The DCIT, Circle-1(2), Ahmedabad V. M/s. Jay Somnath Iron Works, Ahmedabad

ITA 681/AHD/2015

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7491 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 24-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.S. SHUKLA
• Keywords: Retrospective amendment; TDS
• Section: 40(a)(ia); 194C; 143(2); 139(1)

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ायपी “ए” अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD (through web-based video conferencing platform) ] ] BEFORE SHRI G.S. PANNU, PRESIDENT AND SHRI RAJPAL YADAV, VICE-PRESIDET ITA No. 681/Ahd/2015 Assessment Years : 2005-06 Deputy Commissioner of Income-tax, Circle 1(2), Ahmedabad Vs M/s. Jay Somnath Iron Works, 4, Asta Mitra Estate, Behind Jupiter Mills, Dudheshwar Road, Ahmedabad PAN : AABFJ 1886 A अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸/ (Appellant) 灹त् 灹त् 灹त् 灹त् यथ牸 यथ牸यथ牸 यथ牸/ (Respondent) Revenue by : Shri S.S. Shukla, Sr DR Assessee by : Shri S.N. Divetia, AR सुनवाई क琉 तारीख/Date of Hearing : 28/10/2021 घोषणा क琉 तारीख /Date of Pronouncement: 29/11/2021 आदेश आदेशआदेश आदेश/O R D E R PER RAJPAL YADAV, VICE PRESIDENT : The Revenue is in appeal before the Tribunal against the order of the learned Commissioner of Income-tax (Appeals)-10, Ahmedabad dated 12.12.2014 passed for Assessment Year 2005-06. 2. The substantial grounds of appeal taken by the Revenue read as under:- “1. The CIT(A) has erred in law and on fact in deleting the disallowance u/s 40(a)(ia) amounting to Rs.1,31,15,544/- despite the fact that the TDS deducted on or before 31.03.2005 was paid on 30.05.2005 instead of 31.03.2005 as per the applicable provisions of Section 40(a)(ia) for A.Y. 2005-06. 2. The CIT(A) has erred in law and on fact in deleting the disallowance u/s 40(a)(ia) amounting to Rs.10,16,130/- despite the fact that the TDS deducted ITA No. 681/Ahd/2015 DCIT Vs. Jay Somnath Iron Works AY : 2005-06 2 on or before 31.03.2005 was paid on 07.04.2005 instead of 31.03.2005 as per the applicable provisions of section 40(a)(ia) for AY 2005-06. 3. The CIT(A) has not appreciated the fact that the provisions of section 40(a)(ia) with regard to payment of TDS have not been amended retrospectively but amended w.e.f. 01.04.2010.” 3. With the assistance of learned representatives, we have gone through the record carefully. As far as the first ground of appeal is concerned, it emerges out from the record that the assessee, at the relevant time, was doing work on contract basis with regard to laying of Gas/Oil/Water Pipeline. It has filed its return of income on 31.10.2005 declaring total income at Rs.96,22,150/-, which was revised on 28.12.2006 declaring total income at Rs.76,91,930/-. The case of the assessee was selected for scrutiny assessment and a notice under Section 143(2) of the Act was issued and served upon the assessee. On scrutiny of the account, it revealed to the Assessing Officer that the assessee had paid a sum of Rs.1,31,15,544/- to sub-contractors and it was required to deduct TDS under Section 194C of the Income-tax Act, 1961. The case of the assessee is that it has deducted the TDS but made the payment of such taxes deducted on payment made to sub-contractors to the Government account on 30.05.2005. The Assessing Officer was of the view that the assessee ought to have deposited the TDS in the Government account on or before 31.03.2005. Accordingly he disallowed the sum of Rs.1,31,15,544/-. 4. Dissatisfied with the disallowance, assessee carried the matter in appeal before the learned CIT(A). The learned CIT(A) has deleted the disallowance by following the decision of the Hon’ble jurisdictional High Court by recording following findings:- ITA No. 681/Ahd/2015 DCIT Vs. Jay Somnath Iron Works AY : 2005-06 3 “5.1.2 Decision : I have carefully perused the assessment order and submissions of the appellant. An amendment has been made to Sec. 40(a)(ia) of the Act by the Finance Act, 2010 w.e.f. 01.04.2010. As per amended provisions, no disallowance is required to be made u/s 40(a)(ia) of the Act if the amount of TDS has been paid into government account on or before the due date of filing of return of income u/s 139(1) of the Act. The Hon'ble Gujarat High Court in its decision in group of tax appeals in Tax Appeal No. 412/2013 and allied matters (O/TAXAP/412/2013) has held the amendment to be retrospective. The Hon'ble court held as follows :- "7. The core issue as to whether the amendment made by the Finance Act 2010 to Section 40(a)(ia) of the Act is retrospective from the date of insertion of the provisions i.e, 1st April 2005 therefore needs to be answered in affirmation. It can be seen that the amendment made by the Finance Act 2010 allows additional time upto the due date of filing of the return in respect of even those instances where TDS has been deducted during the first eleven months of the previous year. The additional time till the due date of filing of the return, in case of TDS made during the last month of the previous year was already available by the amendment made by Finance Act 2008. Thus, it is apparent that the relaxation made by the amendment made under the Finance Act, 2010 brings the law in parity with the aforementioned situation and accordingly, for the TDS deducted all throughout the year, time is extended from payment till the filing of return. It is thus apparent that when the amendment introduced by the Finance Act, 2008 of relaxing the time for deposit of TDS was made retrospective from the year 2005 [1st April 2005], the amendment by Finance Act 2010 with regard to other limb of time limit for payment of TDS has to be held retrospective not from 1st April 2010 only." The hon'ble Court noted that the above amendment has been held to be retrospective by Hon'bie Calcutta High Court in case of CIT vs. Virgin Creations (ITAT No.302/11 dated 23.112011) and by the Hon'ble Delhi High Court in case of H. S. Mohindra Traders vs. ITO Ward 39(2), New Delhi (2010) 132 TTJ 701 (Delhi.) The hon'ble court further noted that in the case of CIT vs. Royal Builders in Tax Appeal No.520 of 2012, the hon'ble Gujarat High Court has followed hon'ble Delhi High Court in H. S. Mohindra vs. ITO Ward 39(2), New Delhi (supra) in holding the above amendment to be retrospective. ITA No. 681/Ahd/2015 DCIT Vs. Jay Somnath Iron Works AY : 2005-06 4 After discussing the above cases, the hon'ble court finally concluded as follows :- "From the discussion held hereinabove, we answer the substantial question of law raised in these Appeals in favour of the assessee and against the Revenue by holding the amendment made in Section 40(a)(ia) of the Income Tax Act, 1961 by the Finance Act 2010, as retrospective in operation, having effect from 1st April, 2005 i.e from the date of insertion of Section 40(a)(ia) of the Act." Further, hon'ble Gujarat High Court in its order dated 10.12.13 in Tax Appeal 819 of 2011 has followed the ratio laid down by Hon'ble Gujarat High Court in its order dated 22.11.2013 in Tax Appeal No. 412/2013 and allied matters (supra). The Hon'ble Court had held as follows :- "At the outset, it is required to be noted that the only issue involved in the present Tax Appeal is whether amendment to Section 40(a)(ia) of the Income Tax Act brought out by Finance Act, 2010 with effect from 01/04/2010 is having retrospective effect or not? The issue is now squarely covered against the revenue by the decision of this Court in group of Tax Appeals, being Tax Appeal No.412/2013 and allied matters, by which it is held by the Division Bench of this Court that amendment under Section 40(a)(ia) of the Income Tax Act brought out by Finance Act, 2010 with effect from 01/04/2010 is having retrospective effect." In the present case, the appellant had made payment of Rs. 1,31,15,544/- to various parties for sub-contract work. It had deducted TDS on all these payments on or before 31/03/2005. The TDS so deducted was paid into the government account on 30/05/2005. There is no dispute about the date of the payment of TDS deducted on payment of Rs. 1,31,15,544/-. The AO himself has mentioned in the assessment order that the TDS was paid in to govt. account on 30/05/2005. Thus from this it is clear that the TDS deducted was paid in to govt. account before due date for filing of return of income u/s. 139(1) of the Act. Therefore, the case is clearly covered by the jurisdictional hon'ble Gujarat High Court order in Tax Appeal No.412/2013 and allied matters (supra) and Tax Appeal No. 819 of 2011 (supra). In view of the facts narrated above, relying on the judgment of hon'ble Gujarat High Court in Tax Appeal No.412/2013 (supra) and Tax Appeal No. 819 of 2011 (supra), the addition of Rs.1,31,15,544/- made on account of ITA No. 681/Ahd/2015 DCIT Vs. Jay Somnath Iron Works AY : 2005-06 5 disallowance u/s 40(a)(ia) of the Act is hereby deleted. This ground of appeal is allowed.” 5. In the first ground of appeal, the Revenue has challenged this finding. Before us, it was submitted that now the controversy has been silenced by the judgment of Hon’ble Supreme Court in the case of CIT Vs. M/S Calcutta Export Company, reported in (2018)(404) ITR 654(SC). The Hon’ble Supreme Court has held that the amendments made in Section 40(a)(ia) by Finance Act, 2010 would be applicable with retrospective effect and, if an assessee deducted the taxes as required and paid such taxes before due date of filing of the return, then no disallowance will be made under Section 40(a)(ia) of the Income-tax Act. The learned Departmental Representative did not dispute this proposition. The view taken by the learned CIT(A) on the strength of Hon’ble Gujarat High Court decision referred supra is in consonance with later decision of the Hon’ble Supreme Court. Therefore, we do not find any merit in the first ground of appeal which is rejected. 6. As far as the second ground of appeal is concerned, the same is identical to that of ground no.1. The assessee has deducted the TDS and it was deposited on 07.04.2005. The Assessing Officer was of the view that it should have been paid before 31.03.2005. Since the return was filed on 31.10.2005 and before that date the TDS deducted by the assessee was paid to the Government account. Therefore, this aspect is also identical to the ground No.1 and equally covered by the decision of Hon’ble Supreme Court cited supra. Accordingly, this ground is also rejected. 7. So far as the third ground of appeal is concerned, it is only a supportive argument to the two issues pleaded in Ground Nos. 1 & 2 and it does not call for recording of any specific findings; hence rejected. ITA No. 681/Ahd/2015 DCIT Vs. Jay Somnath Iron Works AY : 2005-06 6 8. In the result, the appeal of the Revenue is dismissed. Order pronounced in the Court on 29 th November 2021 at Ahmedabad. Sd/- Sd/- (G.S. PANNU) (RAJPAL YADAV) PRESIDENT VICE-PRESIDENT Ahmedabad, Dated 29/11/2021 *Bt आदेश क琉 灹ितिलिप अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 / The Respondent. 3. संबंिधत आयकर आयु猴 / Concerned CIT 4. आयकर आयु猴)अपील (/ The CIT(A)- 5. िवभागीय 灹ितिनिध ,आयकर अपीलीय अिधकरण,राजोकट/DR,ITAT, Ahmedabad, 6. गाड榁 फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण ITAT, Ahmedabad 1. Date of dictation- ...10.11.2021...- ... 2. Date on which the typed draft is placed before the Dictating Member ............... Other member ..................... 3. Date on which the approved draft comes to the Sr.P.S./P.S. - ...29.11.2021............... 4. Date on which the fair order is placed before the Dictating Member for Pronouncement ...29.11.2021.. 5. Date on which the file goes to the Bench Clerk....29.11.2021............... 6. Date on which the file goes to the Head Clerk.................................. 7. The date on which the file goes to the Assistant Registrar for signature on the order..................... 8. Date of Despatch of the Order..................