M/s. Seatel Electronics India Private Limited, Jaipur V. Income Tax Office, Ward-2(1), Jaipur

ITA 591/JPR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5420 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 14-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Keywords: Retrospective amendment; Additional evidence; Non compliance; Right to appeal
• Section: 12; 43B; 143(3); 40(a)(ia); 205

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO , JM VK;DJ VIHY LA-@ ITA NO. 591/JP/2017 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2012-13 M/S SEATEL ELECTRONICS INDIA PVT. LTD., 13B, ACHROL HOUSE, CIVIL LINES, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD-2(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAHCS 5191 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SIDDARTH RANKA (ADV.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/01/2019 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 04/02/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS THE APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF LD.CIT(A)-I, JAIPUR DATED 03/05/2017 FOR THE A.Y.2012-13 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SH ORT THE ACT). 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS RELATING T O DISALLOWANCE OF RS. 12,47,500/- U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF NON-DEDUCTION OF TDS TOWARDS INTEREST PAID BY THE ASSESSEE. ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PRIVATE LIMITED CO MPANY CARRYING ON THE BUSINESS OF TRADING IN COMPUTER PARTS AND ITS C&F A GENT FOR THE PAST SEVERAL YEARS. DURING THE COURSE OF SCRUTINY ASSESS MENT, THE ASSESSING OFFICER HAS DISALLOWED A SUM OF RS. 12,47,500/- U/S. 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TDS TOWARDS INTEREST PAID BY THE ASSESSEE TO M/S. BAJAJ AUTO FINANCE LTD., TATA CAPITAL LTD., BARCLAYS INVESTMENTS & LOANS (INDIA) LTD., RELIGARE FINVEST LTD. AND RELIANCE CA PITAL LTD. THE ASSESSING OFFICER HAS REJECTED THE SUBMISSION OF THE ASSESSEE APPELLANT THAT THE RECIPIENT COMPANIES HAVE ACCOUNTED FOR THE INTEREST RECEIVED FROM THE ASSESSEE AND HAVE ALSO PAID DUE TAX THEREON AND HAS HELD THAT THE 2 ND PROVISO TO SECTION 40(A)(IA) INTRODUCED BY FINANCE ACT, 2012 IS PROSPECTIVE IN NATURE AND SHALL NOT BE TREATED AS R ETROSPECTIVE. 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED T HE ACTION OF THE ASSESSING OFFICER AGAINST WHICH THE ASSESSEE IS FURT HER APPEAL BEFORE US. 5. IT WAS ARGUED BY THE LD AR OF THE ASSESSEE THAT T HE ISSUE WITH REGARD TO APPLICABILITY OF SECOND PROVISO TO SECTIO N 40(A)(IA) OF THE ACT INTRODUCED BY THE FINANCE ACT, 2012 IS RETROSPECTIV E AND IN SUPPORT OF THE CASE, THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF PR.CIT VS SHRI OM PRAKASH DANGAYACH IN D.B. INCOME TAX APPE AL NO. 124/2018 ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 3 DECISION DATED 03/07/2018 AND DECISION OF THE COORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S FORTUNE INFONET VS. ITO IN ITA NO. 866/JP/2018 ORDER DATED 20/11/2018 WAS PLACED ON REC ORD. 6. ON THE OTHER HAND, THE LD. DR HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUN D THAT THE ISSUE WITH REGARD TO APPLICABILITY OF SECOND PROVISO TO SECTIO N 40(A)(IA) OF THE HAS BEEN HELD TO BE RETROSPECTIVE BY THE COORDINATE BEN CH IN THE FOLLOWING JUDICIAL PRONOUNCEMENTS: THIS TRIBUNAL IN THE CASE OF ACCME (URVASHI PUMPS) ENG. (P.) LTD. VS. JCIT (OSD) (2018) 90 TAXMANN.COM 189 (JP TRIB). THE TRIB UNAL IN THE SAID DECISION HAS CONSIDERED AND DECIDED THIS ISSUE AS U NDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE CONTENDED BEFORE T HE LD. CIT(A) THAT THE INTEREST PAID TO 3 NBFCS NAMELY RELIANCE C APITAL LIMITED, BARCLAYS BANK AND CHOLAMANDALAM DBC FINANCE LIMITED WAS INCLUDED IN THE RETURN OF INCOME FILED BY THESE NON BANKING FINANCIAL COMPANIES THEREFORE, IN VIEW OF THE SECO ND PROVISO TO SECTION 40(A)(IA) OF THE ACT NO DISALLOWANCE IS CAL LED FOR IN RESPECT OF THIS AMOUNT ON WHICH THE RECIPIENT HAVE PAID THE TAXES. THE ASSESSEE URGED THAT THE SECOND PROVISO TO SECTION 4 0(A)(IA) IS REMEDIAL IN NATURE AND THEREFORE, THE SAID AMENDMEN T WILL HAVE RETROSPECTIVE EFFECT. WE FIND THAT HONBLE DELHI HI GH COURT IN CASE OF CIT VS. NARESH KUMAR (SUPRA) WHILE DEALING WITH AN IDENTICAL ISSUE HAS HELD IN PARA 15 TO 29 AS UNDER:- 15. QUESTION WHETHER THE AMENDMENT IS RETROSPECTIVE O R PROSPECTIVE IS VEXED AND RIGID RULE CAN BE APPLIED UNIVERSALLY. VARIOUS RULES OF ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 4 INTERPRETATION HAVE DEVELOPED IN ORDER TO DETERMINE WHETHER OR NOT, AN AMENDMENT IS RETROSPECTIVE OR PROSPECTIVE. FISCAL STATUTES IMPOSING LIABILITIES ARE GOVERNED BY NORMAL PRESUMP TION THAT THEY ARE NOT RETROSPECTIVE. THE CARDINAL RULE IS TH AT THE LAW TO BE APPLIED, IS THAT WHICH IS IN FORCE ON THE FIRST DAY OF THE ASSESSMENT YEAR, UNLESS OTHERWISE MANDATED EXPRESSLY OR PROVID ED BY NECESSARY IMPLICATION. THE AFORESAID DICTUM IS BASE D UPON THE PRINCIPLE THAT A NEW PROVISION CREATING A LIABILITY OR AN OBLIGATION, AFFECTING OR TAKING AWAY VESTED RIGHTS OR ATTACHING NEW DISABILITY IS PRESUMED TO BE PROSPECTIVE. HOWEVER, IT IS ACCEP TED THAT LEGISLATURES HAVE PLENARY POWER TO MAKE RETROSPECTI VE AMENDMENTS, SUBJECT TO CONSTITUTIONAL RESTRICTIONS. 16. BASED UPON THE AFORESAID BROAD DICTUM, JUDGES AND JURISTS HAVE DRAWN DISTINCTION BETWEEN PROCEDURAL AND SUBSTANTIV E PROVISIONS. SUBSTANTIVE PROVISIONS DEAL WITH RIGHTS AND THE SAM E ARE FUNDAMENTAL, WHILE PROCEDURAL LAW IS CONCERNED WITH THE LEGAL PROCESS INVOLVING ACTIONS AND REMEDIES. AMENDMENTS TO SUBSTANTIVE LAW ARE TREATED AS PROSPECTIVE, WHILE A MENDMENTS TO PROCEDURAL LAW ARE TREATED AS RETROSPECTIVE. THIS D ISTINCTION ITSELF IS NOT FREE FROM DIFFICULTIES AS RIGHT TO APPEAL HA S BEEN HELD TO BE A SUBSTANTIVE LAW, BUT LAW OF LIMITATION IS REGARDE D AS PROCEDURAL. THERE IS AN INTERPLAY AND INTERCONNECT BETWEEN WHAT CAN BE REGARDED AS SUBSTANTIVE AND PROCEDURAL LAW [SEE CIT V. SHRAWAN KUMAR SWARUP & SONS [1998] 232 ITR 123(ALL.) ]. 17. THERE ARE DECISIONS, WHICH HOLD THAT PROCESS OF L ITIGATION OR ENFORCEMENT OF LAW IS PROCEDURAL. SIMILARLY, MACHIN ERY PROVISION FOR COLLECTION OF TAX, RATHER THAN TAX ITSELF IS PR OCEDURAL. READ IN THIS CONTEXT, IT CAN BE STRONGLY ARGUED THAT SECTIO N 40(A)(IA) AT LEAST TO THE EXTENT OF THE AMENDMENT IS PROCEDURAL AS BY ENACTING SECTION 40(A)(IA) THE LEGISLATURE DID NOT WANT TO IMPOSE A NEW TAX BUT WANTED TO ENSURE COLLECTION OF TDS AN D THE AMENDMENTS MADE STREAMLINE AND REMEDY THE ANOMALIES NOTICED IN THE SAID PROCEDURE BY ALLOWING DEDUCTION IN THE YEAR WHEN THE EXPENDITURE IS INCURRED PROVIDED TDS IS PAID BEFORE THE DUE DATE FOR FILING OF THE RETURN. REMEDIAL STATUTES ARE NOR MALLY NOT RETROSPECTIVE, ON THE GROUND THAT THEY MAY AFFECT V ESTED RIGHTS. BUT THESE STATUTES ARE CONSTRUED LIBERALLY WHEN JUS TIFIED AND RULE AGAINST RETROSPECTIVITY MAY BE APPLIED WITH LESS RE SISTANCE [SEE BHARAT SINGH V. MANAGEMENT OF NEW DELHI TUBERC ULOSIS CENTRE [1986] 2 SCC 614 AND WORKMEN FIRESTONE TYRE & RUBBER CO. OF INDIA (P.) LTD. V. MANAGEMENT AIR 1973 SC 12 27. 18. IT IS INTERESTING TO NOTE THAT EARLIER ENGLISH DE CISIONS HAVE HELD THAT AN ENACTMENT FIXING A PENALTY OR MAXIMUM PENAL TY FOR ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 5 OFFENCE IS MERELY PROCEDURAL FOR THE PURPOSE OF DET ERMINING RETROSPECTIVITY[SEE DPP V. LAMB [1941]2KB89)AND R V . OLIVER [194 4] 29 CR. APP. 137. THIS VIEW, HOWEVER, HAS BEEN CR ITICIZED IN REHERD ATHLUMNEY, IN RE [1898] 2 QB 547 ON THE G ROUND THAT HIGHER OR GREATER PUNISHMENT IMPAIRS EXISTING RIGHT S OR OBLIGATION; 'NO RULE OF CONSTRUCTION IS MORE FIRMLY ESTABLISHED THAN THIS; THAT A RETROSPECTIVE OPERATION IS NOT TO BE GIVEN TO A S TATUTE SO AS TO IMPAIR AN EXISTING RIGHT OR OBLIGATION, OTHERWISE T HAN AS REGARDS MATTERS OF PROCEDURE, UNLESS THAT EFFECT CANNOT BE AVOIDED WITHOUT DOING VIOLENCE TO THE LANGUAGE OF THE ENACT MENT. IF THE ENACTMENT IS EXPRESSED IN LANGUAGE WHICH IS FAIRLY CAPABLE OF EITHER INTERPRETATION, IT OUGHT TO BE CONSTRUED AS PROSPECTIVE ONLY.' 19. THE WORD 'FAIRLY' USED IN THE AFORESAID QUOTATION IS IMPORTANT AND RELEVANT, BUT FOR APPLICATION OF ANOTHER RULE O F INTERPRETATION. G.P. SINGH IN 'PRINCIPLES OF STATUT ORY INTERPRETATION', 13TH EDITION, 2012 AT PAGE 538 UND ER THE SUB- HEADING 'RECENT STATEMENTS OF THE RULE AGAINST RETR OSPECTIVITY' HAS GREATLY EMPHASIZED THE PRINCIPLE OF FAIRNESS AN D OBSERVED THAT CLASSIFICATION OF STATUTE EITHER SUBSTANTIVE O R PROCEDURAL DOES NOT NECESSARILY DETERMINE WHETHER THE ENACTMENT OR AMENDMENT HAS RETROSPECTIVE OPERATION, E.G., LAW OF LIMITATIO N IS PROCEDURAL BUT ITS APPLICATION TO PAST CAUSE OF ACTION MAY RES ULT OF REVIVING OR EXTINGUISHING A RIGHT, AND SUCH OPERATION CANNOT BE SAID TO BE PROCEDURAL. SIMILARLY, WHEN REQUISITES OF AN ACTION UNDER THE NEW STATUTE, DRAWS FROM A TIME INCIDENT TO ITS PASSING, RULE AGAINST RETROSPECTIVITY MAY NOT BE APPLICABLE. 20. IN THE SAID TEXT, REFERENCE HAS BEEN MADE TO FORM ULATION BY DIXON, C.J. IN MAXWELL V. MURPHY [1957] 96 CLR 261 HOLDING: 'THE GENERAL RULE OF THE COMMON LAW IS THAT A STATU TE CHANGING THE LAW OUGHT NOT, UNLESS THE INTENTION APPEARS WIT H REASONABLE CERTAINTY, TO BE UNDERSTOOD AS APPLYING TO FACTS OR EVENTS THAT HAVE ALREADY OCCURRED IN SUCH A WAY AS TO CONFER OR IMPOSE OR OTHERWISE AFFECT THE RIGHTS OR LIABILITIES WHICH TH E LAW HAD DEFINED BE REFERENCE TO THE PAST EVENTS. BUT GIVEN THE RIGH TS AND LIABILITIES FIXED BY REFERENCE TO THE PAST FACTS, MATTERS OR EV ENTS, THE LAW APPOINTING OR REGULATING THE MANNER IN WHICH THEY A RE TO BE ENFORCED OR THEIR ENJOYMENT IS TO BE SECURED BY JUD ICIAL REMEDY IS NOT WITHIN THE APPLICATION OF SUCH A PRESUMPTION'. ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 6 21. IDENTICALLY, IN SECRETARY OF STATE FOR SOCIAL SEC URITY V. TUNNICLIFFE [1991] 2 ALL ER 712 (CA), STAUGHTON, L.J. HAS EXPRE SSED THE SAID PRINCIPLE IN THE FOLLOWING WORDS: 'THE TRUE PRINCIPLE IS THAT PARLIAMENT IS PRESUMED NOT TO HAVE INTENDED TO ALTER THE LAW APPLICABLE TO PAST EVENTS AND TRANSACTIONS IN A MANNER WHICH IS UNFAIR TO THOSE C ONCERNED IN THEM UNLESS A CONTRARY INTENTION APPEARS. IT IS NOT SIMPLY A QUESTION OF CLASSIFYING AN ENACTMENT AS RETROSPECTI VE OR NOT RETROSPECTIVE. RATHER IT MAY WELL BE A MATTER OF DE GREE- THE GREATER THE UNFAIRNESS, THE MORE IT IS TO BE EXPECT ED THAT PARLIAMENT WILL MAKE IT CLEAR IF THAT IS INTENDED'. 22. HOUSE OF LORDS IN L' OFFICE CHERIFIEN DES PHOSPHA TES V. YAMASHITA SHINNIHON STEAMSHIP CO. LTD. [1994] 1 ALL ER 20 HAS SAID THE QUESTION OF FAIRNESS HAS TO BE ANSWERED BY TAKING I NTO ACCOUNT VARIOUS FACTORS, VIZ., VALUE OF THE RIGHTS WHICH TH E STATUTE AFFECTS; EXTENT TO WHICH THAT VALUE IS DIMINISHED OR EXTINGU ISHED BY THE SUGGESTED RETROSPECTIVE EFFECT OF THE STATUTE; UNFA IRNESS OF ADVERSELY AFFECTING THE RIGHTS; CLARITY OF THE LANG UAGE USED BY PARLIAMENT AND THE CIRCUMSTANCES IN WHICH THE LEGIS LATION WAS CREATED. THESE FACTORS HAVE TO BE WEIGHED TOGETHER TO PROVIDE AN ANSWER WHETHER THE CONSEQUENCES OF READING THE STAT UTE WITH SUGGESTED DEGREE OF RETROSPECTIVITY IS UNFAIR; THAT THE WORDS USED BY THE PARLIAMENT COULD NOT HAVE BEEN INTENDED TO M EAN WHAT THEY MIGHT APPEAR TO SAY. THIS PRINCIPLE WAS APPLIE D WHILE INTERPRETING A NEW PROVISION IN ARBITRATION ACT IN THIS CASE OBSERVING THAT THE DELAY ATTRIBUTABLE TO THE CLAIMA NT IN PURSUING A CLAIM BEFORE ENACTMENT OF THE NEW PROVISION, COUL D BE TAKEN INTO CONSIDERATION FOR DISMISSAL. 23. PRINCIPLE OF 'FAIRNESS' HAS NOT LEFT US UNTOUCHED AND WAS APPLIED BY THE SUPREME COURT IN VIJAY V. STATE OF MAHARASHT RA [2006] 6 SCC 289 IN THE FOLLOWING WORDS: 'THE NEGOTIATION IS NOT A RIGID RULE AND VARIES WI TH THE INTENTION AND PURPORT OF THE LEGISLATION, BUT TO APPLY IT IN SUCH A CASE IS A DOCTRINE OF FAIRNESS. WHEN A NEW LAW IS ENACTED FOR THE BENEFIT OF THE COMMUNITY AS A WHOLE, EVEN IN ABSENCE OF A PROV ISION THE STATUTE MAY BE HELD TO BE RETROSPECTIVE IN NATURE.' 24. IN ALLIED MOTORS (P.) LTD. V. CIT [1997] (224) IT R 677/91 TAXMAN 205 (SC) IT WAS HELD THAT THE NEW PROVISO TO SECTION 43B SH OULD BE GIVEN RETROSPECTIVE EFFECT FROM THE INCEPTION ON THE GROUND THAT THE PROVISO WAS ADDED TO REMEDY UNINTENDED CON SEQUENCES AND SUPPLY AN OBVIOUS OMISSION. THE PROVISO ENSURED REASONABLE ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 7 INTERPRETATION AND RETROSPECTIVE EFFECT WOULD SERVE THE OBJECT BEHIND THE ENACTMENT. 25. IN STATE THROUGH C.B.I DELHI V. GIAN SINGH AIR 19 99 SC 3450 EXTREME PENALTY OF DEATH WAS DILUTED TO ALTERNATIVE OPTION OF IMPRISONMENT FOR LIFE RECORDING THAT THE LEGISLATIV E BENEVOLENCE COULD BE EXTENDED TO AN ACCUSED, WHO AWAITS JUDICIA L VERDICTS AGAINST HIS SENTENCE. EARLIER IN RATTAN LAL V. STAT E OF PUNJAB AIR 1965 SC 444 REFERENCE WAS MADE TO SECTION 6 OF THE PROBATION OF OFFENDERS ACT, 1958 AND IT WAS OBSERVED THAT IF THE ACT WAS NOT GIVEN RETROSPECTIVE OPERATION, IT WOULD LEAD TO ANO MALIES AND THUS COULD NOT BE THE INTENTION OF THE LEGISLATURE. 26. PRINCIPLE OF MATCHING WHICH IS DISTURBED BY SECTI ON 40(A)(IA) OF THE ACT, MAY NOT MATERIALLY BE OF CONSEQUENCE TO TH E REVENUE WHEN THE TAX RATES ARE STABLE AND UNIFORM OR IN CAS ES OF BIG ASSESSEES HAVING SUBSTANTIAL TURNOVER AND EQUALLY H UGE EXPENSES AS THEY HAVE NECESSARY CUSHION TO ABSORB THE EFFECT . HOWEVER, MARGINAL AND MEDIUM TAXPAYERS, WHO WORK AT LOW G.P. RATE AND WHEN EXPENDITURE WHICH BECOMES SUBJECT-MATTER OF AN ORDER UNDER SECTION 40(A)(IA) IS SUBSTANTIAL, CAN SUFFER SEVERE ADVERSE CONSEQUENCES AS IS APPARENT FROM THE CASE OF NARESH KUMAR. TRANSFERRING OR SHIFTING EXPENSES TO A SUBSEQUENT Y EAR, IN SUCH CASES, WILL NOT WIPE OFF THE ADVERSE EFFECT AND THE FINANCIAL STRESS. NEVERTHELESS THE SECTION 40(A)(IA) HAS TO BE GIVEN FULL PLAY KEEPING IN MIND THE OBJECT AND PURPOSE BEHIND THE S ECTION. AT THE SAME TIME, THE PROVISION CAN BE AND SHOULD BE INTER PRETED LIBERALLY AND EQUITABLE SO THAT AN ASSESSEE SHOULD NOT SUFFER UNINTENDED AND DELETERIOUS CONSEQUENCES BEYOND WHAT THE OBJECT AND PURPOSE OF THE PROVISION MANDATES. CASE OF NARESH KUMAR IS NOT ONE OF RARE CASES, BUT ONE OF SEVERAL CASES AS WE FIND THAT SECTION 40(A)(IA) IS INVOKED IN LARGE NUM BER OF CASES. 27. ONE IMPORTANT CONSIDERATION IN CONSTRUING A MACHI NERY SECTION IS THAT IT MUST BE SO CONSTRUED SO AS TO EFFECTUATE TH E LIABILITY IMPOSED BY THE CHARGING SECTION AND TO MAKE THE MAC HINERY WORKABLE. HOWEVER, WHEN THE MACHINERY SECTION RESULTS IN UNIN TENDED OR HARSH CONSEQUENCES WHICH WERE NOT INTENDED, THE REM EDIAL OR CORRECTION ACTION TAKEN IS NOT TO BE DISREGARDED BU T GIVEN DUE REGARD. 28. IT IS, IN THIS CONTEXT, THAT WE HAD IN RAJINDER K UMAR'S CASE (SUPRA) OBSERVED AS UNDER: ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 8 '22. NOW, WE REFER TO THE AMENDMENTS WHICH HAVE BEE N MADE BY THE FINANCE ACT, 2010 AND THE EFFECT THEREOF. WE HA VE ALREADY QUOTED THE DECISION OF THE CALCUTTA HIGH COURT IN V IRGIN CREATIONS (SUPRA). THE SAID DECISION REFERS TO THE EARLIER DECISION OF THE SUPREME COURT IN THE CASE OF ALLIED MOTORS ( P.) LTD(SUPRA) AND COMMISSIONER OF INCOME TAX V. ALOM EXTRUSIONS L TD, [2009] 319 ITR 306 (SC) . IN THE CASE OF ALLIED MOTORS (P.) LTD. (SUPRA), T HE SUPREME COURT WAS EXAMINING THE FIRST PROVISO TO SE CTION 43B AND WHETHER IT WAS RETROSPECTIVE. SECTION 43B WAS I NSERTED IN THE ACT WITH EFFECT FROM 1ST APRIL 1984 FOR CURBING CLA IMS OF TAXPAYERS WHO DID NOT DISCHARGE OR PAY STATUTORY LIABILITIES BUT CLAIMED DEDUCTIONS ON THE GROUND THAT THE STATUTORY LIABILI TY HAD ACCRUED. SECTION 43B STATES THAT THE STATUTORY LIABILITY WOU LD BE ALLOWED AS A DEDUCTION OR AS AN EXPENSE IN THE YEAR IN WHICH T HE PAYMENT WAS MADE AND WOULD NOT BE ALLOWED, EVEN IN CASES OF MERCANTILE SYSTEM OF ACCOUNTANCY, IN THE YEAR OF ACCRUAL. IT W AS NOTICED THAT IN SOME CASES HARDSHIP WOULD BE CAUSED TO ASSESSEES , WHO PAID THE STATUTORY DUES WITHIN THE PRESCRIBED PERIOD THO UGH THE PAYMENTS SO MADE WOULD NOT FALL WITHIN THE RELEVANT PREVIOUS YEAR. ACCORDINGLY, A PROVISO WAS ADDED BY FINANCE A CT, 1987 APPLICABLE WITH EFFECT FROM 1ST APRIL, 1988. THE PR OVISO STIPULATED THAT WHEN STATUTORY DUES COVERED BY SECTION 43B WER E PAID ON OR BEFORE THE DUE DATE FOR FURNISHING OF THE RETURN UN DER SECTION 139(1), THE DEDUCTION/EXPENSE, EQUAL TO THE AMOUNT PAID WOULD BE ALLOWED. THE SUPREME COURT NOTICED THE PURPOSE B EHIND THE PROVISO AND THE REMEDIAL NATURE OF THE INSERTION MA DE. OF COURSE, THE SUPREME COURT ALSO REFERRED TO EXPLANATION 2 WH ICH WAS INSERTED BY FINANCE ACT, 1989 WHICH WAS MADE RETROS PECTIVE AND WAS TO TAKE EFFECT FROM 1ST APRIL, 1984. HIGHLIGHTI NG THE OBJECT BEHIND SECTION 43B, IT WAS OBSERVED THAT THE PROVIS O MAKES THE PROVISION WORKABLE, GIVES IT A REASONABLE INTERPRET ATION. IT WAS ELUCIDATED: '12. IN THE CASE OF GOODYEAR INDIA LTD. V. STATE O F HARYANA THIS COURT SAID THAT THE RULE OF REASONABLE CONSTRUCTION MUST BE APPLIED WHILE CONSTRUING A STATUTE. LITERAL CONSTRU CTION SHOULD BE AVOIDED IF IT DEFEATS THE MANIFEST OBJECT AND PURPO SE OF THE ACT. 13. THEREFORE, IN THE WELL-KNOWN WORDS OF JUDGE LE ARNED HAND, ONE CANNOT MAKE A FORTRESS OUT OF THE DICTIONARY; A ND SHOULD REMEMBER THAT STATUTES HAVE SOME PURPOSE AND OBJECT TO ACCOMPLISH WHOSE SYMPATHETIC AND IMAGINATIVE DISCOV ERY IS THE SUREST GUIDE TO THEIR MEANING. IN THE CASE OF R.B. JUDHA MAL KUTHIALA V. CIT, THIS COURT SAID THAT ONE SHOULD AP PLY THE RULE OF REASONABLE INTERPRETATION. A PROVISO WHICH IS INSER TED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION W ORKABLE, A ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 9 PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE S ECTION AND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SE CTION A REASONABLE INTERPRETATION, REQUIRES TO BE TREATED A S RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CA N BE GIVEN TO THE SECTION AS A WHOLE. 14. THIS VIEW HAS BEEN ACCEPTED BY A NUMBER OF HIG H COURTS. IN THE CASE OF CIT V. CHANDULAL VENICHAND, THE GUJARAT HIGH COURT HAS HELD THAT THE FIRST PROVISO TO SECTION 43-B IS RETROSPECTIVE AND SALES TAX FOR THE LAST QUARTER PAID BEFORE THE FILI NG OF THE RETURN FOR THE ASSESSMENT YEAR IS DEDUCTIBLE. THIS DECISIO N DEALS WITH ASSESSMENT YEAR 1985-85. THE CALCUTTA HIGH COURT IN THE CASE OF CIT V. SRI JAGANNATH STEEL CORPN. HAS TAKEN A SI MILAR VIEW HOLDING THAT THE STATUTORY LIABILITY FOR SALES TAX ACTUALLY DISCHARGED AFTER THE EXPIRY OF THE ACCOUNTING YEAR IN COMPLIANCE WITH THE RELEVANT STATUTE IS ENTITLED TO DEDUCTION UNDER SECTION 43-B. THE HIGH COURT HAS HELD THE AMENDMENT TO BE C LARIFICATORY AND, THEREFORE, RETROSPECTIVE. THE GUJARAT HIGH COU RT IN THE ABOVE CASE HELD THE AMENDMENT TO BE CURATIVE AND EXPLANAT ORY AND HENCE RETROSPECTIVE. THE PATNA HIGH COURT HAS ALSO HELD THE AMENDMENT INSERTING THE FIRST PROVISO TO BE EXPLANA TORY IN THE CASE OF JAMSHEDPUR MOTOR ACCESSORIES STORES V. UNIO N OF INDIA. THE SPECIAL LEAVE PETITION FROM THIS DECISION OF TH E PATNA HIGH COURT WAS DISMISSED. THE VIEW OF THE DELHI HIGH COU RT, THEREFORE, THAT THE FIRST PROVISO TO SECTION 43-B WILL BE AVAI LABLE ONLY PROSPECTIVELY DOES NOT APPEAR TO BE CORRECT. AS OBS ERVED BY G.P. SINGH IN HIS PRINCIPLES OF STATUTORY INTERPRETATION , 4TH EDN. AT P. 291: 'IT IS WELL-SETTLED THAT IF A STATUTE IS CURAT IVE OR MERELY DECLARATORY OF THE PREVIOUS LAW RETROSPECTIVE OPERA TION IS GENERALLY INTENDED.' IN FACT THE AMENDMENT WOULD NO T SERVE ITS OBJECT IN SUCH A SITUATION UNLESS IT IS CONSTRUED A S RETROSPECTIVE. THE VIEW, THEREFORE, TAKEN BY THE DELHI HIGH COURT CANNOT BE SUSTAINED.' 23. SECTION 43B DEALS WITH STATUTORY DUES AND STIP ULATES THAT THE YEAR IN WHICH THE PAYMENT IS MADE THE SAME WOULD BE ALLOWED AS A DEDUCTION EVEN IF THE ASSESSEE IS FOLLOWING THE M ERCANTILE SYSTEM OF ACCOUNTANCY. THE PROVISO, HOWEVER, STIPUL ATES THAT DEDUCTION WOULD BE ALLOWED WHERE THE STATUTORY DUES COVERED BY SECTION 43B STAND PAID ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. SECTION 40(A)(IA) IS APPLICABLE T O CASES WHERE AN ASSESSEE IS REQUIRED TO DEDUCT TAX AT SOURCE AND FA ILS TO DEDUCT OR DOES NOT MAKE PAYMENT OF THE TDS BEFORE THE DUE DAT E, IN SUCH CASES, NOTWITHSTANDING SECTIONS 30 TO 38 OF THE ACT , DEDUCTION IS TO BE ALLOWED AS AN EXPENDITURE IN THE YEAR OF PAYM ENT UNLESS A CASE IS COVERED UNDER THE EXCEPTIONS CARVED OUT. TH E AMENDED ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 10 PROVISO AS INSERTED BY FINANCE ACT, 2010 STATES WHE RE AN ASSESSEE HAS MADE PAYMENT OF THE TDS ON OR BEFORE THE DUE DA TE OF FILING OF THE RETURN UNDER SECTION 139(1), THE SUM SHALL B E ALLOWED AS AN EXPENSE IN COMPUTING THE INCOME OF THE PREVIOUS YEA R. THE TWO PROVISIONS ARE AKIN AND THE PROVISOS TO SECTIONS 40 (A)(IA) AND 43B ARE TO THE SAME EFFECT AND FOR THE SAME PURPOSE. 24. IN PODAR CEMENT (P.) LTD. (SUPRA), THE SUPREME COURT CONSIDERED WHETHER TERM 'OWNER' WOULD INCLUDE UNREG ISTERED OWNERS WHO HAD PAID SALE CONSIDERATION AND WERE COV ERED BY SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THE CO NTENTION OF THE ASSESSEES WAS THAT THE AMENDMENTS MADE TO THE DEFIN ITION OF TERM 'OWNER' BY FINANCE BILL, 1987 SHOULD BE GIVEN RETROSPECTIVE EFFECT. IT WAS HELD THAT THE AMENDMENTS WERE RETROS PECTIVE IN NATURE AS THEY RATIONALISE AND CLEAR THE EXISTING A MBIGUITIES AND DOUBTS. REFERENCE WAS MADE TO CRAWFORD: 'STATUTORY CONSTRUCTION' AND 'THE PRINCIPLE OF DECLARATORY STA TUTES', FRANCIS BENNION: 'STATUTORY INTERPRETATION', JUSTICE G.P. S INGH'S 'PRINCIPLES OF STATUTORY INTERPRETATION', IT WAS OB SERVED THAT SOMETIMES AMENDMENTS ARE MADE TO SUPPLY AN OBVIOUS OMISSION OR TO CLEAR UP DOUBTS AS TO THE MEANING OF THE PREV IOUS PROVISION. THE ISSUE WAS ACCORDINGLY DECIDED HOLDING THAT IN S UCH CASES THE AMENDMENTS WERE RETROSPECTIVE THOUGH IT WAS NOTICED THAT AS PER TRANSFER OF PROPERTY ACT, REGISTRATION ACT, ETC . A LEGAL OWNER MUST HAVE A REGISTERED DOCUMENT. 25. IN VIEW OF THE AFORESAID DISCUSSION IN PARAS 1 8,19 AND 20, IT IS APPARENT THAT THE RESPONDENT ASSESSEE DID NOT VIOLA TE THE UNAMENDED SECTION 40(A)(IA) OF THE ACT. WE HAVE NOT ED THE AMBIGUITY AND REFERRED THEIR CONTENTION OF REVENUE AND REJECTED THE INTERPRETATION PLACED BY THEM. THE AMENDED PROV ISIONS ARE CLEAR AND FREE FROM ANY AMBIGUITY AND DOUBT. THEY W ILL HELP CURTAIL LITIGATION. THE AMENDED PROVISION CLEARLY S UPPORT VIEW TAKEN IN PARAGRAPHS 17 - 20 THAT THE EXPRESSION 'SA ID DUE DATE' USED IN CLAUSE A OF PROVISO TO UNAMENDED SECTION RE FERS TO TIME SPECIFIED IN SECTION 139(1) OF THE ACT. THE AMENDED SECTION 40(A)(IA) EXPANDS AND FURTHER LIBERALISES THE STATU TE WHEN IT STIPULATES THAT DEDUCTIONS MADE IN THE FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR BUT PAID BEFORE THE DUE DATE OF FILIN G OF THE RETURN, WILL CONSTITUTE SUFFICIENT COMPLIANCE.' 29. IN VIEW OF THE AFORESAID DISCUSSION, WE DO NOT FI ND ANY MERIT IN THE PRESENT APPEALS FILED BY THE REVENUE AND THEY A RE DISMISSED. ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 11 WE FURTHER NOTE THAT THE COORDINATE BENCH OF THIS T RIBUNAL IN CASE OF RAJESH YADAV IN ITA NO. 895/JP/2012 VIDE ORDER D ATED 29.01.2016 HAS HELD AS UNDER:- 6.1. RECENTLY IN THE MATTER OF P.M.S. DIESELS 201 5 ] 59 TAXMANN.COM 100 (PUNJAB & HARYANA), HONBLE PUNJAB & HARYANA HI GH COURT HAD ELABORATELY DISCUSSED THE JUDGMENT PASSED BY THE HO NBLE CALCUTTA HIGH COURT AND HONBLE GUJARAT HIGH COURT, HONBLE ALLAH ABAD HIGH COURT AND OTHER JUDGMENTS AS AVAILABLE AND THEREAFTER HAS COM E TO THE CONCLUSION THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE MANDAT ORY IN NATURE AND NON COMPLIANCE/NON DEDUCTION OF TAX ATTRACTS DISALLOWAN CE OF THE ENTIRE AMOUNT. HAVING SAID SO, WE WILL BE FAILING IN OUR D UTY IF WE DO NOT DISCUSS THE AMENDMENT BROUGHT IN BY THE FINANCE (NO. 2) ACT 2014 WITH EFFECT FROM 1.4.2015 BY VIRTUE OF WHICH PROVISO TO SECTION 40(A)(IA) HAS BEEN INSERTED, WHICH PROVIDES THAT IF ANY SUCH SUM TAXED 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 TH E INCOME OF PREVIOUS YEAR, AND FURTHER, SECTION 40(A)(IA) HAS BEEN SUBST ITUTED WHEREIN THE 30% OF ANY SUM PAYABLE TO A RESIDENT HAS BEEN SUBSTITUT ED. IN THE PRESENT CASE, THE AUTHORITIES BELOW HAS ADDED THE ENTIRE SU M OF RS. 7,51,322/- BY DISALLOWING THE WHOLE OF THE AMOUNT. THOUGH THE SUB STITUTION IN SECTION 40 HAS BEEN MADE EFFECTIVE WITH EFFECTIVE FROM 1.4. 2015, IN OUR VIEW THE BENEFIT OF THE AMENDMENT SHOULD BE GIVEN TO THE ASS ESSEE EITHER BY DIRECTING THE AO TO CONFIRM FROM THE CONTRACTORS, N AMELY, M/S. GARVIT STONEX, M/S. CHANDA MARBLES AND M/S. NIDHI GRANITES AS TO WHETHER THE SAID PARTIES HAVE DEPOSITED THE TAX OR NOT AND FURT HER OR RESTRICT THE ADDITION TO 30% OF RS. 11 ITA NO. 895/JP/2012 A.Y 2 007-08. SHRI RAJENDRA YADAV VS. ITO AJMER. 7,51,322/-. IN OUR VI EW, IT WILL BE TIED OF JUSTICE IF THE DISALLOWANCE IS ONLY RESTRICTED TO 3 0% OF RS. 7,51,322/-. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED IN THE ABOVE SAID MANNER. FURTHER THIS TRIBUNAL HAS TAKEN A SIMILAR VIEW ON T HIS ISSUE BY FOLLOWING THE ABOVE DECISIONS AND THEREFORE EVEN IF THERE IS DIVERGENT VIEW TAKEN BY THE HONBLE KERALA HIGH COU RT THE VIEW TAKEN IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNAL BY FOLLOWING THE VARIOUS DECISIONS ARE TO BE FOLLOWED TO MAINTAIN TH E RULE OF ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 12 CONSISTENCY. ACCORDINGLY, WE ARE OF THE VIEW THE SE COND PROVISO TO SECTION 40(A)(IA) OF THE ACT WOULD BE EFFECTIVE RET ROSPECTIVE AS IT WAS UNDISPUTEDLY INSERTED TO REMOVABLE THE HARDSHI P FACED BY THE ASSESSES. HENCE, WE SET ASIDE THIS ISSUE TO THE REC ORD OF THE ASSESSING OFFICER FOR LIMITED PURPOSE TO VERIFY THE FACT THAT THE INTEREST INCOME RECEIVED BY THESE NBFCS HAVE BEEN I NCLUDED IN THE RETURN OF INCOME AND OFFERED TO TAX AND THEN DE CIDE THIS ISSUE IN LIGHT OF ABOVE OBSERVATION. RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW LAID DO WN IN ABOVE JUDICIAL PRONOUNCEMENTS, WE HOLD THAT SECOND PROVISO TO SECTI ON 40(A)(IA) OF THE ACT AS INTRODUCED BY THE FINANCE ACT, 2012 IS RETRO SPECTIVE. 8. HOWEVER, IN THE INSTANT CASE, THE ASSESSEE HAD FI LED APPLICATION UNDER RULE 29 OF THE INCOME TAX APPELLATE TRIBUNAL RU LES, 1963. AS PER THE ADDITIONAL EVIDENCE SO FILED, THE ASSESSEE HAS OBTAINED CERTIFICATE FROM THE FOLLOWING PARTIES TO WHOM INTEREST WAS PAID: (A) BAJAJ AUTO FINANCE LTD. (B) TATA CAPITAL LTD. (C) RELIGARE FINVEST LTD. (D) BARCLAYS INVESTMENT & LOANS (INDIA) LTD. (E) RELIANCE CAPITAL LTD. 9. WE ALSO FOUND THAT THE ASSESSEE IS OBTAINED CERT IFICATE OF CHARTERED ACCOUNTANT OF THE CONCERNED INSTITUTION TO THE EFFE CT THAT THE INTEREST PAID BY THE ASSESSEE TO THE ABOVE PARTIES HAVE ALREADY B EEN INCLUDED IN THE TOTAL INCOME WHILE COMPLETING TAXABLE INCOME AS PER RETURN OF INCOME FILED WITH THE DEPARTMENT, WHICH WERE NOT AVAILABLE D URING THE ITA 591/JP/2017_ M/S SEATEL ELECTRONICS VS ITO 13 ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS BE FORE THE LD. CIT(A) AND WHICH IS NECESSARY TO CONSIDER WHILE DECIDING THE AFORESAID APPEAL. SINCE THESE CERTIFICATES GOES TO THE ROOT OF THE MA TTER AND ARE VITAL, RELEVANT AND IMPORTANT IN GETTING THIS APPEAL DECID ED, WE DIRECT THE ASSESSING OFFICER TO CONSIDER THESE CERTIFICATES IN DECIDING THE ISSUE IN TERMS OF JUDICIAL PRONOUNCEMENTS REFERRED HEREINABO VE. WE DIRECT ACCORDINGLY. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS OF THE CONDITIONS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH FEBRUARY, 2019. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04 TH FEBRUARY, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S SEATEL ELECTRONICS INDIA PVT. LTD ., JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 2(1), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 591/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR