M/s Manjunatha Land Developers and Constructions Pvt. Ltd., Bangalore V. ACIT, Bangalore

ITA 642/BANG/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95387 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 18-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 13-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 80IB; 194C; 12

Judgement Text

ITA.642 & 679/BANG/2014 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE BEFORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI. VIJAYPAL RAO, JUDICIAL MEMBER I.T.A NO.642/BANG/2014 (ASSESSMENT YEAR : 2007-08) M/S. MANJUNATHA LAND DEVELOPERS AND CONSTRUCTIONS PVT. LTD, NO.849, 1 ST FLOOR, 12 TH CROSS, 4 TH MAIN, 1 ST STAGE, INDIRANAGAR, BANGALORE 560 038 .. APPELLANT PAN : AADCM9356M V. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE -12(1), BANGALORE .. RESPONDENT I.T.A NO.679/BANG/2014 (ASSESSMENT YEAR : 2007-08) (BY THE REVENUE) ASSESSEE BY : SHRI. PRASHANTH G. S, CA REVENUE BY : SHRI. SANJAY KUMAR, CIT -III HEARD ON : 18.11.2015 PRONOUNCED ON : 27.11.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE CROSS APPEALS FILED BY ASSESSEE AND REVE NUE RESPECTIVELY DIRECTED AGAINST AN ORDER DT.21.02.2014 OF CIT (A)- III, BENGALURU. ITA.642 & 679/BANG/2014 PAGE - 2 02. ASSESSEES APPEAL IS TAKEN UP FIRST FOR DISPOS AL. ASSESSEE HAS ALTOGETHER RAISED 18 GROUNDS OF WHICH GROUNDS 1, 2, 3, 16, 17 AND 18 ARE GENERAL NEEDING NO SPECIFIC ADJUDICATION. GROUND.1 5 IS ON LEVY OF INTEREST U/S.234B AND C OF THE INCOME-TAX ACT, 1961 (THE AC T IN SHORT), WHICH IS CONSEQUENTIAL IN NATURE. 03. VIDE ITS GROUNDS 4 TO 11 ASSESSEE RAISES A GRIE VANCE THAT IT WAS NOT ALLOWED THE CLAIM OF DEDUCTION OF RS.1,41,62,788/- U/S.80IB(10) OF THE ACT. FACTS APROPOS ARE THAT ASSESSEE, A BUILDER AND DEVE LOPER, HAD FILED ITS RETURN FOR THE IMPUGNED ASSESSMENT YEAR DECLARING INCOME O F RS.46,18,320/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED BY THE AO THAT ASSESSEE HAD CLAIMED DEDUCTION OF RS.1,41,62,188/- U/S.80IB(10) OF THE ACT, FOR A PROPERTY CONSTRUCTED IN SURVEY NO.50/11 , SANTHAMARENAHALLI, K R PURAM, BANGALORE. FOR VERIFYING THE CLAIM OF ASS ESSEE, AO MADE A REFERENCE TO THE DISTRICT VALUATION OFFICER (DVO IN SHORT). DVO RECOMMENDED DISALLOWANCE OF THE CLAIM MADE BY THE A SSESSEE U/S.80IB(10) OF THE ACT NOTING THAT OUT OF THE FOUR BLOCKS IN TH E LAND AREA OF 3 ACRES AND 36GUNTAS, THE THREE BLOCKS WHICH WERE REFERRED TO H IM BY THE AO WERE SITUATED IN A LAND AREA WHICH WAS BELOW ONE ACRE. FURTHER AS PER THE DVO, SOME PORTION OF THE LAND WAS DEVELOPED AS INDIVIDUA L PLOTS AND DISPOSED ITA.642 & 679/BANG/2014 PAGE - 3 OFF. AO PUT THE ASSESSEE ON NOTICE ON THE RECOMMEN DATION OF THE DVO. ASSESSEE THEREUPON STATED THAT IT HAD DIFFERENT AP ARTMENTS NAMED LAKE CITY RESIDENCE, LAKE VIHAR, MANJU ANUGRAHA, LAKE BE AUTY, LAKE GLACIER AND LAKE ENCLAVE BUT THERE WERE ALL PART OF ONE PRO JECT CALLED LAKE CITY RESIDENCY. AS PER THE ASSESSEE, DVO HAD NOT CONSID ERED THE LAKE CITY RESIDENCE AND MANJU ANUGRAHA FOR CALCULATIONS. ASS ESSEE SUBMITTED THAT GIVING DIFFERENT NAMES FOR EACH APARTMENT WAS ONLY FOR EASY MARKET AND DID NOT IN ANY WAY EFFECT THE CLAIM MADE U/S.80IB(10) O F THE ACT. HOWEVER, AO WAS OF THE OPINION THAT ASSESSEE WAS UNABLE TO E XPLAIN AS TO HOW IT WAS ELIGIBLE FOR THE CLAIM U/S.80IB(10) OF THE ACT. HE DENIED THE CLAIM. 04. AGGRIEVED ASSESSEE MOVED IN APPEAL BEFORE THE C IT (A). ARGUMENT OF THE ASSESSEE WAS THAT EACH PROJECT WAS CONSIDERE D AS DIFFERENT ONE BY THE AO ERRONEOUSLY. ACCORDING TO THE ASSESSEE, APPROVE D PLAN SANCTIONED BY THE TOWN MUNICIPALITY OF K. R. PURAM, CLEARLY MENTI ONED THAT PROJECT HAD AN AREA OF MORE THAN ONE ACRE. AS PER THE ASSESSEE , CONSTRUCTION WAS AS PER THE APPROVED PLAN. IN OTHER WORDS ARGUMENT OF THE ASSESSEE WAS THAT CONSTRUCTION HAVING BEEN DONE IN AN AREA OF 3 ACRES 36 GUNTAS, IT HAD TO BE GIVEN THE BENEFIT OF 80IB(10) OF THE ACT. CIT (A) WAS HOWEVER NOT APPRECIATIVE OF THIS CONTENTION. ACCORDING TO HIM, ASSESSEE HAD NOT ITA.642 & 679/BANG/2014 PAGE - 4 FULFILLED THE CONDITIONS U/S.80IB(10) OF THE ACT. PROJECTS WERE CONSTRUCTED ON A LAND AREA WHICH WAS LESS THAN 1 ACRE AND THERE WAS DEVIATION FROM THE SANCTIONED PLAN. AS PER THE CIT (A) ASSESSEE COULD NOT REBUT THE FINDINGS OF AO AND DVO. HE UPHELD THE DISALLOWANCE. 05. NOW BEFORE US, LD. AR STRONGLY ASSAILING THE OR DERS OF LOWER AUTHORITIES SUBMITTED THAT THE PERMISSION FOR CONST RUCTION WAS ISSUED BY THE TOWN MUNICIPALITY OF K. R. PURAM ON 19.01.2006. AC CORDING TO HIM, COPY OF THE PERMISSION IS PLACED AT PAGES 35 AND 36 OF T HE PAPER BOOK CLEARLY SHOWED THAT THE PLAN INCLUDED THEREIN LAKE CITY RES IDENCE, LAKE GLACIER, LAKE BEAUTY, LAKE ENCLAVE ALTOGETHER KNOWN AS LAKE CITY RESIDENTIAL COMPLEX. AS PER THE LD. AR THE OFFICIAL MEMORANDUM DT.19.10.2004 ISSUED BY THE DEPUTY COMMISSIONER, BANGALORE DISTR ICT, BANGALORE, HAD CLEARLY STATED THAT LAND IN SY.NO.50/1 CAME TO 3.36 ACRES. AS PER THE LD. AR THIS WAS THE VERY SAME SURVEY NUMBER WAS MENTION ED IN THE LETTER DT.19.01.2006 OF K.R. PURAM MUNICIPALITY, GIVING A PPROVAL FOR THE PROJECT. ACCORDING TO HIM CONSIDERING EACH OF THE BLOCKS IN THE AREA OF 3.36 ACRES AS INDEPENDENT WAS INCORRECT. RELYING ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. VANDANA PROPERTIES (254 ITR 258), LD. AR SUBMITTED THAT WHAT WAS RELEVANT WAS THE AREA OF PLOT OF LAND. ITA.642 & 679/BANG/2014 PAGE - 5 ACCORDING TO HIM THERE COULD BE ANY NUMBER OF HOUSI NG PROJECTS IN A GIVEN AREA OF LAND AND IF THE PROJECTS WERE APPROVED BY T HE LOCAL AUTHORITY THEN 80IB(10) OF THE ACT COULD BE AVAILED PROVIDED OTHER CONDITIONS SET OUT THEREIN WERE SATISFIED. ACCORDING TO HIM THERE WAS NO CASE FOR THE REVENUE THAT ANY OF THE OTHER CONDITIONS SET OUT IN 80IB(10 ) WAS NOT SATISFIED. 06. PER CONTRA, LD. DR STRONGLY SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW. ACCORDING TO HIM, DVOS REPORT CLEARLY MENT IONED THAT ASSESSEE HAD DEVIATED FROM THE ORIGINAL APPROVED PLAN. 07. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. REPORT OF THE DVO WHICH HAS BEEN EXTRACTED IN THE ASSESSME NT ORDER IS REPRODUCED HEREUNDER FOR BREVITY : THE ASSESSEE COMPANY HAS OBTAINED AN APPROVAL TO CONSTRUCT 204 UNITS WITH THE LAND AREA OF 3 ACRES AND 36 GUNTAS I .E.15782.22 SQM WITH THE SINGLE UNIT WHEREAS AS PER SITE CONDITION THERE ARE FOUR APARTMENTS VIZ., LAKE CITY RESIDENCY, LAKE BEAUTY, LAKE GLACIE R AND LAKE ENCLAVE. HOWEVER ONLY THREE APARTMENTS ARE REFERRED TO THIS OFFICE VIZ., LAKE BEAUTY, LAKE GLACIER AND LAKE ENCLAVE. THE LAND UT ILIZED FOR THE ABOVE THREE APARTMENTS ARE AS FOLLOWS : 1 LAKE ENCLAVE 17 .90X22 80 = 408.12 SQM OR 4393 SF T WHICH IS LESS THAI 2 LAKE GLACER AND LAKE BEAUTY 38.25 X29.25 = 1118.8 1 SQM OR 12043 SFT WHICH IS LESS THAN ONE ACRE ITA.642 & 679/BANG/2014 PAGE - 6 FURTHER THE ASSESSEE COMPANY HAS NOT IMPLEMENTED TH E APPROVED PLANS / DRAWINGS AND SOME PORTION OF THE L AND HAS BEEN DEVELOPED AS INDIVIDUAL PLOTS AND FLATS AND DI SPOSED. THUS THERE IS A TOTAL DEVIATION IN THE APPROVED PLA N. ALSO THE LAND AREA INVOLVED IN THESE PROJECTS ARE LESS THAN ONE ACRE AND HENCE THE ADMISSIBILITY UNDER 80I(B) CLAIM OF T HE ASSESSEE HAD TO BE DISALLOWED / REJECTED. 08. IT IS AN ADMITTED POSITION THAT AREA OF LAND WH ERE ASSESSEE WAS HAVING THE PROJECTS MEASURED 3 ACRES AND 36 GUNTAS. FINAN CIAL STATEMENTS OF THE ASSESSEE FOR THE RELEVANT PREVIOUS YEAR PLACED AT P APER BOOK PAGES 3 TO 34 AT SCHEDULE 14, HAS SHOWN INCOME FROM SALE OF FLATS AT LAKE CITY RESIDENCY. OBVIOUSLY ASSESSEE WAS HAVING INCOME FR OM EACH OF THE PROJECT COMING IN THE LAKE CITY RESIDENCY. APPROVA L LETTER MENTIONS THAT THE PLAN WAS SANCTIONED FOR LAKE CITY RESIDENCY WIT H SEPARATE BLOCKS THEREIN. HONBLE BOMBAY HIGH COURT IN THE CASE OF VANDANA PROPERTIES (SUPRA), AT PARA 29 HAS OBSERVED AS UNDER : 29. FROM THE AFORESAID LETTER OF CBDT, IT IS CLEAR THAT FOR THE PURPOSES OF SECTION 80IB (10) IT IS NOT THE MANDATE OF THE SECTION THAT THE HOUSING PROJECT MUST BE ON A VACANT PLOT O F LAND HAVING MINIMUM AREA OF ONE ACRE AND THAT WHERE A NEW HOUSI NG PROJECT IS CONSTRUCTED ON A PLOT OF LAND HAVING MINIMUM AREA O F ONE ACRE BUT WITH EXISTING HOUSING PROJECTS WOULD QUALIFY FOR SE CTION 80IB (10) DEDUCTION. EVEN OTHERWISE, THE ARGUMENT OF THE REVE NUE DOES NOT STAND TO REASON BECAUSE, IN THE CITY OF MUMBAI WHER E THERE IS ACUTE SPACE CRUNCH, IT IS DIFFICULT TO FIND A VACAN T PLOT HAVING ITA.642 & 679/BANG/2014 PAGE - 7 MINIMUM AREA OF ONE ACRE AND EVEN IF FEW SUCH PLOTS ARE EXISTING IT CANNOT BE SAID THAT SECTION 80IB (10) DEDUCTION WAS INTENDED TO GIVE BENEFIT ONLY TO THE UNDERTAKINGS WHO CONSTRUCT HOUSING PROJECTS ON THOSE FEW PLOTS. THEREFORE, IT IS CLEAR THAT ON A PLOT OF LAND HAVING MINIMUM AREA OF ONE ACRE, THERE CAN BE ANY NUMBER OF HOUSING PROJECTS AND SO LONG AS THOSE HOUSING PR OJECTS ARE APPROVED BY THE LOCAL AUTHORITY AND FULFIL THE COND ITIONS SET OUT UNDER SECTION 80IB (10), THE DEDUCTION THEREUNDER C ANNOT BE DENIED TO ALL THOSE HOUSING PROJECTS. SECTION 80IB (10) WHILE SPECIFYING THE SIZE OF THE PLOT OF LAND, DOES NOT S PECIFY THE SIZE OR THE NUMBER OF HOUSING PROJECTS THAT ARE REQUIRED TO BE UNDERTAKEN ON A PLOT HAVING MINIMUM AREA OF ONE ACRE. AS A RES ULT, SIGNIFICANCE OF THE SIZE OF THE PLOT OF LAND IS LOS T AND, THEREFORE, THE ASSESSEE SUBJECT TO FULFILLING OTHER CONDITIONS BEC OMES ENTITLED TO SECTION 80IB (10) DEDUCTION ON CONSTRUCTION OF A HO USING PROJECT ON A PLOT HAVING AREA OF ONE ACRE, IRRESPECTIVE OF THE FACT THAT THERE EXIST OTHER HOUSING PROJECTS OR NOT. IN THESE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL IN REJECTING THE CONTE NTION OF THE REVENUE REGARDING THE SIZE OF THE PLOT CANNOT BE FA ULTED. 09. THUS ONCE A PLOT OF LAND HAS MORE THAN ONE ACRE , THE NUMBER OF HOUSING PROJECTS THEREIN WOULD NOT MATTER. THERE I S NO CASE FOR THE REVENUE THAT ASSESSEE HAD VIOLATED ANY CONDITIONS O R NOT SATISFIED ANY OTHER CONDITIONS SET OUT U/S.80IB(10) OF THE ACT. THOUGH DVO HAS POINTED OUT DEVIATION FROM THE APPROVED PROJECT HE HAS NOT STAT ED WHAT SUCH DEVIATION WAS AND HOW IT VIOLATED ANY CONDITION SET OUT IN SE CTION 80IB(10) OF THE ACT. THIS BEING THE CASE, WE ARE OF THE OPINION TH AT ASSESSEE WAS ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT. NEVERTHELESS, WE FIND FROM THE ORDERS OF LOWER AUTHORITIES THAT NO VERIFI CATION HAS BEEN DONE WITH REGARD TO THE QUANTUM OF THE CLAIM. DENIAL OF THE CLAIM HAS BEEN MADE FOR ITA.642 & 679/BANG/2014 PAGE - 8 THE SOLE REASON THAT AREA OF THE LAND WHERE THE PRO JECT WAS BEING EXECUTED WAS LESS THAN ONE ACRE. THOUGH WE HOLD THAT ASSESS EE IS ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT, FOR QUANTIFICATI ON OF SUCH CLAIM, WE REMAND THE ISSUE BACK TO THE FILE OF THE AO. ORDER S OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE AO FOR CORRECTLY QUANTIFYING THE CLAIM OF THE ASSESSEE U/S.80IB(10). GROUNDS 4 TO 11 OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURP OSE. 10. VIDE ITS GROUNDS 12 TO 14 GRIEVANCE RAISED IS T HAT AO DISALLOWED 30% OF LABOUR CHARGES. FACTS APROPOS ARE THAT ASSE SSEE HAD CLAIMED LABOUR CHARGES OF RS.5,25,704/- ON ITS MANJU ANUGRAHA PROJ ECT, AND RS.2,55,765/- FOR ITS LAKE CITY RESIDENCY PROJECT. AO FOUND THAT ABOVE CLAIM, WERE SUPPORTED ONLY BY SELF-MADE VOUCHERS AND ADDRESSES OF THE PAYEES WERE NOT AVAILABLE. ACCORDING TO AO, GENUINENESS OF THE EXP ENDITURE COULD NOT BE PROVED BY THE ASSESSEE IN FULL. HE MADE AN AD HOC DISALLOWANCE OF 30% OF THE CLAIM. SUCH DISALLOWANCE CAME TO RS.2,34,414/- . 11. ASSESSEES APPEAL BEFORE THE CIT (A) ON THIS IS SUE WAS NOT SUCCESSFUL. ACCORDING TO CIT (A), ASSESSEE COULD N OT SHOW THAT THE EXPENDITURE ON LABOUR CLAIMED BY IT WAS SUPPORTED B Y PROPER VOUCHERS. ITA.642 & 679/BANG/2014 PAGE - 9 12. NOW BEFORE US, LD. AR STRONGLY ASSAILING THE OR DER OF LOWER AUTHORITIES SUBMITTED THAT LABOUR CHARGES COULD BE SUPPORTED ONLY BY SELF- MADE VOUCHERS. ACCORDING TO HIM, LABOURERS COULD B E EXPECTED TO GIVE BILLS FOR THE SERVICES RENDERED BY THEM. 13. PER CONTRA, LD. DR SUPPORTED THE ORDERS OF LOWE R AUTHORITIES. 14. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. DISALLOWANCE OF 30% OF LABOUR CHARGES WAS MADE FOR A REASON THAT SELF- MADE VOUCHERS DID NOT CARRY THE ADDRESSES OF THE PA YEES. MAY BE IT IS TRUE THAT ONLY SELF-MADE VOUCHERS CAN BE MAINTAINED IN S UPPORT OF LABOUR EXPENDITURE. HOWEVER NOTHING CAN STOP THE ASSESSEE FROM GIVING FULL ADDRESS OF THE RECIPIENTS. HAVING FAILED TO DO WE CANNOT SAY THAT ASSESSEE HAD DISCHARGED ITS ONUS FOR SUPPORTING ITS CLAIM. WE ARE OF THE OPINION THAT LOWER AUTHORITIES WERE JUSTIFIED IN MAKING A D ISALLOWANCE OF 30%. NO INTERFERENCE IS REQUIRED. GROUNDS 12 TO 14 OF THE ASSESSEE ARE DISMISSED. 15. NOW WE TAKE UP THE APPEAL OF REVENUE. SOLE ISS UE RAISED BY THE REVENUE IS THAT CIT (A) DELETED THE DISALLOWANCE U/ S.40(A)(IA) OF THE ACT, CONSIDERING THAT FINANCE ACT, 2010, AMENDMENT TOSEC TION 40(A)(IA) OF THE ACT, THROUGH FINANCE ACT, 2010 HAD TO BE CONSTRUED RETROSPECTIVELY. ITA.642 & 679/BANG/2014 PAGE - 10 16. BEFORE US LD. DR SUBMITTED THAT ASSESSEE HAD DE DUCTED TAX AT SOURCE ON THE CLAIM OF EXPENDITURE OF RS.4,83,79,766/-, BU T HAD REMITTED IT TO THE EXCHEQUER WITH SUBSTANTIAL DELAY. PAYMENTS EFFECTE D WERE FOR SUB- CONTRACTS. THEREFORE ACCORDING TO HIM, AO WAS JUST IFIED IN INVOKING SECTION 40(A)(IA) OF THE ACT. 17. PER CONTRA, LD. AR SUPPORTED THE ORDER OF CIT ( A). RELIANCE WAS PLACED ON JUDGMENT OF HONBLE JURISDICTIONAL HIGH C OURT IN ANIL KUMAR & CO., V. ITO (354 ITR 170). 18. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THERE IS NO DISPUTE THAT TAX WAS DEDUCTED BY THE ASSESSEE AN D REMITTED BY IT BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. AS P ER THE AO, AMENDMENT TO SECTION 40(A)(IA) MADE THROUGH FINANCE ACT, 2010, W AS APPLICABLE ONLY PROSPECTIVELY. WE FIND THAT THIS ISSUE HAD COME UP BEFORE THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ANIL KUMAR & CO (SUPRA). THEIR LORDSHIPS HAD HELD AS UNDER AT PARA 3 TO 6 OF ITS J UDGMENT DT.01.02.2013 : 3. THE TRIBUNAL, AFTER EXPLAINING THE EFFECT OF TH E AMENDMENT BY THE FINANCE ACT, 2008, HELD THAT THE TAX DEDUCTED DURIN G THE LAST MONTH OF THE PREVIOUS YEAR, ON OR BEFORE THE DUE DATE SPECIF IED IN SUB-SECTION (1) OF SECTION 139, IF THEY ARE CREDITED WITHIN THE TIME SPECIFIED IN SUB- SECTION (1) OF SECTION 139, DISALLOWANCE CANNOT BE MADE. THEREFORE, IT UPHELD THE ORDER BY THE APPELLATE AUTHORITY AND GRA NTED RELIEF TO THE ITA.642 & 679/BANG/2014 PAGE - 11 ASSESSEE. AGGRIEVED BY THE SAID ORDER, THE PRESENT APPEAL IS FILED. AT THE TIME OF ADMISSION, THIS COURT HAS FRAMED THE FO LLOWING SUBSTANTIAL QUESTIONS OF LAW : '(I) WHETHER THE AMENDMENT TO SECTION 40(A)(IA), AS AMENDED BY THE FINANCE ACT, 2010, WITH EFFECT FROM APRIL 1, 20 10, IS RETROSPECTIVELY APPLICABLE TO THE ASSESSMENT YEAR 2 005-06 AS HELD BY THE INCOME-TAX APPELLATE TRIBUNAL IN THE PR ESENT CASE ? (II) WHETHER THE ASSESSEE WHO HAS CREDITED THE PRES SING AND GINNING CHARGES TO THE CONTRACTORS FROM APRIL 1, 20 04, TO FEBRUARY 28, 2005, IS ENTITLED TO THE DEDUCTION UND ER SECTION 40(A)(IA) ALTHOUGH THE TAX AT SOURCE IS NOT DEDUCTE D AS REQUIRED UNDER SECTION 194C AND NOT PAID WITHIN THE STIPULAT ED TIME AS REQUIRED UNDER SECTION 200(1) READ WITH RULE 30(B)( I)(2) OF THE INCOME-TAX RULES ?' 4. LEARNED COUNSEL APPEARING FOR THE PARTIES FAIRLY SUBMITTED THAT THE SUBSTANTIAL QUESTIONS OF LAW REQUIRES TO BE MODIFIE D AND THOSE QUESTIONS DO NOT ARISE FOR CONSIDERATION. 5. THE SUBSTANTIAL QUESTION OF LAW WHICH ARISES FOR CONSIDERATION IS : 'WHETHER THE ASSESSEE BY VIRTUE OF THE AMENDMENT TO THE FINANCE ACT, 2008, IS ENTITLED TO THE BENEFIT OF TH E SAME ?' 6. IT IS NOT IN DISPUTE THAT ON THE DATE THE ASSESS EE DEDUCTED THE TAX, HE HAD TO PAY/REMIT THE MONEY WITHIN SEVEN DAYS FROM T HAT DATE AND IF THE AMOUNT IS ACTUALLY PAID WHEN THE CREDIT IS GIVEN, T HEN THE TAX IS PAYABLE WITHIN TWO MONTHS. ADMITTEDLY, IN THE INSTA NT CASE, THE ASSESSEE DID NOT COMPLY WITH THE LEGAL REQUIREMENT. HOWEVER, THE ASSESSING AUTHORITY WAS JUSTIFIED IN MAKING THE DIS ALLOWANCE, BUT ON THE DATE THE APPEAL WAS FILED, THE SECTION CAME TO BE AMENDED, GIVING RETROSPECTIVE BENEFIT. THEREFORE, THE APPELLATE AUT HORITY EXTENDED THE BENEFIT OF THE AMENDED PROVISION AND HELD THAT THE DISALLOWANCE IS PAID AND THE ORDER HAS BEEN UPHELD BY THE TRIBUNAL. THEREFORE, BY THE FINANCE ACT, 2008, WHICH IS GIVEN RETROSPECTIVE EFF ECT FROM APRIL 1, 2005, THE BENEFIT OF THAT PROVISION HAD BEEN EXTEND ED TO THE ASSESSEE, THOUGH THE ASSESSMENT ORDER PASSED INITIALLY CANNOT BE FOUND FAULT. WITH THE CHANGE OF LAW, WHEN THE EFFECT OF THE AMEN DMENT IS TO GIVE ITA.642 & 679/BANG/2014 PAGE - 12 BENEFIT TO THE ASSESSEE, THE APPELLATE AUTHORITY AN D THE TRIBUNAL WERE JUSTIFIED IN EXTENDING THE SAID BENEFIT. IN THAT VI EW OF THE MATTER, THE ORDER PASSED BY THE TRIBUNAL IS IN ACCORDANCE WITH LAW AND DOES NOT CALL FOR INTERFERENCE. THEREFORE, THE SUBSTANTIAL Q UESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE APPEAL IS DISMISSED. PARTIES TO BEAR THEIR OWN COST S. WE ARE THEREFORE OF THE VIEW THAT CIT (A) WAS IN CO NSONANCE WITH THE ABOVE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT . HE WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S.40(A)(IA) OF THE ACT. NO INTERFERENCE IS REQUIRED. 19. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE, WHEREAS APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH DAY OF N OVEMBER, 2015. SD/- SD/- (VIJAYPAL RAO) (ABRAH AM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR