BAPUSHAEB NANASAHEB DHUMAL, MUMBAI V. ACIT RG 22(2), MUMBAI

ITA 6628/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1335 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 30-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: ANIL J SATHE
• Keywords: Retrospective amendment; TDS; Set aside
• Section: 40(a)(ia); 194C; 139(1); 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) BAPUSHAEB NANASAHEB DHUMAL PROP M/S N & BROTHERS, OPP.H P REFINERY GOVAN PADA, MAHULE RD. CHEMBER MUMBAI-400074 .APPELLANT PAN: AABPD9282A V/S ACIT RG 22(2) MUMBAI RESPONDENT APPELLANT BY : SHRI ANIL J SATHE RESPONDENT BY : SHRI S S RANA O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 12.10.2009 OF CIT(A)-33, MUMBAI ARISES FROM GIVING EFFECT ORDER DATED 7.8.2009 PASSED BY THE A O IN CONSEQUENCE OF THE DIRECTION GIVEN BY THE CIT(A) O RDER DATED 31.03.2009 PASSED UNDER SECTION 154 FOR THE ASSESSM ENT YEAR 2005-06. 2 THE ASSESSEE HAS RAISED FOLLOWING GROUND IN THIS APPEAL: 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN RESTRICTING THE RELIEF AR ISING ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 2 OUT OF THE PROVISO TO SECTION 40(A)(IA) AT RS.23,28,567/- INSTEAD OF RS.2,83,43,188 AS CLAIMED BY THE APPELLANT; 2. THE LEARNED CIT(A) HAS ERRED IN CONCLUDING THAT THE APPELLANT HAS INTERPRETED THE PROVISO TO SECTION 40(A)(IA) TO SUIT HIS CONVENIENCE.; 3. IN THE ALTERNATIVE AND WITHOUT PREJUDICE TO THE ABOVE THE LEARNED CIT(A) ERRED IN REJECTING THE CONTENTION OF THE APPELLANT THAT THE ENTIRE TAX WAS DEDUCTIBLE IN MARCH I.E. THE LAST MONTH OF THE PREVIOUS YEAR IN RESPECT OF THE ENTIRE SUM OF RS.2,83,43,188 AND THUS THE PROVISO SQUARELY APPLIED IN RESPECT OF THAT SUM. 4. THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE METHOD OF ACCOUNTING OF CREDITING INCOME ON 31 ST MARCH, FROM WHICH TAX WAS DEDUCTED WAS CONSISTENTLY FOLLOWED BY THE ASSESSEE, EXPLAINED TO THE ASSESSING OFFICER AND ACCEPTED BY HIM. 3. FROM THE GROUNDS OF APPEAL, THE ONLY ISSUE ARIS ES FOR OUR CONSIDERATION AND ADJUDICATION IS WHETHER IN THE FA CTS AND CIRCUMSTANCES OF CASE, THE CIT(A) IS JUSTIFIED IN C ONFIRMING THE DISALLOWANCE MADE BY THE AO U/S 40(A)(IA) IN RESPEC T OF THE PAYMENT AGAINST WHICH THE TDS WAS DEDUCED IN THE M ONTH OF MARCH 2005 AND DEPOSITED BEFORE THE DUE DATE OF FIL ING OF THE RETURN. 4. THE RELEVANT FACT EMERGING FROM THE RECORD ARE A S UNDER: 4.1 THE ASSESSEE IS CARRYING ON THE AGENCY WORK OF VARIOUS CORPORATE AND TRANSPORTING THE PETROLEUM TO VARIOUS LOCATIONS. DURING THE YEAR, THE ASSESSEE PAID RS.2,83,43,188 T O VARIOUS CONTRACTOR. THE AO NOTICED THAT THE PAYMENT OF TDS WAS NOT MADE WITHIN THE STATUTORY PERIOD IN RESPECT OF PAYM ENTS OF THE ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 3 CONTRACTORS AND THEREFORE, IT REQUIRED TO BE DISALL OWED U/S 40(A)(IA). THE ASSESSEE CLAIMED BEFORE THE AO TH AT THE ENTIRE PAYMENT WAS MADE IN THE MONTH OF MARCH 2005 AND TAX WAS DEDUCTED IN THE MONTH OF MARCH 2005 ONLY THEREF ORE, THE TAX DEPOSITED ON 21.09.2005 IS WITHIN THE STATUTORY PERIOD AS PROVIDED U/S 40(A)(IA) BEING BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AS PER SECTION 139(1) OF THE ACT. IN THE ORIGINAL ASSESSMENT FRAMED ON 28.11.2007, THE AO D ISALLOWED THE ENTIRE EXPENDITURE OF RS.2,83,43,188/- ON THE G ROUND THAT THE PAYMENT OF TDS WERE MADE BEYOND THE STATUTORY P ERIOD. THE ASSESSEE CHALLENGED THE DISALLOWANCE BEFORE THE CIT(A) 5. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE DISALLOWANCE MADE BY THE AO VIDE OR DER DATED 21.05.2008. SUBSEQUENTLY, THE ASSESSEE FILED THE PETITION U/S 154 FOR RECTIFICATION OF THE ORDER DATED 21.05. 2008 OF THE CIT(A) ON THE GROUND THAT THE DUE DATE FOR FILING OF THE RETURN IN THE CASE WAS 31.10.2005 AND THE RETURN WAS FILED ON 29.10.2005, THE ASSESSEE PAID THE TAX ON 21.09.2005 WHICH IS BEFORE THE DUE DATE OF FILING OF THE RETURN AS PRE SCRIBED U/S 139(1). THUS THE ASSESSEE PLEADED IN THE PETITION U/S 154 THAT IN VIEW OF THE RETROSPECTIVE AMENDMENT IN SECTION 40(A)(IA) VIDE FINANCE ACT (NO.2), 2008 WITH EFFECT FROM 01.0 4.2005 THE EXPENDITURE SHOULD BE ALLOWED AS DEDUCTION. CONSEQ UENTLY, THE CIT(A) PASSED THE ORDER DATE 32.03.2009 U/S 154 AND ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 4 THEREBY DIRECTED THE AO TO GIVE RELIEF TO THE ASSE SSEE DIRECTLY IN COMPLIANCE WITH THE SAID SECTION AND AFTER MAKIN G THE PROPER VERIFICATION AS AVAILABLE BEFORE HIM. WHILE GIVING EFFECT TO THE ORDER, THE AO HAS GIVEN A FINDING THAT THE A CTUAL PAYMENT MADE /CREDITED IN RESPECT OF THOSE PARTIES IN THE MONTH OF MARCH ONLY OF RS. RS.2,83,43,188/ AND REST OF THE AMOUNT WAS PAID BEFORE THE MONTH OF MARCH, 2005 DUR ING HE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDE R CONSIDERATION. THEREFORE, THE AO HAS ALLOWED THE DE DUCTION ONLY TO THE EXTENT OF RS..2,83,43,188/- AND MAINTAI NED THE DISALLOWANCE OF THE BALANCE EXPENDITURE. 6. ON FURTHER APPEAL, THE CIT(A) CONFIRM THE ADDITI ON MADE BY THE AO VIDE IMPUGNED ORDER. 7. BEFORE US, THE LEARNED AR OF THE ASSESSEE HAS SU BMITTED THAT THE PROVISION OF SECTION 194C ARE RELEVANT ON LY TO THE EXTENT OF ASCERTAINING THE DEDUCTIBILITY OF THE TAX ON CERTAIN PAYMENT AND NOT THE ACTUAL DEDUCTION AND DEPOSIT OF THE TAX. THE CONDITION FOR ACTUAL DEDUCTION AND DEPOSITS ARE PRESCRIBED U/S 40(A)(IA) FOR DISALLOWING THE EXPENDITURE. HE HAS REFERRED THE SUB-CLAUSE A AND B OF CLAUSE (IA) OF SUB-SECT ION (A) OF SECTION 40 AND SUBMITTED THAT WHEN THE TAX WAS DED UCTED DURING THE LAST MONTH OF PREVIOUS YEAR THE SAME WA S REQUIRED TO BE PAID ON OR BEFORE THE DUE DATE AS PER SUB-SEC TION (1) OF ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 5 SECTION 139. THE ASSESSEE HAS DEDUCTED THE TAX ONL Y ON 31.03.2005, AND DULY DEPOSITED THE TAX ON 21.09.20 05 WHICH IS BEFORE THE DUE DATE OF FILING OF THE RETURN AS P ER THE PROVISIONS OF SECTION 139(1). HE HAS FURTHER REFERR ED THE PROVISO TO SECTION 40(A)(IA) AND SUBMITTED THAT IN THE CASES WHERE THE TAX IS DEDUCTED IN THE SUBSEQUENT YEAR TH EN SUCH SUM IS ALLOWABLE AS DEDUCTION IN THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID AND SIMILARLY, WHEN THE TAX HAS BEEN DEDUCTED DURING HE LAST MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE THE SAID SUM IS ALLOWABLE ONLY I N THE PREVIOUS YEAR IN WHICH IT HAS BEEN PAID. THE ANOTH ER INSTANCE WHEN THE TAX HAS BEEN DEDUCTED DURING ANY OTHER MON TH OF THE PREVIOUS YEAR (EXCEPT THE LAST MONTH) BUT PAID AFTE R THE END OF THE PREVIOUS YEA THEN THE SAME IS ALLOWABLE AS DED UCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH IT HAS BEEN PAID. THUS, THE LEARNED AR HAS SUBMITTED THA T THE ACTUAL DEDUCTION AND PAYMENT IS GOVERNED BY THE PRO VISIONS OF SECTION 40(A)(IA) FOR DISALLOWANCE OF THE EXPENDIT URE AND NOT BY THE PROVISIONS OF SECTION 194C OR ANY OTHER PROV ISIONS OF CHAPTER XVIIB. HE HAS FURTHER CONTENDED THAT THE PROVISIONS OF SECTION 40(A)(IA) HAS BEEN AMENDED BY THE FINAN CE ACT, 2010 APPLICABLE FOR THE ASSESSMENT YEAR 2010-11 AN D AS PER THE AMENDED PROVISIONS IF THE TAX DEDUCTED AT SOURC E CAN BE DEPOSITED WITH THE GOVERNMENT ON OR BEFORE THE DUE OF FILING OF THE RETURN OF INCOME THEN THE DEDUCTION WILL NOT BE DENIED. ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 6 8. THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THA T THE AMENDMENT BROUGHT IN TO SECTION 40(A)(IA) IS REMED IAL IN NATURE AND THEREFORE SHALL BE RETROSPECTIVE. HE HA S RELIED UPON THE FOLLOWING CASE LAWS: I) CIT V/S APAR INDUSTRIES LTD (323 ITR 411) II) CIT V/S ALOM EXTRUSIONS LTD (319 ITR 306( SC) III) ALLIED MOTORS (P) LTD V/S CIT (224 ITR 677)) 9. ON THE OTHER HAND, THE LEARNED DR HA SUBMITTED T HAT AS PER THE PROVISIONS OF SECTION 194C TAX IS REQUIRED TO BE DEDUCTED AT SOURCE AT THE TIME OF CREDITING OF SUCH PAYMENT TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAY MENT THEREOF WHICH EVER IS EARLIER AND THE DUE DATE FOR DEPOSI TING THE SAME IS 7 DAYS FROM THE END OF THE MONTH IN WHICH THE TAX IS DEDUCTED. RELAXATION OF TIME PERIOD IN DEPOSITING THE TDS IS GIVEN UNDER THE PROVISIONS OF SECTION 40(A)(IA) IS ONLY IN THE CASE WHEN THE TAX WAS DEDUCTIBLE AND DEDUCTED IN TH E LAST MONTH OF THE PREVIOUS YEAR WHICH MEANS WHEN THE TAX IS DEDUCTIBLE AND DEDUCTED ON THE CLOSE OF THE ACCOUNT ING YEAR THE SAME CAN BE DEPOSITED ON OR BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME UNDER SECTION 139(1). IF IT IS DEDUCTIBLE AND DEDUCED PRIOR TO THE MONTH OF MARCH THEN HAS TO BE DEDUCTED BEFORE THE END OF LAST MONTH OF THE PREVI OUS YEAR. SECTION 40(A)(IA) OF THE ACT HAS DETERRENT TO THE ASSESSEE TO ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 7 ENSURE TIMELY DEPOSITS OF TDS IN THE GOVERNMENT TRE ASURY. AS FAR AS THE TIME OF PAYMENT OF DEPOSIT OF THE TAX, T HE SAME IS RELAXED UNDER THE PROVISIONS OF SECTION 40(A)(IA) BUT DEDUCTIBILITY AND TIME OF DEDUCTION IS PROVIDED UND ER THE PROVISIONS OF SECTION 194C AND OTHER PROVISIONS OF CHAPTER XVII OF THE ACT. THEREFORE, WHEN THE ASSESSEE IN TH E CASE IN HAND HAS NOT DEDUCED THE TAX IN TIME AND THEREAFTER ALSO NOT DEPOSITED IN TIME FROM THE DATE WHEN IT WAS TO BE D EDUCTED THE PROVISIONS OF SECTION 40(A)(IA) ARE ATTRACTED AND T HE EXPENDITURE SO MADE WITHOUT COMPLIANCE OF CHAPTER XVII ARE TO BE DISALLOWED. HE HAS RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. HE HAS ALSO RELIED UPON THE DECISION OF THE HON.SUPREME COURT IN THE CASE OF MADURAI MILS AND C O.LTD. REPORTED IN 89 ITR 445 AND SUBMITTED THAT THE PROVI SO CAN NOT ENLARGE THE SCOPE OF THE MAIN PROVISION WHEN THE SA ID CAN BE FAIRLY AND PROPERLY CONSTRUED WITHOUT ATTRIBUTING T O IT WITH EFFECT. THE LEARNED DR HAS SUBMITTED THAT THE ASS ESSEE HAS RELIED UPON THE PROVISO TO SECTION 40(A)(IA) IN S UPPORT OF ITS CLAIM BUT WHEN THE PROVISO CAN NOT ENLARGES THE S COPE OF THE MAIN PROVISION/ENACTMENT THEN THE PROVISO CANNOT BE READ IN ISOLATION AND INDEPENDENTLY. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RE LEVANT RECORD AS WELL AS CASE LAW RELIED UPON BY BOTH THE PARTIES. THE CONTROVERSY IN THE PRESENT CASE REVOLVES AROUND THE ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 8 APPLICABILITY OF THE PROVISIONS OF SECTION 194C WHI LE DISALLOWING THE EXPENDITURE UNDER THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. IT IS UNDISPUTED FACT THAT T HE ASSESSEE MADE THE PAYMENT TO THE SUB-CONTRACTOR DURING THE P REVIOUS YEAR BUT THE TAX WAS DEDUCTED ONLY ON 31.3.2005. T HE AO HAS ALREADY ALLOWED THE DEDUCTION IN RESPECT OF PAYMENT MADE DURING HE MONTH OF MARCH 2005 BUT DISALLOWED THE DE DUCTION IN RESPECT OF THE PAYMENT WHICH WERE CREDITED AND MADE DURING THE PERIOD OTHER THAN THE MONTH OF MARCH 2005. NO DOUBT THAT AS PER THE PROVISIONS OF CHAPTER XVIIB AND PARTICU LARLY SECTION 194C AS THE PAYMENT UNDER CONSIDERATION ARE COVERED UNDER THE PROVISIONS OF SECTION 194C, THE TAX HAS T O BE DEDUCTED AT THE TIME OF PAYMENT OR CREDIT OF SUCH S UM IN WHICH THE TAX IS DEDUCTED WITHIN 7 DAYS FROM THE END OF T HE MONTH AND HAS TO BE DEPOSITED WITH THE GOVERNMENT WITHIN THE PERIOD PRESCRIBED UNDER SECTION 194C. IN CASE OF FAILURE OF DEDUCTION OF TAX AND/OR DEPOSITING THE SAME AS PER THE PROVI SIONS OF SECTION 194C OR THE PROVISIONS OF CHAPTER -XVII AS THE CASE MAY BE, THE ASSESSEE HAS TO FACE THE CONSEQUENCES A S PROVIDED UNDER THE SAID CHAPTER-XVII OF THE ACT BY ATTRACTING THE PENALTY OR INTEREST. THE PROVISIONS OF SECTION 40(A)(IA) ARE IN ADDITION TO THE PROVISIONS OF CHAPTER XVII AS WE LL AS CHAPTER XXII TO ENSURE THE DEDUCTION AND DEPOSIT OF THE TDS IT IS APPROPRIATE TO QUOTE THE PROVISIONS OF SECTI ON 40(A)(IA): ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 9 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38 ], THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMP UTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUS INESS OR PROFESSION, (A) IN THE CASE OF ANY ASSESSEE [(I) (IA) ANY INTEREST, COMMISSION OR BROKERAGE, [RENT, ROYALTY,] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB -CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPP LY 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 O R, AFTER DEDUCTION, 71 [HAS NOT BEEN PAID, (A) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR , ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 ; OR (B) IN ANY OTHER CASE, ON OR BEFORE THE LAST DAY O F THE PREVIOUS YEAR:] [ PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCT ED (A) DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE SAID DUE DATE; OR (B) DURING ANY OTHER MONTH OF THE PREVIOUS YEAR BU T PAID AFTER THE END OF THE SAID PREVIOUS YEAR, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUT ING 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 SHALL 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 EXPL ANATION III TO SECTION 194C ; [(V) RENT SHALL HAVE THE SAME MEANING AS IN CLAU SE (I) TO THE EXPLANATION TO SECTION 194-I ; (VI) ROYALTY SHALL HAVE THE SAME MEANING AS IN E XPLANATION 2 TO CLAUSE (VI) OF SUB-SECTION (1) OF SECTION 9 ;] ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 10 11. AS PER THE CLAUSE (IA) OF SUB-SECTION (A) OF SE CTION (40) WHEN TAX IS DEDUCTIBLE AT SOURCE ON THE PAYMENT UND ER CHAPTER XVII AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER D EDUCTION HAS NOT BEEN PAID THEN THE SAID DEDUCTION IS NOT AL LOWABLE. AS PER THE SUB-CLAUSE A OF CLAUSE (IA) IF THE TAX I S DEDUCTED DURING THE LAST MONTH OF PREVIOUS YEAR AND PAID ON OR BEFORE THE DUE DATE OF FILING OF RETURN AS PER THE PROVISI ONS OF SECTION 139(1) THEN SUCH SUM SHALL BE ALLOWED AS DEDUCTION. IN THE CASES WHERE THE TAX IS DEDUCTED DURING PREVIOUS YEA R OTHER THAN THE LAST MONTH OF PREVIOUS YEAR BUT IS DEPOSIT ED BEFORE THE LAST DAY OF PREVIOUS YEAR THEN IT WILL BE ALLO WED AS DEDUCTION. THEREFORE, THE CONDITIONS FOR ALLOWABIL ITY OF THE DEDUCTION IS PRESCRIBED UNDER SECTION 40(A)(IA) ITS ELF AND PROVISIONS OF CHAPTER XVII AND SECTION 194C UNDE R CHAPTER XVIIB AT THAT RELEVANT POINT OF TIME ARE RELEVANT O NLY FOR THE PURPOSES OF ASCERTAINING THE DEDUCTIBILITY OF THE T AX ON THE PAYMENT. ONCE, THE NATURE OF PAYMENT IS FALLING UNDER THE PROVISIONS OF CHAPTER XVII/VIIB THEN THE DISALLOWA NCE U/S 40(A)(IA) SHALL BE AS PER THE CONDITION AS PROVIDED UNDER THIS SECTION ITSELF. THE PROVISO TO SECTION 40(A)(IA) M AKES IT FURTHER CLEAR THAT EVEN IN THE CASE WHEN THE TAX HAS BEEN D EDUCTIBLE AS PER THE PROVISIONS OF CHAPTER-XVII BUT DEDUCTE D IN THE SUBSEQUENT YEAR OR DEDUCTED DURING THE LAST MONTH O F PREVIOUS YEAR BUT PAID AFTER THE DUE DATE U/S 139(1) OR DED UCTED DURING THE OTHER MONTH OF THE PREVIOUS YEAR EXCEPT LAST MONTH BUT ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 11 PAID AFTER THE END OF THE SAID PREVIOUS YEAR THEN THE SAID SUM SHALL NOT BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR BUT ALLOWED IN THE PREVIOUS YEAR IN WHICH THE SAID TAX HAS BEEN PAID. IF THE CONDITION OF DED UCTION AND PAYMENT PRESCRIBED U/S CHAPTER XVII/XVIIB ARE APPLI CABLE FOR DISALLOWANCE OF THE DEDUCTION 40(A)(IA) THEN THE P ROVISIONS OF SECTION 40(A)(IA) WILL BE RENDERED AS MEANINGLESS , ABSURDITY AND ETIOS. AS PER THE PROVISIONS OF SECTION 40(A)(I A) THE DEDUCTION IS DISALLOWED ONLY IN THE CASE WHEN EITH ER NO TAX WAS DEDUCTED OR IT WAS NOT PAID AFTER DEDUCTION. B UT WHEN THE TAX IS DEDUCTED MAY BE BELATEDLY AND DEPOSITED BELA TEDLY THEN DEDUCTION IS ALLOWABLE IN THE PREVIOUS YEAR IN WHIC H IT WAS SO DEPOSITED. THEREFORE, IF THE PROVISIONS OF SECTIO N 194C WITH RESPECT TO THE TIME OF DEDUCTION AND PAYMENTS ARE APPLIED FOR THE DISALLOWANCE U/S 40(A)(IA) THEN THERE WILL BE N O PURPOSE OR OBJECT FOR PROVIDING THE CERTAIN CONDITIONS OF ACTU AL DEDUCTION OF TAX AND PAYMENT OF TAX U/S 40(A)(IA). IN OUR VI EW, THE PROVISIONS OF CHAPTER XVII ARE RELEVANT ONLY FOR A SCERTAINING THE DEDUCTIBILITY OF THE TAX AT SOURCE AND NOT FOR THE ACTUAL DEDUCTION AND PAYMENT FOR ATTRACTING THE PROVISION S OF SECTION 40(A)(IA). SINCE IN THE CASE IN HAND WHEN THE ASSE SSEE HAD DEDUCTED THE TAX IN THE LAST MONTH OF THE PREVIOUS YEAR I.E MARCH 2005 AND DEPOSITED THE SAME BEFORE THE DUE DA TE OF FILING OF THE RETUNE U/S 139(1) THEN IT IS COVERED UNDER CLAUSE A OF SECTION 40(A)(IA). THEREFORE WHEN THE ASSESS EES CASE ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 12 COVERED UNDER THE MAIN PROVISIONS OF EXISTING LAW THEN WE NEED NOT TO GO TO THE ISSUE OF PROSPECTIVE OR RETRO SPECTIVE EFFECT OF THE AMENDMENT IN THE PROVISIONS BY THE F INANCE ACT, 2010. AS REGARDS THE DECISION RELIED UPON BY THE L EARNED DR WHEN THE PROVISO TO SECTION 40(A)(IA) IS NOT CONTR ARY TO THE MAIN SECTION/ENACTMENT THEN THE SAID DECISION WILL NOT HELP THE CASE OF THE REVENUE. EVEN OTHERWISE WHEN THE C ASE OF THE ASSESSEE FALLS UNDER THE MAIN PROVISIONS OF SECTIO N 40(A)(IA) THEN THE SAID DECISION RELIED UPON BY THE LEARNED D R IN THE CASE OF CIT V/S MADURAI MILS AND CO.LTD (SUPRA) IS NOT RELEVANT. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE CLAIM OF THE DEDUCTION OF THE ASSESSEE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 25.06.2010 SD SD (P.M.JAGTAP) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMB ER MUMBAI, DATED 25 TH JUNE 2010 SRL:23610 ITA NO. 6628/MUM/2009 (ASSESSMENT YEARS: 2005-06) 13 COPY TO: 1. BAPUSHAEB NANASAHEB DHUMAL PROP M/S N & BROTHERS, OPP.H P REFINERY GOVAN PADA, MAHULE RD. CHEMBER MUMBAI-400074 2. ACIT RG 22(2) MUMBAI 3. CCIT -XII, MUMBAI. 4. CIT-22, MUMBAI 5. CIT (A)-XXXIII, MUMBAI. 6. DCIT -22(2), MUMBAI 7. DR BBENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI