME. IN FACT, EVEN BEFORE THE YEAR 2010, THE SAID PROVISO WAS AMENDED BY THE FINANCE ACT 2008 AND THAT AMENDMENT OF THE YEAR 2008 WAS PROVIDED RETROSPECTIVE OPERATION BY THE LEGISLATURE ITSELF. FOR READY REFERENCE, WE MAY REPRODUCE IN JUXTAPOSITION THE MAI N PART OF SECTION 40( A ) (IA) OF THE ACT AS IT WOULD READ AFTER THE AMENDMENTS OF 2008, 2010 AND 2014 RESPECTIVELY, AS UNDER 13 : - ( I ) AFTER THE AMENDMENT BY FINANCE ACT, 2008 '40. AMOUNTS NOT DEDUCTIBLE. NOTWITHSTANDING AN YTHING TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', - ( A ) IN THE CASE OF ANY ASSESSEE - ** ** ** ( IA ) ANY INTEREST, COMMI SSION OR BROKERAGE, RENT, ROYALTY 14 , FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (I NCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID, - ITA NO. 467 /CTK/201 7 29 (A) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURIN G THE LAST MONTH OF THE PREVIOUS YEAR, ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139; OR (B) IN ANY OTHER CASE, ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR: PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR, HAS BEEN DEDUCTED - (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 YEAR BUT PAID AFTER THE END OF THE SAID PREVIOUS YEAR, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. ** ** ** ( II ) AFTER THE AMENDMENT BY FINANCE ACT, 2010 '40. AMOUNTS NOT DEDUCTIBLE. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING A MOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', - ( A ) IN THE CASE OF ANY ASSESSEE - ** ** ** ( IA ) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SER VICES OR FEES FOR TECHNICAL SERVICES 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 CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER C HAPTER XVII - B AND SUCH 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 THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID: ** ** ** ( III ) AFT ER THE AMENDMENT BY FINANCE (NO.2) ACT, 2014 '40. AMOUNTS NOT DEDUCTIBLE. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS OR PROFESSION', - ( A ) IN THE CASE OF ANY ASSESSEE - ** ** ** ITA NO. 467 /CTK/201 7 30 ( IA ) THIRTY PER CENT. OF ANY SUM PAYABLE TO A RESIDENT, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH 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 THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139, THIRTY PER CENT. OF SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID 15 : PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DE DUCT 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 SUB - 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. 16 ** ** ** 19.2 THE AFORESAID AMENDMENT BY THE FINANCE (NO.2) ACT OF 2014 WAS SPECIFICALLY MADE APPLICABLE W.E.F. 1 - 4 - 2015 AND CLEARLY REPRESENTS THE WILL OF THE LEGISLATURE AS TO WHAT IS TO BE DEDUCTED OR WHAT PERCENTAGE OF DEDUCTION IS NOT TO BE ALLOWED FOR A PARTICULAR EVENTUALITY, FROM THE ASSESSMENT YEAR 2015 - 2016. 19.3 ON THE OTHER HAND, IN THE CASE OF CALCUTTA EXPORT COMPANY ( SUPRA ), THIS COURT NOTICED THE AFORESAID TWO AMENDMENTS TO SECTION 40( A )(IA) OF THE ACT BY THE FINANCE ACT, 2008 AND BY THE FINANCE ACT, 2010, WHICH WERE INTENDED TO DEAL WITH PROCEDURAL HARDSHIP LIKELY TO BE FACED BY THE BONAFIDE TAX PAYER, WHO HAD DEDUCTED TAX AT SOURCE BUT COULD NOT MAKE DEPOSIT WITHIN THE PRESCRIBED TIME SO AS TO CLAIM DEDUCTION. IN PARAGRAPH 17 OF JUDGMENT IN CALCUTTA EXPORT COMPANY, THIS COURT T OOK NOTE OF THE CASE OF GENUINE HARDSHIP, PARTICULARLY OF THE ASSESSEES WHO HAD DEDUCTED TAX AT SOURCE IN THE LAST MONTH OF PREVIOUS YEAR; AND OBSERVED IN PARAGRAPH 18 THAT THE SAID AMENDMENT OF THE YEAR 2008 WAS BROUGHT ABOUT WITH A VIEW TO MITIGATE SUCH HARDSHIP. AFTER REPRODUCING THE SAID AMENDMENT OF THE YEAR 2008 AND AFTER NOTICING ITS RETROSPECTIVE OPERATION, THIS COURT DELVED INTO THE POSITION OBTAINING AFTER 2008, WHERE STILL REMAINED ONE CLASS OF ASSESSEES WHO COULD NOT CLAIM DEDUCTION FOR THE TDS AMOUNT IN THE PREVIOUS YEAR IN WHICH THE TAX WAS DEDUCTED AND WHO COULD CLAIM BENEFIT OF SUCH DEDUCTION IN THE NEXT YEAR ONLY; AND, AFTER FINDING THAT THE AMENDMENT OF THE YEAR 2010 WAS INTENDED TO REMEDY THIS POSITION, HELD THAT THE SAID AMENDMENT, BEING CURATIVE IN NATURE, IS REQUIRED TO BE GIVEN RETROSPECTIVE OPERATION THAT IS, FROM THE DATE OF INSERTION OF SECTION 40( A )(IA). 19.4 LEARNED COUNSEL FOR THE APPELLANT HAS ONLY REFERRED TO THE CONCLUDING PART OF THE DECISION IN CALCUTTA EXPORT COMPANY BUT, A LOOK AT THE ENTIRE SYNTHESIS BY THIS COURT, OF THE REASONS FOR THE AMENDMENTS ITA NO. 467 /CTK/201 7 31 OF 2008 AND 2010, MAKES IT CLEAR AS TO WHY THIS COURT HELD THAT THE AMENDMENT OF THE YEAR 2010 WOULD BE RETROSPECTIVE IN OPERATION. WE MAY USEFULLY REPRODUCE THE RELEVANT DISCUSS ION AND EXPOSITION OF THIS COURT IN CALCUTTA EXPORT COMPANY AS UNDER: - (AT PP. 663 - 666 OF ITR): - '19. THE ABOVE AMENDMENTS MADE BY THE FINANCE ACT, 2008 THUS PROVIDED THAT NO DISALLOWANCE UNDER SECTION 40( A )(IA) OF THE INCOME - TAX ACT SHALL BE MADE IN RESPE CT OF THE EXPENDITURE INCURRED IN THE MONTH OF MARCH IF THE TAX DEDUCTED AT SOURCE ON SUCH EXPENDITURE HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN. IT IS IMPORTANT TO MENTION HERE THAT THE AMENDMENT WAS GIVEN RETROSPECTIVE OPERATION FROM THE DATE OF APRIL 1,2005, I.E., FROM THE VERY DATE OF SUBSTITUTION OF THE PROVISION. 20. THEREFORE, THE ASSESSES WERE, AFTER THE SAID AMENDMENT IN 2008, CLASSIFIED IN TWO CATEGORIES NAMELY: ONE, THOSE WHO HAVE DEDUCTED THAT TAX DURING THE LAST MONTH OF THE PRE VIOUS YEAR AND TWO, THOSE WHO HAVE DEDUCTED THE TAX IN THE REMAINING ELEVEN MONTHS OF THE PREVIOUS YEAR. IT WAS PROVIDED THAT IN THE CASE OF ASSESSEES FALLING UNDER THE FIRST CATEGORY, NO DISALLOWANCE UNDER SECTION 40( A )(IA) OF THE INCOME - TAX ACT SHALL BE MADE IF THE TAX DEDUCTED BY THEM DURING THE LAST MONTH OF THE PREVIOUS YEAR HAS BEEN PAID ON OR BEFORE THE LAST DAY OF FILING OF RETURN IN ACCORDANCE WITH THE PROVISIONS OF SECTION 139(1) OF THE INCOME - TAX ACT FOR THE SAID PREVIOUS YEAR. IN CASE, THE ASSES SEES ARE FALLING UNDER THE SECOND CATEGORY, NO DISALLOWANCE UNDER SECTION 40( A )(IA) OF INCOME - TAX ACT WHERE THE TAX WAS DEDUCTED BEFORE THE LAST MONTH OF THE PREVIOUS YEAR AND THE SAME WAS CREDITED TO THE GOVERNMENT BEFORE THE EXPIRY OF THE PREVIOUS YEAR. THE NET EFFECT IS THAT THE ASSESSEE COULD NOT CLAIM DEDUCTION FOR THE TDS AMOUNT IN THE PREVIOUS YEAR IN WHICH THE TAX WAS DEDUCTED AND THE BENEFIT OF SUCH DEDUCTIONS CAN BE CLAIMED IN THE NEXT YEAR ONLY. 21. THE AMENDMENT THOUGH HAS ADDRESSED THE CONCERNS OF THE ASSESSES FALLING IN THE FIRST CATEGORY BUT WITH REGARD TO THE CASE FALLING IN THE SECOND CATEGORY, IT WAS STILL RESULTING INTO UNINTENDED CONSEQUENCES AND CAUSING GRAVE AND GENUINE HARDSHIPS TO THE ASSESSES WHO HAD SUBSTANTIALLY COMPLIED WITH THE R ELEVANT TDS PROVISIONS BY DEDUCTING THE TAX AT SOURCE AND BY PAYING THE SAME TO THE CREDIT OF THE GOVERNMENT BEFORE THE DUE DATE OF FILING OF THEIR RETURNS UNDER SECTION 139(1) OF THE INCOME - TAX ACT. THE DISABILITY TO CLAIM DEDUCTIONS ON ACCOUNT OF SUCH LA TELY CREDITED SUM OF TDS IN ASSESSMENT OF THE PREVIOUS YEAR IN WHICH IT WAS DEDUCTED, WAS DETRIMENTAL TO THE SMALL TRADERS WHO MAY NOT BE IN A POSITION TO BEAR THE BURDEN OF SUCH DISALLOWANCE IN THE PRESENT ASSESSMENT YEAR. 22. IN ORDER TO REMEDY THIS POSI TION AND TO REMOVE HARDSHIPS WHICH WERE BEING CAUSED TO THE ASSESSEES BELONGING TO SUCH SECOND CATEGORY, AMENDMENTS HAVE BEEN MADE IN THE PROVISIONS OF SECTION 40( A ) (IA) BY THE FINANCE ACT, 2010. ** ** ** ITA NO. 467 /CTK/201 7 32 24. THUS, THE FINANCE ACT, 2010 FURTHER RELAXED THE RIGORS OF SECTION 40( A )(IA) OF THE INCOME - TAX ACT TO PROVIDE THAT ALL TDS MADE DURING THE PREVIOUS YEAR CAN BE DEPOSITED WITH THE GOVERNMENT BY THE DUE DATE OF FILING THE RETURN OF INCOME. THE IDEA WAS TO ALLOW ADDITIONAL TIME TO THE DEDUCTORS TO DEPO SIT THE TDS SO MADE. HOWEVER, THE MEMORANDUM EXPLAINING THE PROVISIONS OF THE FINANCE BILL, 2010 EXPRESSLY MENTIONED AS FOLLOWS: 'THIS AMENDMENT IS PROPOSED TO TAKE EFFECT RETROSPECTIVELY FROM APRIL 1, 2010 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE A SSESSMENT YEAR 2010 - 11 AND SUBSEQUENT YEARS.' 25. THE CONTROVERSY SURROUNDING THE ABOVE AMENDMENT WAS WHETHER THE AMENDMENT BEING CURATIVE IN NATURE SHOULD BE APPLIED RETROSPECTIVELY, I.E., FROM THE DATE OF INSERTION OF THE PROVISIONS OF SECTION 40( A )(IA) OR TO BE APPLICABLE FROM THE DATE OF ENFORCEMENT. ** ** ** 27. A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION WORKABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION, IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETATION AND REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CAN BE GIVEN TO THE SECTION AS A WHOLE. 28. THE PURPOSE OF THE AMENDMENT MADE BY THE FINANCE ACT, 2010 IS TO SOLVE THE ANOMALIES THAT THE INSERTION OF SECTION 40( A )(IA) WAS CAUSING TO THE BONA FIDE TAX PAYER. THE AMENDMENT, EVEN IF NOT GIVEN OPERATION RETROSPECTIVELY, MAY NOT MATERIALLY BE OF CONSEQUENCE TO THE REVENUE WHEN THE TAX RATES ARE STABLE AND UNIFORM OR IN CASES OF BIG ASSESSEES HAVING SUBSTANTIAL TURNOVER AND EQUALLY HUGE EXPENSES AND NECESSARY CUSHION TO ABSORB THE EFFECT. HOWEVER, MARGINAL AND MEDIUM TAXPAYERS, WHO WORK AT LOW GROSS PRODUCT RATE AND WHEN EXPENDITURE WHICH BECOMES THE SUBJECT MATTER OF AN ORDER UNDER SECTION 40( A )(IA) IS SUBSTANTIAL, CAN SUFFER SEVERE ADVERSE CONSEQUENCES IF THE AMENDMENT MADE IN 2010 IS NOT GIVEN RETROSPECTIVE OPERATION, I.E., FROM THE DATE OF SUBSTITUTION OF THE PROVISION. TRANSFERRING OR SHIFTING EXPENSES TO A SUB SEQUENT YEAR, IN SUCH CASES, WILL NOT WIPE OUT THE ADVERSE EFFECT AND THE FINANCIAL STRESS. SUCH COULD NOT BE THE INTENTION OF THE LEGISLATURE. HENCE, THE AMENDMENT MADE BY THE FINANCE ACT, 2010 BEING CURATIVE IN NATURE IS REQUIRED TO BE GIVEN RETROSPECTIV E OPERATION, I.E., FROM THE DATE OF INSERTION OF THE SAID PROVISION.' 19.5 A BARE LOOK AT THE EXTRACTION AFORESAID MAKES IT CLEAR THAT WHAT THIS COURT HAS HELD AS REGARDS 'RETROSPECTIVE OPERATION' IS THAT THE AMENDMENT OF THE YEAR 2010, BEING CURATIVE IN N ATURE, WOULD BE APPLICABLE FROM THE DATE OF INSERTION OF THE PROVISION IN QUESTION I.E., SUB - CLAUSE (IA) OF SECTION 40( A ) OF THE ACT. THIS BEING THE POSITION, IT IS DIFFICULT TO FIND ANY SUBSTANCE IN THE ARGUMENT THAT THE PRINCIPLES ADOPTED BY THIS COURT I N THE CASE OF CALCUTTA EXPORT COMPANY ( SUPRA ) DEALING WITH CURATIVE AMENDMENT, RELATING MORE TO THE PROCEDURAL ASPECTS CONCERNING DEPOSIT OF THE DEDUCTED TDS, BE ITA NO. 467 /CTK/201 7 33 APPLIED TO THE AMENDMENT OF THE SUBSTANTIVE PROVISION BY THE FINANCE (NO.2) ACT, 2014. 19.6 WE MAY IN THE PASSING OBSERVE THAT THE ASSESSEE - APPELLANT WAS EITHER LABOURING UNDER THE MISTAKEN IMPRESSION THAT HE WAS NOT REQUIRED TO DEDUCT TDS OR UNDER THE MISTAKEN BELIEF THAT THE METHODOLOGY OF SPLITTING A SINGLE PAYMENT INTO PARTS BELOW RS. 20,000/ - WOULD PROVIDE HIM ESCAPE FROM THE RIGOUR OF THE PROVISIONS OF THE ACT PROVIDING FOR DISALLOWANCE. IN EITHER EVENT, THE APPELLANT HAD NOT BEEN A BONAFIDE ASSESSEE WHO HAD MADE THE DEDUCTION AND DEPOSITED IT SUBSEQUENTLY. OBVIOUSLY, THE APPELLANT COULD NOT H AVE DERIVED THE BENEFITS THAT WERE OTHERWISE AVAILABLE BY THE CURATIVE AMENDMENTS OF 2008 AND 2010. HAVING DEFAULTED AT EVERY STAGE, THE ATTEMPT ON THE PART OF ASSESSEE - APPELLANT TO SEEK SOME SUCCOR IN THE AMENDMENT OF SECTION 40( A )(IA) OF THE ACT BY THE F INANCE (NO.2) ACT, 2014 COULD ONLY BE REJECTED AS ENTIRELY BASELESS, RATHER PREPOSTEROUS. 19.7 HENCE, QUESTION NO. 3 IS ALSO ANSWERED IN THE NEGATIVE, I.E., AGAINST THE ASSESSEE - APPELLANT AND IN FAVOUR OF THE REVENUE. QUESTION NO. 4 20. BEFORE FINALLY ANSW ERING THE ROOT QUESTION IN THE MATTER AS TO WHETHER THE PAYMENTS IN QUESTION HAVE RIGHTLY BEEN DISALLOWED FROM DEDUCTION, WE MAY USEFULLY SUMMARISE THE ANSWERS TO QUESTION NOS. 1 TO 3 THAT THE PROVISIONS OF SECTION 194C WERE INDEED APPLICABLE AND THE ASSES SEE - APPELLANT WAS UNDER OBLIGATION TO DEDUCT THE TAX AT SOURCE IN RELATION TO THE PAYMENTS MADE BY IT FOR HIRING THE VEHICLES FOR THE PURPOSE OF ITS BUSINESS OF TRANSPORTATION OF GOODS; THAT DISALLOWANCE UNDER SECTION 40( A )(IA) OF THE ACT IS NOT LTD. ONLY TO THE AMOUNT OUTSTANDING AND THIS PROVISION EQUALLY APPLIES IN RELATION TO THE EXPENSES THAT HAD ALREADY BEEN INCURRED AND PAID BY THE ASSESSEE; THAT DISALLOWANCE UNDER SECTION 40( A )(IA) OF THE ACT OF 961 AS INTRODUCED BY THE FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 1 - 4 - 2005 IS APPLICABLE TO THE CASE AT HAND RELATING TO THE ASSESSMENT YEAR 2005 - 2006; AND THAT THE BENEFIT OF AMENDMENT MADE IN THE YEAR 2014 TO THE PROVISION IN QUESTION IS NOT AVAILABLE TO THE APPELLANT IN THE PRESENT CASE. THESE ANSWERS PRA CTICALLY CONCLUDE THE MATTER BUT WE HAVE FORMULATED QUESTION NO. 4 ESSENTIALLY TO DEAL WITH THE LAST LIMB OF SUBMISSIONS REGARDING THE PREJUDICE LIKELY TO BE SUFFERED BY THE APPELLANT. 21. THE SUGGESTION ON BEHALF OF THE APPELLANT ABOUT THE LIKELY PREJUDIC E BECAUSE OF DISALLOWANCE DESERVES TO BE REJECTED FOR THREE MAJOR REASONS. IN THE FIRST PLACE, IT IS CLEAR FROM THE PROVISIONS DEALING WITH DISALLOWANCE OF DEDUCTIONS IN PART D OF CHAPTER IV OF THE ACT, PARTICULARLY THOSE CONTAINED IN SECTIONS 40( A )(IA) AN D 40A(3) 17 OF THE ACT, THAT THE SAID PROVISIONS ARE INTENDED TO ENFORCE DUE COMPLIANCE OF THE REQUIREMENT OF OTHER PROVISIONS OF THE ACT AND TO ENSURE PROPER COLLECTION OF TAX AS ALSO TRANSPARENCY IN DEALINGS OF THE PART IES. THE NECESSITY OF DISALLOWANCE COMES INTO OPERATION ONLY WHEN DEFAULT OF THE NATURE SPECIFIED IN THE PROVISIONS TAKES PLACE. LOOKING TO THE OBJECT OF THESE PROVISIONS, THE SUGGESTIONS ABOUT PREJUDICE OR HARDSHIP CARRY NO MEANING AT ALL. SECONDLY, AS NO TICED, BY WAY OF THE PROVISO AS ORIGINALLY ITA NO. 467 /CTK/201 7 34 INSERTED AND ITS AMENDMENTS IN THE YEARS 2008 AND 2010, REQUISITE RELIEF TO A BONAFIDE TAX PAYER WHO HAD COLLECTED TDS BUT COULD NOT DEPOSIT WITHIN TIME BEFORE SUBMISSION OF THE RETURN WAS ALSO PROVIDED; AND AS RE GARDS THE AMENDMENT OF 2010, THIS COURT RULED IT TO BE RETROSPECTIVE IN OPERATION. THE PROVISO SO AMENDED, OBVIOUSLY, SAFEGUARDED THE INTEREST OF A BONAFIDE ASSESSEE WHO HAD MADE THE DEDUCTION AS REQUIRED AND HAD PAID THE SAME TO THE REVENUE. THE APPELLANT HAVING FAILED TO AVAIL THE BENEFIT OF SUCH RELAXATION TOO, CANNOT NOW RAISE A GRIEVANCE OF ALLEGED HARDSHIP. THIRDLY, AS NOTICED, THE APPELLANT HAD SHOWN TOTAL PAYMENTS IN TRUCK FREIGHT ACCOUNT AT RS. 1,37,71,206/ - AND TOTAL RECEIPTS FROM THE COMPANY AT R S. 1,43,90,632/ - . WHAT HAS BEEN DISALLOWED IS THAT AMOUNT OF RS. 57,11,625/ - ON WHICH THE APPELLANT FAILED TO DEDUCT THE TAX AT SOURCE AND NOT THE ENTIRE AMOUNT RECEIVED FROM THE COMPANY OR PAID TO THE TRUCK OPERATORS/OWNERS. VIEWED FROM ANY ANGLE, WE DO N OT FIND ANY CASE OF PREJUDICE OR LEGAL GRIEVANCE WITH THE APPELLANT. 21.1 HENCE, ANSWER TO QUESTION NO. 4 IS CLEARLY IN THE AFFIRMATIVE I.E., AGAINST THE APPELLANT AND IN FAVOUR OF THE REVENUE THAT THE PAYMENTS IN QUESTION HAVE RIGHTLY BEEN DISALLOWED FROM DEDUCTION WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE - APPELLANT. WE NOTED FROM THE ORDER OF AO THAT THE ASSESSEE HAS MADE THE PAYMENTS TO THE RECIPIENTS BUT NO TDS HAS DEDUCTED BY HIM AT ALL. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THAT CONCERNED RECIPIENTS HAVE INCLUDED TO THE RECEIPTS FROM THE BANK IN HIS TOTAL INCOME AND IT PAID INCOME TAX THEREON AS PER THE PROVISIONS OF INCOME TAX ACT, WE FIND THAT THE ASSESSEE TRIED TO PROVE THAT THERE IS NO LOSS TO THE REVENUE AND REQUESTED FOR SENDING BACK THE MATTER TO THE FILE OF AO FOR VERIFICATION. ON PERUSAL OF THE ORDER OF THE CIT(A), WE NOTICED THAT THIS PROVISO I.E. FURNISHING OF FORM 26A HAS BEEN INSERTED W.E.F.01.04.2013 AND, THEREFORE, APPLICABLE FORM THE ASSESSMENT YEAR 2013 - 2014. THIS CONTENTIO N IS SQUARELY SUPPORTED BY THE ABOVE DECISION OF THE HONBLE SUPREME COURT AS NOTED SUPRA. IN THIS CASE, THE ASSESSEE HAD NOT DEDUCTED TDS ON THE TRANSPORTATION PAYMENTS, WHICH WERE REQUIRED TO ITA NO. 467 /CTK/201 7 35 BE DEDUCTED AS PER THE PROVISIONS OF SECTION 194C OF THE ACT F OR THE FINANCIAL YEAR 2005 - 06 AND THE SECTION 40(A)(IA) OF THE ACT WAS INSERTED W.E.F.01.04.2005 BY THE FINANCE ACT NO.2. IN THIS CASE THE HONBLE APEX COURT DECIDED THE CASE AGAINST THE ASSESSEE AND IN FAVOUR OF REVENUE BY HOLDING THIS PROVISIONS IS APPLI CABLE FOR THE ASSESSMENT YEAR 2005 - 06. BEFORE US, THE IMPUGNED CASE IS FOR THE ASSESSMENT YEAR 2012 - 2013 AND THE PROVISIONS HAS BEEN INSERTED W.E.F.01.04.2013 WILL NOT APPLY IN THE RATIO DECIDENDI ABOVE. IN THE WRITTEN SUBMISSIONS, THE ASSESSEE HAS RELIED MA N Y JUDGMENTS WHICH HAVE BEEN REPRODUCED ABOVE ARE NOT APPLICABLE CONSIDERING TO THE LATEST JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SHREE CHOUDHARY TRANSPORT COMPANY (SUPRA) . IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND THE LATEST D ECISION OF THE HONBLE APEX COURT AS STATED SUPRA, THE CASE LAWS RELIED ON BY THE LD. AR OF THE ASSESSEE IS NOT APPLICABLE IN THE PRESENT CASE IN HAND. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 9 . GROUND NO.6 IS RELATING TO DISALLOWANC E MADE BY THE AO U/S.43B OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT PRODUCE THE CHALLAN COPY OF RS.1,15,570/ - . ON PERUSAL OF THE ASSESSMENT ORDER, WE NOTICED THAT THESE PAYMENTS RELATES TO THE ARREARS FROM 2007 - 2008 BUT HERE IT IS NOT YEARWISE BREAKUP THAT HOW MUCH AMOUNT IS RELATING TO WHICH YEAR ALONG WITH PROOF OF PAYMENTS . THEREFORE, THIS MATTER IS SENT BACK TO THE FILE OF AO FOR DETERMINATION OF ITA NO. 467 /CTK/201 7 36 THE YEARWISE BREAKUP ALONG WITH THE PAYMENTS AND DECIDE THE ISSUE AS PE R THE PROVISIONS OF SECTION 43B OF THE ACT. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10 . GROUND NO.7 RELATES TO DISALLOWANCE MADE BY THE AO FOR GRATUITY TO STAFF OF RS.2,70,000/ - . THIS HAS BEEN DISALLOWED BY THE AO REFERR ING TO SECTION 36(1)(V) OF THE ACT AND CONFIRMED BY THE CIT(A) . IN THIS REGARD, THE ASSESSEE HAS SUBMITTED THAT IT HAS BEEN PAID AS PER THE DIRECTION OF THE RESERVE BANK OF INDIA BUT BEFORE US THE LD. AR OF THE ASSESSEE HAS NOT PRODUCE ANY DOCUMENTARY EVID ENCES, THEREFORE, THIS MATTER IS ALSO SENT BACK TO THE FILE OF AO FOR VERIFICATION AS TO WHETHER IT HAS BEEN PAID WITHIN THE DUE DATE TO THE APPROVED GRATUITY FUND OR ANY OTHER FUND AS PRESCRIBED BY THE INCOME TAX ACT. THUS, THIS GROUND OF APPEAL OF THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 12 / 10 / 20 20 . S D/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 12 / 10 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. ITA NO. 467 /CTK/201 7 37 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, CUTTACK 1. / THE APPELLANT - M/S BALASORE COOPERATIVE BANK LIMITED, BIBEKANANDA MARG, BALASORE - 756001 2. / THE RESPONDENT - ACIT, BALASORE CIRCLE, BALASORE 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//