Sh. Chander Mohan Mahajan, Pathankot V. Assistant Commissioner of Income Tax, Pathankot

ITA 70/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8819 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-10-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 25-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Retrospective amendment
• Section: 133(6); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER ITA NO.70(ASR)/2016 ASSESSMENT YEAR:2012-13 PAN : AAXPM3854D SH. CHANDER MOHAN MAHAJAN, VS. ASSTT. COMMR. OF INC OME TAX, PROP. M/S. C.M. ASSOCIATES, CIRCLE-VI, PATHANKOT. MALIKPUR CHOWK, PATHANKOT. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.N. ARORA, ADVOCATE RESPONDENT BY: SH. RAHUL DHAWAN, DR DATE OF HEARING: 18/10/2016 DATE OF PRONOUNCEMENT: 16 /01/2017 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-2, AMRITSAR, DATED 08.10.2015 FOR THE ASSESS MENT YEAR 2012-13. THE ASSESSEE IS AGGRIEVED AGAINST THE ACTION OF THE LD. CIT(A) BY WHICH HE HAS CONFIRMED THE ADDITION OF RS.5,16,632/-, WHICH THE AO HAD MADE TO THE INCOME OF THE ASSESSEE, AS THE AO HELD THAT THE AMOUNT OF LOAN ON WHICH INTEREST WAS PAID WAS NOT STANDING IN THE NA ME OF THE ASSESSEE AND WAS RATHER STANDING IN THE NAME OF HIS WIFE SM T. MONIKA MAHAJAN. IT A NO.70/ASR/2016 A.Y. 2012-13 2 2. THE BRIEF FACTS, AS NOTED IN THE ASSESSMENT ORDE R ARE THAT THE ASSESSEE IS RUNNING AN AGENCY OF M/S. ASHOKA LEYLAN D FOR ITS TRUCKS AND SPARE PARTS. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED TO HAVE PAID AN AMOUNT OF RS.5,16,632/- TO PUNJAB & SIND BANK. THEREFORE, THE AO ISSUED NOTICE UNDER SECTION 133(6) TO THE BANK AND CALLED FOR I NFORMATION. AS PER INFORMATION RECEIVED FROM THE BANK, THE AMOUNT OF I NTEREST WAS PAID ON A LOAN OF RS.40,00,000/- OBTAINED BY SMT. MONIKA MAHA JAN. IT WAS FURTHER OBSERVED BY THE AO THAT AFTER OBTAINING LOAN OF RS. 40,00,000/- FROM THE BANK, SHE HAD TRANSFERRED THE SUM OF RS.40,00,000/ - TO THE ODP ACCOUNT OF THE ASSESSEE. THE AO HELD THAT SINCE THE LOAN WAS STANDING IN THE NAME OF SMT. MONIKA MAHAJAN, THE ASSESSEE WAS N OT LIABLE TO GET DEDUCTION FOR INTEREST PAID BY HIM. HE FURTHER HELD THAT THE ASSESSEE WAS DEEMED TO BE PAYING INTEREST TO BANK ON BEHALF OF S MT. MONIKA MAHAJAN ON WHICH HE WAS LIABLE TO DEDUCT TAX AT SOURCE. THE REFORE, HE HELD THAT ASSESSEE WAS ALSO NOT ALLOWED DEDUCTION OF SUCH EX PENSE IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON- DEDUCTION OF TAX AT SOURCE. THEREFORE, HE MADE THE ADDITION OF RS.5,16 ,632/-. 3. AGGRIEVED WITH THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO DISMISSED THE APPEAL OF THE ASS ESSEE. 4. NOW, AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE COPY OF BALANCE SHEET, PLACED AT PB 37-39. O UR SPECIFIC ATTENTION IT A NO.70/ASR/2016 A.Y. 2012-13 3 WAS INVITED TO PB-39, WHERE THE CURRENT ACCOUNT CA- 423 WAS REFLECTED BY THE ASSESSEE AS LOAN OBTAINED FROM THE BANK. THE LD . COUNSEL FOR THE ASSESSEE SUBMITTED THAT WIFE OF THE ASSESSEE HAD OB TAINED LOAN AGAINST HER FIXED DEPOSITS AND HAD TRANSFERRED THE AMOUNT OF LOAN OF RS.40,00,000/- TO THE BUSINESS ACCOUNT OF HER HUSBA ND, WHO UTILIZED THE AMOUNT FOR BUSINESS PURPOSES AND THEREFORE, THE ASS ESSEE WAS ENTITLED TO DEDUCTION FOR THE SAME. 6. AS REGARDS THE VIOLATION OF PROVISIONS OF SECTIO N 40(A)(IA) FOR NON DEDUCTION OF TAX, THE LD. COUNSEL SUBMITTED THAT TH E ASSESSEE WAS NOT LIABLE TO DEDUCT TAX, AS THE ASSESSEE HAD NOT PAID INTEREST TO HER WIFE AND HAD DIRECTLY PAID INTEREST TO PUNJAB & SIND BANK AN D IN THIS RESPECT OUR ATTENTION WAS INVITED TO PB-8, WHERE THE ASSESSEE H AD DECLARED CURRENT ACCOUNT 29-423 IN HIS BOOKS OF ACCOUNT AND HAD REG ULARLY CREDITED INTEREST CHARGED BY THE BANK ON MONTHLY BASIS. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN EARLIER YEARS AL SO, THE ASSESSEE HAD PAID SIMILAR INTEREST ON THE LOAN OBTAINED BY HIS W IFE BUT THE DEPARTMENT HAD NOT MADE ANY ADDITION ON THIS ACCOUNT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SMT. MONIKA MAHAJAN HAD DEC LARED INTEREST EARNED FROM THE BANK FIXED DEPOSITS IN THE RETURN OF INCOME AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PB 16 16A, W ERE A COPY OF INCOME TAX RETURN AND COMPUTATION OF INCOME WAS PLACED. TH E LD. COUNSEL WITHOUT PREJUDICE SUBMITTED THAT EVEN IF THE ASSESS EE IS CONSIDERED TO IT A NO.70/ASR/2016 A.Y. 2012-13 4 HAVE PAID INTEREST TO SMT. MONIKA MAHAJAN, THE ASSE SSEE WAS NOT LIABLE TO DEDUCT TDS ON THIS, AS THE DEEMED PAYEE WHO HAD DECLARED THE SAID INCOME IN HER RETURN OF INCOME. THE LD. COUNSEL IN THIS RESPECT INVITED OUR ATTENTION TO PB-5 AND SUBMITTED THAT THOUGH THI S SECOND PROVISO TO SECTION 40(A)(IA) WAS INTRODUCED W.E.F. 01.04.2013 BUT ITS APPLICABILITY WAS HELD TO BE RETROSPECTIVE IN A NUMBER OF CASES A ND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PB 6 TO 69, WHERE COPIES O F VARIOUS CASES DECIDED BY VARIOUS BENCHES INCLUDING ITAT, AMRITSAR BENCH, WERE PLACED AND WHEREIN IT WAS HELD THAT SECOND PROVISO TO SECTION 40(A)(IA) WAS PROCEDURAL IN NATURE AND WAS APPLICABLE W.E.F. 01.0 4.2005. IN VIEW OF THE ABOVE, IT WAS ARGUED THAT THE ADDITION WAS NOT SUST AINABLE. 7. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT IT IS AN UNDISPUTED FACT THAT THE LOAN WAS OBTAINED BY SMT. MONIKA MAHA JAN AND ONLY SHE WAS LIABLE TO PAY INTEREST TO THE BANK AND THEREFOR E, THE AUTHORITIES BELOW HAS RIGHTLY MADE AND UPHELD THE ADDITION. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT ON 10.0 6.2010, SMT. MONIKA MAHAJAN TOOK LOAN FROM PUNJAB & SIND BANK AND AFTER OBTAINING LOAN SMT. MONIKA MAHAJAN TRANSFERRED THE FUNDS TO THE TU NE OF RS.40,00,000/- TO THE BUSINESS ACCOUNT OF HER HUSBA ND, I.E., SH. CHANDER MOHAN MAHAJAN. THEREFORE, IT IS AN UNDISPUT ED FACT THAT THE IT A NO.70/ASR/2016 A.Y. 2012-13 5 AMOUNT OF LOAN WAS UTILIZED BY THE ASSESSEE FOR HIS BUSINESS PURPOSES. THE ASSESSEE HAS ALSO DECLARED LOAN FROM BANK OBTAI NED BY HIS WIFE IN HIS BOOKS OF ACCOUNT AND SINCE WHEN THE LOAN WAS TA KEN, THE ASSESSEE HAD BEEN DIRECTLY PAYING INTEREST TO THE BANK AND IN THE EARLIER YEARS ALSO THE INTEREST WAS CLAIMED AS BUSINESS EXPENDITU RE. IT IS ALSO A FACT THAT SMT. MONIKA MAHAJAN HAD DECLARED HER INCOME FR OM FIXED DEPOSITS AGAINST WHICH LOAN WAS OBTAINED, AS HER INCOME AS I S APPARENT FROM PB 16 & 16A, WHERE A COPY OF INCOME TAX RETURN AND COM PUTATION OF INCOME OF SMT. MONIKA MAHAJAN WAS PLACED. SMT. MONIKA MAHA JAN HAD PAID APPLICABLE TAXES ON THIS INCOME AND SHE HAD NOT C LAIMED ANY SET OFF OF EXPENDITURE OF INTEREST ON OD ACCOUNT WHICH WAS CHA RGED BY THE PUNJAB & SIND BANK. HAD SMT. MONIKA MAHAJAN CLAIMED SET OFF OF INTEREST ON OD ACCOUNT, THE NET INCOME OF FDRS WOULD HAVE BEEN NEGATIVE BUT SHE DID NOT CLAIM INTEREST PAID TO BANK, AS THE FUNDS W ERE NOT UTILIZED BY HER AND WERE RATHER UTILIZED BY HER HUSBAND. THE AUTHOR ITIES BELOW HAS CLEARLY HELD THAT THE AMOUNT WAS TRANSFERRED TO THE BUSINESS ACCOUNT OF THE ASSESSEE, THEREFORE, IT CANNOT BE SAID THAT THE FUNDS WERE NOT UTILIZED BY THE ASSESSEE. IT IS NOT A CASE WHERE THE AUTHORI TIES BELOW HAS HELD THAT THE FUNDS WERE NOT UTILIZED BY THE ASSESSEE FO R HIS BUSINESS. THE OBJECTION RAISED BY THE AUTHORITIES BELOW THAT THE LOAN AMOUNT WAS NOT STANDING IN THE NAME OF THE ASSESSEE AND THEREFORE, INTEREST EXPENSE WAS NOT ALLOWABLE IS NOT CORRECT AS THE ASSESSEE HAD UT ILISED THE FUNDS IN HIS BUSINESS. IT IS LIKE A CASE WHERE A WIFE ALLOWS HIS HUSBAND TO UTILIZE HER IT A NO.70/ASR/2016 A.Y. 2012-13 6 FUNDS OBTAINED BY MORTGAGING HER FIXED DEPOSITS WIT H A CONDITION THAT INTEREST WILL BE PAID BY HIM AND THEREFORE ASSESSEE WAS ENTITLED TO CLAIM THIS DEDUCTION. AS REGARDS THE OTHER CONTENTIONS T HAT THE ASSESSEE WAS DEEMED TO HAVE PAID INTEREST TO SMT. MONIKA MAHAJAN , ON WHICH HE WAS REQUIRED TO DEDUCT TDS IS ALSO NOT CORRECT, AS THE INTEREST WAS DIRECTLY PAID TO THE BANK AND EVEN IF IT IS CONSIDERED, THAT THE ASSESSEE WAS DEEMED TO HAVE PAID INTEREST TO SMT. MONIKA MAHAJAN , THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS IN VIEW OF THE SECOND PRO VISO TO SECTION 40(A)(IA), WHICH THOUGH WAS APPLICABLE W.E.F. 01.04 .2013 BUT HAS BEEN HELD TO BE RETROSPECTIVE IN NATURE IN A NUMBER OF C ASES. IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. REPORTED IN 3 77 ITR 635 (DELHI), THE HONBLE DELHI HIGH COURT HAD EXAMINED THIS ISS UE AND HAD HELD THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WAS DECLARATORY AND CURATIVE IN NATURE AND HAD RETROSPECTIVE EFFECT FROM 01.04.2 005. THE RELEVANT FINDINGS GIVEN IN PARAS 11 TO 15 OF THE ORDER FOR THE SAKE OF COMPLETENESS ARE REPRODUCED BELOW: 11. THE FIRST PROVISO TO SECTION 201 (1) OF THE AC T HAS BEEN INSERTED TO BENEFIT THE ASSESSEE. IT ALSO STATES THAT WHERE A PERSON FAILS TO DEDUCT TAX AT SOURCE ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SUCH PERSON S HALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF S UCH TAX IF SUCH RESIDENT HAS FURNISHED HIS RETURN OF INCOME UNDER S ECTION 139 OF THE ACT. NO DOUBT, THERE IS A MANDATORY REQUIREMENT UND ER SECTION 201 TO DEDUCT TAX AT SOURCE UNDER CERTAIN CONTINGENCIES , BUT THE INTENTION OF THE LEGISLATURE IS NOT TO TREAT THE ASSESSEE AS A PERSON IN DEFAULT SUBJECT TO THE FULFILMENT OF THE CONDITIONS AS STIP ULATED IN THE FIRST PROVISO TO SECTION 201(1). THE INSERTION OF THE SEC OND PROVISO TO SECTION 40(A) (IA) ALSO REQUIRES TO BE VIEWED IN TH E SAME MANNER. THIS AGAIN IS A PROVISO INTENDED TO BENEFIT THE ASS ESSEE. THE EFFECT IT A NO.70/ASR/2016 A.Y. 2012-13 7 OF THE LEGAL FICTION CREATED THEREBY IS TO TREAT TH E ASSESSEE AS A PERSON NOT IN DEFAULT OF DEDUCTING TAX AT SOURCE UN DER CERTAIN CONTINGENCIES. 12. RELEVANT TO THE CASE IN HAND, WHAT IS COMMON T O BOTH THE PROVISOS TO SECTION 40 (A) (IA) AND SECTION 210 (1) OF THE ACT IS THAT THE AS LONG AS THE PAYEE/RESIDENT (WHICH IN THIS CA SE IS ALIP) HAS FILED ITS RETURN OF INCOME DISCLOSING THE PAYMENT R ECEIVED BY AND IN WHICH THE INCOME EARNED BY IT IS EMBEDDED AND HAS A LSO PAID TAX ON SUCH INCOME, THE ASSESSEE WOULD NOT BE TREATED A S A PERSON IN DEFAULT. AS FAR AS THE PRESENT CASE IS CONCERNED, I T IS NOT DISPUTED BY THE REVENUE THAT THE PAYEE HAS FILED RETURNS AND OF FERED THE SUM RECEIVED TO TAX. 13. TURNING TO THE DECISION OF THE AGRA BENCH OF IT AT IN RAJIV KUMAR AGARWAL V. ACIT (SUPRA ), THE COURT FINDS THA T IT HAS UNDERTAKEN A THOROUGH ANALYSIS OF THE SECOND PROVIS O TO SECTION 40 (A)(IA) OF THE ACT AND ALSO SOUGHT TO EXPLAIN THE R ATIONALE BEHIND ITS INSERTION. IN PARTICULAR, THE COURT WOULD LIKE TO R EFER TO PARA 9 OF THE SAID ORDER WHICH READS AS UNDER: 'ON A CONCEPTUAL NOTE, PRIMARY JUSTIFICATION FOR SU CH A DISALLOWANCE IS THAT SUCH A DENIAL OF DEDUCTION IS TO COMPENSATE FOR THE LOSS OF REVENUE BY CORRESPONDING INCOME NOT BEING TAKEN INTO ACCOUNT IN COMPUTATION OF TAXA BLE INCOME IN THE HANDS OF THE RECIPIENTS OF THE PAYMENTS. SUC H A POLICY MOTIVATED DEDUCTION RESTRICTIONS SHOULD, THEREFORE, NOT COME INTO PLAY WHEN AN ASSESSEE IS ABLE TO ESTABLISH THA T ' THERE IS NO ACTUAL LOSS OF REVENUE. THIS DISALLOWANCE DOES DEINCENTIVIZE NOT DEDUCTING TAX AT SOURCE, WHEN SUC H TAX DEDUCTIONS ARE DUE, BUT, SO FAR AS THE LEGAL FRAMEW ORK IS CONCERNED, THIS PROVISION IS NOT FOR THE PURPOSE OF PENALIZING FOR THE TAX DEDUCTION AT SOURCE LAPSES. THERE ARE S EPARATE PENAL PROVISIONS TO THAT EFFECT. DEINCENTIVIZING A LAPSE AND PUNISHING A LAPSE ARE TWO DIFFERENT THINGS AND HAVE DISTINCTLY DIFFERENT, AND SOMETIMES MUTUALLY EXCLUSIVE, CONNOT ATIONS. WHEN WE APPRECIATE THE OBJECT OF SCHEME OF SECTION 40(A)(IA), AS ON THE STATUTE, AND TO EXAMINE WHETHER OR NOT, O N A 'FAIR, JUST AND EQUITABLE' INTERPRETATION OF LAW- AS IS TH E GUIDANCE FROM HONBLE DELHI HIGH COURT ON INTERPRETATION OF THIS LEGAL PROVISION, IN OUR HUMBLE UNDERSTANDING, IT COULD NO T BE AN 'INTENDED CONSEQUENCE' TO DISALLOW THE EXPENDITURE, DUE TO NON DEDUCTION OF TAX AT SOURCE, EVEN IN A SITUATION IN WHICH CORRESPONDING INCOME IS BROUGHT TO TAX IN THE HANDS OF THE RECIPIENT. THE SCHEME OF SECTION 40(A)(IA), AS WE S EE IT, IS AIMED AT ENSURING THAT AN EXPENDITURE SHOULD NOT BE ALLOWED IT A NO.70/ASR/2016 A.Y. 2012-13 8 AS DEDUCTION IN THE HANDS OF AN ASSESSEE IN A SITUA TION IN WHICH INCOME EMBEDDED IN SUCH EXPENDITURE HAS REMAI NED UNTAXED DUE TO TAX WITHHOLDING LAPSES BY THE ASSESS EE. IT IS NOT, IN OUR CONSIDERED VIEW, A PENALTY FOR TAX WITH HOLDING LAPSE BUT IT IS A SORT OF COMPENSATORY DEDUCTION RE STRICTION FOR AN INCOME GOING UNTAXED DUE TO TAX WITHHOLDING LAPS E. THE PENALTY FOR TAX WITHHOLDING LAPSE PER SE IS 1 SEPARATELY PROVIDED FOR IN SECTION 271 C, AND, SECTION 40(A)(I A) DOES NOT ADD TO THE SAME. THE PROVISIONS OF SECTION 40(A)(IA ), AS THEY EXISTED PRIOR TO INSERTION OF SECOND PROVISO THERET O, WENT MUCH BEYOND THE OBVIOUS INTENTIONS OF THE LAWMAKERS AND CREATED UNDUE HARDSHIPS EVEN IN CASES IN WHICH THE ASSESSEE 'S TAX WITHHOLDING LAPSES DID NOT RESULT IN ANY LOSS TO TH E EXCHEQUER. NOW THAT THE LEGISLATURE HAS BEEN COMPASSIONATE ENO UGH TO CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVI ATE THE UNINTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT S TATE SO SPECIFICALLY, THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT OF TIME WHEN TH E RELATED LEGAL PROVISION WAS INTRODUCED. IN VIEW OF THESE DI SCUSSIONS, AS ALSO FOR THE DETAILED REASONS SET OUT EARLIER, W E CANNOT SUBSCRIBE TO THE VIEW THAT IT COULD HAVE BEEN AN 'I NTENDED CONSEQUENCE' TO PUNISH THE ASSESSEES FOR NON DEDUCT ION OF TAX AT SOURCE BY DECLINING THE DEDUCTION IN RESPECT OF RELATED PAYMENTS, EVEN WHEN THE CORRESPONDING INCOME IS DUL Y BROUGHT TO TAX. THAT WILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORDINGLY, WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATO RY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1ST APRIL, 2005, BEING THE DATE FROM WHICH SUB CLAUSE ( IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO. 2) A CT, 2004.' 14. THE COURT IS OF THE VIEW THAT THE ABOVE REASON ING OF THE AGRA BENCH OF ITAT AS REGARDS THE RATIONALE BEHIND THE I NSERTION OF THE SECOND PROVISO TO SECTION 40(A) (IA) OF THE ACT AND ITS CONCLUSION THAT THE SAID PROVISO IS DECLARATORY AND CURATIVE AND HA S RETROSPECTIVE EFFECT FROM 1ST APRIL 2005, MERITS ACCEPTANCE. 15. IN THAT VIEW OF THE MATTER, THE COURT IS UNABL E TO FIND ANY LEGAL INFIRMITY IN THE IMPUGNED ORDER OF THE ITAT I N ADOPTING THE RATIO OF THE DECISION OF THE AGRA BENCH, ITAT IN (RAJIV K UMAR AGARWAL V. ACIT). IT A NO.70/ASR/2016 A.Y. 2012-13 9 9. IN VIEW OF THE ABOVE JUDGMENT OF HONBLE DELHI HIGH COURT, WE HOLD THAT EVEN IF IT IS PRESUMED THAT THE ASSESSEE WAS DEEMED TO HAVE PAID INTEREST TO SMT. MONIKA MAHAJAN, EVEN THEN THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS, AS FROM WHATEVER AMOUNT SHE IS DEEMED TO HAVE RECEIVED FROM HER HUSBAND, THE ENTIRE AMOUNT HAS BE EN PAID TO BANK AND THERE IS NO INCOME EARNED BY SMT. MONIKA MAHAJ AN AND SUCH NIL INCOME IS DEEMED TO HAVE BEEN INCLUDED IN HER RETUR N OF INCOME AND THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) WERE NOT APPLICABLE IN VIEW OF AMENDMENT TO SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, WHICH HAS BEEN HELD TO BE PROCEDURAL IN NATURE AND IS APPLICA BLE RETROSPECTIVELY W.E.F. 01.04.2005. IN VIEW OF THE ABOVE, WE REVERSE THE ORDER OF THE LD. CIT(A) AND ACCEPT THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/01/2017. SD/- SD/- (N.K. CHOUDHRY) (T.S. KAP OOR) JUDICIAL MEMBER ACCOUNTANT MEMBER /SKR/ DATED: 16/01/2017 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. CHANDER MOHAN MAHAJAN, PATHANKOT 2. THE ACIT, CIRCLE-VI, PATHANKOT 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL,