Ranjana Roy, Kolkata V. I.T.O.Wd - 42(3),Kol., Kolkata

ITA 558/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100208 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 15-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRABAL CHOWDHURY JCITSRDR
• Assessee Lawyers: SANDIP KR ROY
• Keywords: Retrospective amendment; Question of law; Reasonable cause
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 558 / KOL / 2013 ASSESSMENT YEAR :2009-10 RANJANA ROY 24, NANDALAL DEY STREET, BARANAGAR, KOLKATA 700 036 [ PAN NO.AFPPR 0864 M ] V/S . INCOME TAX OFFICER WARD-42(3), PODDER COURT, 4 TH FLOOR, 18, RABINDRA SARANI, KOLKATA 700 001 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SANDIP KR. ROY, ADVOCATE /BY RESPONDENT SHRI PRABAL CHOWDHURY, JCIT-SR-DR /DATE OF HEARING 13-11-2015 /DATE OF PRONOUNCEMENT 04-12-2015 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-XIX, KOLKATA IN APPEAL NO.331/ CIT(A)-XIX/ITO, WD- 42(3),KOL/12-13 DATED 05.08.2011. ASSESSMENT WAS FR AMED BY ITO WARD- 42(3), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 26.12.2011 FOR A SSESSMENT YEAR 2009-10. 2. SEVERAL GROUNDS RAISED BY ASSESSEE IN THIS APPEA L BUT COMMON ISSUE IN ALL THE GROUNDS IS THAT LD. CIT(A) ERRED IN CONFIRM ING THE ACTION OF ASSESSING ITA NO.558/KOL/2013 A.Y. 2009-10 RANJANA ROY V. ITO WD.42(3) KOL. PAGE 2 OFFICER BY DISALLOWING THE EXPENSES ON ACCOUNT OF V IOLATION OF THE PROVISIONS OF TDS FOR AN AMOUNT OF RS. 25,91,026/- . 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL AND RUNNING HER BUSINESS ENTITY UNDER THE NAME AND STYLE M/S CHANDA M. THE ASSESSEE BUSINESS IS TO ORGANIZE VARIOUS CULTURAL AND MUSICA L EVENTS. THE ASSESSEE ACTS AS COORDINATOR/ INTERMEDIARY BETWEEN THE ARTIS TES AND PARTIES WISH TO HAVE CULTURAL/MUSICAL EVENTS. THE ROLE OF THE ASSES SEE IS TO BRING BOTH THE PARTIES AT COMMON UNDERSTANDING IN SO FAR IT RELATE S THE MONETARY TERMS. HOWEVER THE ASSESSEE DOES NOT BECOME A PARTY TO THA T UNDERSTANDING. AS SUCH, THE ASSESSEE RECEIVES THE PAYMENT FROM THE PA RTY AND REMITS THE SAME TO THE ARTISTES AFTER THE NEGOTIATION WITHOUT DEDUC TING TDS. THE ASSESSEE DOES NOT DEDUCT THE TDS FROM THE PAYMENT TO THE ARTISTES UNDER THE BELIEF THAT HE IS ACTING IN REPRESENTATIVE CAPACITY ON BEHALF OF THE PARTY/ ORGANIZERS, THEREFORE HE IS NOT LIABLE TO DEDUCT TDS AS PER THE INCOME TA X PROVISIONS. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS D EBITED AN EXPENSE IN THE NAME OF ARTISTES REMUNERATION FOR AN AMOUNT OF 41,57,675/-. OUT OF THIS AMOUNT OF PAYMENT A SUM OF RS. 25,91,026/- WAS LIAB LE TO TDS PROVISIONS UNDER SECTION 194-J OF THE ACT AS THE PAYMENT WAS E XCEEDING RS. 20,000/-. BUT THE ASSESSEE FAILED TO DEDUCT THE TDS ON THE SA ID AMOUNT. THE AO RAISED THE QUESTION TO THE ASSESSEE FOR NON DEDUCTION OF TAX AS PER THE PROVISIONS OF SECTION 194-J OF THE ACT. THE ASS ESSEE SUBMITTED THAT SHE IS ACTING AS A CO-ORDINATOR BETWEEN ARTISTS AND THE OR GANIZER FOR ARRANGING MUSICAL PROGRAMMES. THE ROLE OF THE ASSESSEE IS ENS URE THAT BOTH THE PARTIES HONOUR THEIR COMMITMENT AND FOR THIS PURPOSE THE PA YMENT FROM THE PARTY/ ORGANIZERS FOR THE ARTISTES ARE KEPT WITH THE CO-OR DINATOR I.E. ASSESSEE. HENCE THE ROLE OF THE ASSESSEE IS TO ACT AS CUSTODIAN OF THE MONEY. HOWEVER, THE AO DISREGARDED THE CLAIM OF ASSESSEE AND HELD THAT SUC H PAYMENTS ARE LIABLE FOR ITA NO.558/KOL/2013 A.Y. 2009-10 RANJANA ROY V. ITO WD.42(3) KOL. PAGE 3 TDS PROVISION AS PER SEC, 194-J OF THE ACT. ACCORDI NGLY, AO ADDED AN AMOUNT OF 25,91,026/- TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO UPHELD THE ACTION OF AO BY OBSERVING AS UNDER :- 8) DUE CONSIDERATION IS GIVEN TO A/RS SUBMISSION AND A.OS ASSESSMENT ORDER AS WELL AS FURTHER CLARIFICATION P ROVIDED THROUGH REMAND REPORT. THE APPELLANT VACILLATING STAND CLEA RLY SHOWS THAT WHEN ON THE MERIT OF THE CASE THE APPELLANT FAILED TO SU BSTANTIATE HE HAS SUBMITTED FRESH EXPLANATION / GROUNDS FOR DELETION OF SUCH ADDITION. IT MAY BE MENTIONED THAT THE FACTS WHICH ARE BROUGHT O N RECORD BY THE AO AND FURTHER CLARIFIED IN THE REMAND REPORT DO ESTAB LISH THAT THE AMOUNT OF RS.25,92,026/- WAS CLEARLY UNDER THE PURVIEW OF SEC TION 194J. THE APPELLANT HAS OBJECTED TO INVOKING SECTION 194J ON THE PLEA THAT THERE WAS NO CONTRACT ENTERED INTO. HOWEVER, IT MAY BE EM PHASIZED THAT CONTRACT MAY BE WRITTEN OR ORAL AND FOR ATTRACTING TDS PROVISION IT IS NOT CONDITION PRECEDENT THAT SUCH WRITTEN CONTRACT IS L ACED ON THE RECORD. THERE MAY BE SITUATION WHERE THERE IS NEITHER WRITT EN CONTRACT NOR ORAL CONTRACT HOWEVER, THE BUSINESS ARRANGEMENT BETWEEN THE TWO PARTIES MAY BE SUCH WHICH HAS ALL THE INGREDIENT OF A CONTR ACT. IN THIS CASE AS EXPLAINED BY THE AO THERE EXISTS SUCH BUSINESS ARRA NGEMENT ON WHICH BASIS IT CAN BE INFERRED THAT ALL THE INGREDIENTS O F CONTRACT ARE VERY MUCH ARE THERE. IT IS VERY DIFFICULT TO ORGANIZE AND BRI NG SUCH ARTISTS FOR PERFORMANCE WITHOUT HAVING SOME TERMS AND CONDITION S ENTERED INTO IN ADVANCE. THE DISCLOSURES OF SUCH TERMS AND CONDITIO NS MAY NOT HAVE BEEN DISCLOSED ON A VARIOUS REASONS AND THIS MAY BE ONE OF THE REASON FOR NOT HAVING WRITTEN CONTRACT. HOWEVER, THE EXIST ENCE OF ALL THE INGREDIENTS OF CONTRACT ARE ALWAYS THERE FOR SUCCES S OF SUCH PROGRAMME. THE APPELLANT HAS ORGANIZED SUCH PROGRAM ME ON LARGE SCALE INVOLVING SUBSTANTIAL AMOUNT OF REVENUE WITH MANY ARTISTS WHICH PRE-SUPPOSES THAT VARIOUS TERMS AND CONDITIONS WERE IN EXISTENCE. IN VIEW OF THESE FACTS I AM NOT INCLINED TO ACCEPT THE A/RS SUBMISSION THAT THE PROVISION OF SECTION 194J IS NOT APPLICABLE. 9) IT MAY ALSO BE MENTIONED THAT IN THE FAG END OF APPEAL PROCEEDINGS THE A/R PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTHAN COCA COLA BEVERAGE PVT. LTD. VS- CIT (2007), 293 ITR 226 (SC). IT MAY BE MENTIONED THAT THE A/R CAN RAISE ADDITIONAL GROUNDS OF APPEAL ON QUESTION OF LAW WHICH MUST ARI SE FROM THE FACTS, WHICH ARE LYING ON THE RECORD AND THE A/R HAS TO EX PLAIN THE REASONABLE CAUSE FOR NOT RAISING SUCH GROUNDS/ SUCH EVIDENCES AT APPROPRIATE TIME. THE A/R NOWHERE IN THE ORIGINAL GROUNDS OF APPEAL O R STATEMENT OF FACTS HAVE RAISED SUCH GROUNDS, THEREFORE, THE ADDITIONAL GROUND NEEDS TO BE ADJUDICATED WHERE IT IS ADMISSIBLE OR NOT. SINCE TH E A/R HAS NOT PLACED ITA NO.558/KOL/2013 A.Y. 2009-10 RANJANA ROY V. ITO WD.42(3) KOL. PAGE 4 RELEVANT MATERIAL ALONG WITH REASONABLE CAUSE FOR R AISING SUCH ADDITIONAL GROUNDS AND THEREFORE IN PRINCIPLE SUCH GROUND IS NOT ADMISSIBLE. HOWEVER, WITHOUT PREJUDICE TO THE ABOVE I ALSO FIND THAT THE JUDGEMENT GIVEN IN CASE OF HONBLE SUPREME COURT I N THE CASE OF HINDUSTHAN COCA COLA BEVARAGE PVT. LTD. VS. CIT ( 2007), 293 ITR 226 (SC) CANNOT BE APPLIED TO THE CASE OF APPELLANT AS FACTS AND CIRCUMSTANCES ARE ENTIRELY DIFFERENT. 10) I ALSO FIND THAT THE ANALYSIS OF HONBLE SUPREM E COURT DECISION IN COCA COLA CASE CANT BE APPLIED TO THE FACTS AND CI RCUMSTANCES OF APPELLANT CASE. IT MAY BE MENTIONED THAT THE JUDGEM ENT OF HONBLE SUPREME COURT IS CONSIDERED LAW OF THE LAND, HOWEVE R, ITS APPLICABILITY IS ALWAYS TO THE EXISTENCE OF SIMILAR FACTS AND CIR CUMSTANCES. IT IS ALSO TO BE ACCEPTED THAT THE JUDGEMENT DELIVERED BY THE HON BLE SUPREME COURT CANNOT BE INTERPRETED AND IMPLEMENTED IN A MA NNER WHICH GOES AGAINST THE OBJECTIVE OF BASIC PROVISIONS OF THE SE CTION. 11) IT IS IN THIS BACKGROUND THAT THE DECISION REND ERED BY THE HONBLE SUPREME COURT IN THE CASE OF COCA COLA (P) LTD HAS TO BE UNDERSTOOD AND IMPLEMENTED ACCORDINGLY. IN THIS CASE IT WILL B E AGAINST THE LAW TO INTERPRET THAT IN EACH AND EVERY CASE WHERE THE DED UCTEE HAS PAID THE TAX, THOUGH THE ONUS IS ON THE DEDUCTOR TO DEDUCT T HE TAX, THE BENEFIT WILL BE GIVEN TO THE DEDUCTOR. SUCH TYPE OF INTERPRETATI ON GOES AGAINST THE BASIC OBJECTIVE OF TDS PROVISION WHICH IS BASED ON THE PHILOSOPHY PAY AS YOU EARN . IT IS TRUE THAT TDS PROVISION IS PRESUMPTIVE FOR M OF TAXATION, HOWEVER, THE POINT AND TIME OF COLLECTION IS INTEGRAL PART OF SUCH PROVISION. BECAUSE OF SUCH INTRINSIC CHARACTER OF TDS PROVISION IT IS CONSIDERED TO BE THE MOST IMPORTANT TOOL OF TAX COL LECTION AND IT IS REQUIRED THAT STRICT AND HARMONIOUS INTERPRETATION OF TDS PROVISIONS SHOULD BE GIVEN. 12) IN THE BACKGROUND OF ABOVE STATED DISCUSSIONS T HE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF COCA COLA (P) LTD., HAS VERY LIMITED APPLICABILITY AND IT CAN BE RESTRICTED TO O NLY SUCH GENUINE AND BONA FIDE CASES WHERE THOUGH THERE IS COMPLIANCE OF TDS PROVISION, HOWEVER, UNDER HONEST BELIEVE THERE IS UNDERSTATEME NT OF TAX DEDUCTED AT SOURCE. THE ABOVE JUDGMENT DOES NOT APPROVE THE CASE WHERE AN ASSESSEE IN DEFAULT FAILED TO DEDUCT TAX AND TAKING A PLEA THAT THE DEDUCTEE HAS PAID THE TAX. 13) THE FACTS OF THE CASE OF COCA COLA (P) LTD., VE RY MUCH CORROBORATE WITH SUCH OBSERVATION AS IN THAT CASE THE AO WAS OF THE VIEW THAT THE WAREHOUSING CHARGES PAID BY THE ASSESSEE COCA COLA (P) LTD., (DEDUCTOR) TO M/S. PRADEEP OIL CORPORATION (DEDUCTE E) WAS IN FACT RENT AND TDS SHOULD HAVE BEEN DEDUCTED U/S. 194I AT HIGH ER RATE THAN THE TAX DEDUCTED BY THE DEDUCTOR @ 20% TREATING IT AS C ONTRACTUAL PAYMENT. ITA NO.558/KOL/2013 A.Y. 2009-10 RANJANA ROY V. ITO WD.42(3) KOL. PAGE 5 IT IS IN THIS BACKGROUND AND FACT THAT THE HONBLE SUPREME COURT HELD THAT NO FURTHER TAX COULD BE RECOVERED FROM THE DED UCTOR ONCE IT HAS BEEN PAID BY THE DUDUCTEE ALONG WITH INTEREST U/S. 201(1A) OF THE IT ACT. THE HONBLE SUPREME COURT, HOWEVER APPROVED THE ACT ION OF THE AO IN TREATING ASSESSEE AS ASSESSEE IN DEFAULT. 14. THE FACTS OF THE CASE OF THE ASSESSEE IS ENTIRE LY DIFFERENT THAN IN THE CASE OF COCA COLA (P) LTD., THE ASSESSEE HAS NOT CO MPLIED WITH THE PROVISION OF TDS AND EVEN AFTER GETTING SUFFICIENT OPPORTUNITY FAILED TO PRODUCE ANY EVIDENCE THAT THE TAX HAS ALREADY BEEN PAID BY THE DEDUCTEE. ON THE BASIS OF ABOVE JUDGEMENT OF COCA C OLA EVEN IF IT IS PRESUMED THAT THE DEDUCTEE HAS ALREADY PAID THE TAX THE ASSESSEE CANNOT GET RELIEF ON THE BASIS OF SUCH JUDGMENT BEC AUSE OF GROSS VIOLATION OF TDS PROVISION WITH NO DIRECT PROOF THA T THE DEDUCTEE HAS ALREADY PAID THE TAX IN CONTRAST TO CASE OF COCA CO LA (P) LTD., WHERE THERE WAS HONEST VIOLATION OF TDS PROVISION. IN VIE W OF ABOVE STATED DISCUSSIONS I AM OF THE CONSIDERED VIEW THAT THE DE CISION OF HONBLE SUPREME COURT IN CASE OF COCA COLA (P) LTD., HAS ON LY RESTRICTED APPLICATION AND CANNOT BE APPLIED IN THE CASE OF AP PELLANT. 15) IN THE CASE OF APPELLANT FIRST OF ALL THE APPLI CABILITY OF TDS PROVISION WAS QUESTIONED WHICH IS UNACCEPTABLE AND THEREAFTER RELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CO CA COLA (P) LTD.,, WHICH IS ALSO OF NO HELP IN VIEW OF ABOVE STATED DI SCUSSION. THE ASSESSEES RELIANCE ON OTHER TWO CASES ARE ALSO MIS PLACED IN VIEW OF ABOVE STATED DISCUSSION AS WELL AS THE RATIO OF SUC H DECISION ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE AP PELLANT CASE. IN VIEW OF THE AFORESAID DISCUSSION THE PAYMENT OF RS.25,91,026/- WAS SQUARELY HIT BY THE TDS PROVISION AND NON-COMPLIANC E TO SUCH PROVISION HAS RESULTED IN INVOKING SECTION 40(A)(IA) OF THE I .T. ACT, 1961. THEREFORE, THE ADDITION OF RS.25,91,026/- IS CONFIRMED ON MERIT. AGGRIEVED, ASSESSEE PREFERRED SECOND APPEAL BEFORE US ON THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THE CIT(A) TOTALLY FAILED TO PROVE THE EXI STENCE OF ANY CONTRACTUAL RELATIONSHIP BETWEEN THE APPELLANT AND THE ARTISTS EVENTUALLY ADMITTED AT PARA 8 PAGE 6 OF THE ORDER AND ONLY PRE -SUPPOSE THE EXISTENCES OF SOME INGREDIENTS THEREOF WITHOUT INVO KING THE PROVISION OF SECTION 133(6) WHEN ALL THE RELEVANT PARTICULARS AN D INFORMATION WERE READILY AVAILABLE WITH THE DEPARTMENT. THE CIT(A) M AY SUSPECT ANYTHING BUT CANNOT ACT WITHOUT CONCRETE PROOF. ITA NO.558/KOL/2013 A.Y. 2009-10 RANJANA ROY V. ITO WD.42(3) KOL. PAGE 6 2. THAT THE CIT(A) TOTALLY ERRED IN NOT APPRECIATIN G THAT THE HON'BLE SUPREME COURT DECIDED THE COCACOLA BEVERAGE COS CA SE RELYING UPON A SPECIFIC CBDT CIRCULAR WHICH HAS NOT BEEN MENTION ED AT ALL IN THE APPEAL ORDER AND IF PROPERLY UNDERSTAND, WOULD HAVE PUT TO AN END ALL THE CONTROVERSIES RAISED BY THE CIT(A). 3. THAT THE CIT(A) DID NOT SPECIFY WHY THE DECLARAT IONS UNDER OATH FILED BY THE ARTISTS WITH PAN ACCEPTING FULL RESPONSIBILI TY TO PAY TAX THEREON WERE NOT CONSIDERED AND WHICH ARE EVEN BINDING UPON THE DECLARANTS WHOSE CREDENTIALS, REPUTATION AND TRUSTWORTHINESS A RE BEYOND ALL DOUBTS. SHRI SANDIP KR. ROY, LD. AUTHORIZED REPRESENTATIVE APPEARING ON BEHALF OF ASSESSEE AND SHRI PRABAL CHOWDHURY, LD. DEPARTMENTA L REPRESENTATIVE APPEARING ON BEHALF OF REVENUE. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US LD. AR SUBMITT ED THAT ASSESSEES PART OF THE ROLE IS TO NEGOTIATE THE DEAL AND ACTS AS INTER MEDIARY IN SETTLING THE TERMS OF AGREEMENT DIRECTLY BETWEEN TWO SIDES WITHOUT MAK ING HERSELF AS ANY PARTY THEREIN. THE PERFORMERS (ARTISTES) AND THE ORGANIZE RS ARE NOT KNOWN TO EACH OTHER AS SUCH. THE ASSESSEE RECEIVES THE PAYMENTS F ROM THE ORGANIZERS AFTER TDS AND MAKE OVER THE NEGOTIATED AMOUNT WITHOUT TDS SINCE THE APPELLANT IS REPRESENTING AND ACTING FOR AND ON BEHALF OF THE OR GANIZERS. ALL THE ARTISTES ARE VERY FAMOUS, WIDELY ACCLAIMED AND HAVE THEMSELVES F URNISHED DECLARATION WITH PAN THAT THEY WILL BE DIRECTLY RESPONSIBLE FOR THEIR RESPECTIVE TAX MATTERS AND ONE OF THEM, ALKA YAGNIK EVEN UNEQUIVOCALLY STA TED THAT SHE HAD ALREADY PAID INCOME TAX ON SUCH INCOME. ON THE OTHER HAND, LD. DR VEHEMENTLY RELIED ON THE ORDERS OF AUTHORITIES BELOW. WE FIND FROM TH E AFORESAID DISCUSSION THAT AO DISALLOWED THE EXPENSES CLAIMED BY ASSESSEE DUE TO VIOLATION OF PROVISION TO SEC. 194-J OF THE ACT. THE ARGUMENT OF THE ASSES SEE THAT THE RECIPIENT OF INCOME HAS PAID THE TAX IN THEIR RESPECTIVE HANDS H AS ALSO BEEN REGARDED. HOWEVER, WE FIND THAT THERE IS AN AMENDMENT IN PROV ISO TO SEC. 40(A)(IA) R.W.S. 1 ST PROVISO TO SEC. 201, WHEREIN, IF ANY PAYEE HAS PAI D THE TAXES BY OFFERING / DISCLOSING THE SAID RECEIPT IN HIS / HER RETURN OF INCOME, THEN THE ITA NO.558/KOL/2013 A.Y. 2009-10 RANJANA ROY V. ITO WD.42(3) KOL. PAGE 7 PAYER (THE ASSESSEE HEREIN) SHOULD NOT BE TREATED A S ASSESSEE IN DEFAULT AND NO DISALLOWANCE U/S/. 40(A)(IA) OF THE ACT COULD O PERATE IN THAT SCENARIO. THE SAID PROVISO THOUGH INSERTED BY THE FINACNE ACT, 20 12 W.E.F. 01.04.2013 HAS BEEN HELD TO BE RETROSPECTIVE IN OPERATION BY RECEN T DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. ANSAL LAND MARK TOWNSHIP (P) LTD . REPORTED IN (2015) TAXMANN.COM 45 (DEL) WHEREIN THE QUESTION RAISED BEFORE THE COURT AND THE DECISION RENDERED THEREON IS REPR ODUCED HEREIN BELOW FOR THE SAKE OF CLARITY: QUESTION : WHETHER THE SECOND PROVISO TO SECTION 40(A)(IA) ( INSERTED BY THE FINANCE ACT, 2012), WHICH STATES THAT TDS SHALL BE DEEMED TO BE DEDUCTED AND PAID BY A DEDUCTOR IF RESIDENT RECIPIE NT HAS DISCLOSED THE AMOUNT IN HIS RETURN OF INCOME AND PAID TAX THEREON , IS RETROSPECTIVE IN NATURE OR NOT? HELD : SECTION 40(A)(IA) WAS INTRODUCED BY THE FINANCE (NO.2) ACT, 2004 TO ENSURE THAT AN EXPENDITURE SHOULD NOT BE ALLOWED AS DEDUCTION IN THE HANDS OF AN ASSESSEE IN A SITUATION WHERE INCOME EM BEDDED IN SUCH EXPENDITURE HAS REMAINED UNTAXED DUE TO TAX WITHHOL DING LAPSES BY THE ASSESSEE. HENCE, SECTION 40(A)(IA) IS NOT A PENALTY PROVISION FOR TAX WITHHOLDING LAPSE BUT IT IS A PROVISION INTRODUCED TO COMPENSAT E ANY LOSS TO THE REVENUE IN CASES WHERE DEDUCTOR HASNT DEDUCTED TDS AN AMOUNT PAID TO DEDUCTEE AND, IN TURN, DEDUCTEE ALSO HASNT OFFE RED TO TAX INCOME EMBEDDED IN SUCH AMOUNT. THE PENALTY FOR TAX WITHHOLDING LAPSE PER SE IS SEP ARATELY PROVIDED UNDER SECTION 271C AND, THEREFORE SECTION 40(A)(IA) ISNT ATTRACTED TO THE SAME. HENCE, AN ASSESSEE COULD NOT BE PENALIZED UND ER SECTION 40(A)(IA) WHEN THERE WAS NO LOSS TO REVENUE. THE AGRA TRIBUNAL IN THE CASE OF RAJIV KUMAR AGARWAL V. ACIT (2014) 45 TAXMANN.COM 555 (AGRA-TRIB) HAS HELD THAT THE SE COND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NA TURE AND HA RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005, BEING THE DATE FROM WHICH SUB- CLAUSE (IA) OF SECTION 40(8) WAS INSERTED BY THE FI NANCE (NO.2) ACT, 2004, EVEN THOUGH THE FINANCE ACT, 2012 HAD NOT SPE CIFICALLY0 STATED THAT PROVISO IS RETROSPECTIVE IN NATURE. ITA NO.558/KOL/2013 A.Y. 2009-10 RANJANA ROY V. ITO WD.42(3) KOL. PAGE 8 THE HIGH COURT AFFIRMED THE RATIO LAID DOWN BY THE AGRA TRIBUNAL AND HELD THAT SAID PROVISO IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005 RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF HO N'BLE DELHI HIGH COURT, WE DEEM IT FIT AND APPROPRIATE IN THE INTEREST OF JUST ICE AND FAIR PLAY TO SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER TO DECI DE THE ISSUE AFRESH IN THE LIGHT OF THE AFORESAID JUDGMENT TO ENSURE WHETHER THE DED UCTEE HAS PAID TAXES ON THEIR INCOME. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY WHETHER THE PAYEES HAVE INCLUDED THE SUBJECT MENTIONED RECE IPTS IN THEIR RESPECTIVE RETURNS AND PAID TAXES THEREON OR NOT. IF THAT IS S O, THEN DISALLOWANCE U/S. 40(A)(IA) OF THE ACT SHALL NOT BE MADE IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE GROUND RAISED BY ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 04/ 12/2015 SD/- SD/- (MAHAVIR SINGH) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 04 /1 2 /2015 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-RANJANA ROY, 24, NANADALAL DEY STREET, B ARANAGAR, KOL-36 2. /RESPONDENT-ITO WD-42(3), PODER COURT-4 TH FL, 18, RABINDRA SARANI, KOL-01 3. * +, . / CONCERNED CIT KOLKATA 4. .- / CIT (A) KOLKATA 5. 012 33+,, +, , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , /TRUE COPY/ / +, ,