Vinod Chandrashekharan Menon, Pune V. Deputy Commissioner of Income-tax, Circle - 7, Pune

ITA 709/PUN/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8755 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 17-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANDEEP GARG
• Assessee Lawyers: HARI KRISHAN
• Keywords: Retrospective amendment; Bad and doubtful debts; TDS
• Section: 40(a)(ia)

Judgement Text

आयकर अपीलीय अधधकरण “बी ” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI R.S.SYAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 709/PUN/2018 धनधाारण वषा / Assessment Year : 2013-14 Mr. Vinod Chandrashekharan Menon Flat No.104, Bovasita Fortalez, Kalyani Nagar, Pune-411 001. PAN : ACLPM4138L .......अपीलाथी / Appellant बनाम / V/s. The Deputy Commissioner of Income Tax, Circle-7, Pune. ......प्रत्यथी / Respondent Assessee by : Shri Hari Krishan Revenue by : Shri Piyush Kumar Singh Yadav & Shri Sandeep Garg सुनवाई की तारीख / Date of Hearing : 08.11.2021/10.11.2021 घोषणा की तारीख / Date of Pronouncement : 11.11.2021 आदेश / ORDER PER CHANDRA MOHAN GARG JM: This appeal filed by the assessee is directed against the order of the Ld. CIT(Appeals), Pune-5, Pune dated 18.09.2017 for the assessment year 2013- 14 as per the following grounds of appeal : “1. The Ld. Commissioner of Income Tax (Appeals) has erred in sustaining the disallowances of Rs.17,95,359/-made by the Assessing Officer u/s 40(a)(ia) of the Income Tax Act for late payment of TDS. 2. The Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that the amount paid to each of the ten sub-contractors, as per the list below which list is also reproduced in Para 5 of the order of the Commissioner of Income Tax(Appeals), was below the taxable limit. Therefore the amount paid to the sub-contractors were not chargeable to tax in the hands of the sub-contractors. Accordingly the assessee was 2 ITA No. 709/PUN/2018 A.Y.2013-14 not required to deduct TDS on the said amount paid to the sub - contractors. As such the provisions of section 40(a)(ia) were not applicable in the case of the assessee. Sr. No. Name of the Contractor Amount (Rs.) 1 Vasant Gaikwad ( Propritor of Abhijit Enterprises) 3,48,290 2 Saeed Ahmed Khan 3,54,999 3 Kiran Khandale 3,12,070 4 Siddharth Natekar Proprietor of Vaidya Construction 3,00,000 5 Ramkuwar Jansid Proprietor of Ramkuwar Jansid 80,000 6 Raju Varal 1,14,000 7 Mohammad Amin Proprietor of Mahammad Amin & Co. 48,000 8 Bhondwe Shivdad Proprietor of Amar Earth Movers 88,000 9 Iamal Ahmed 35,000 10 Irfan Mulla 1,15,000 Total 17,95,359 3. The Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that the amendment made to Sub Clause (ia) of the Clause (a) of section 40 of the Income Tax Act by the finance (No.2) act 2014, being the beneficial amendment has retrospective effect. Accordingly only 30% of the total payments of Rs.17,95,359/- to the sub-contractors could be disallowed. Accordingly the Ld. Commissioner of Income Tax (Appeals) has erred in sustaining the disallowance of the entire amount. 4. The appellant craves leave to add or amend/modify or delete any or all of the above grounds of appeal. 2. The brief facts in this case are that the assessee is an individual engaged in the business of construction activity and labour supervisor work under the name and style „Aishwarya Construction‟. The return of income was filed declaring total income of Rs.50,15,230/- and the case was selected for scrutiny under CASS and the required notices issued and served on the assessee. The assessee has also shown income from house property along with the income from business on account of disallowance u/s.40(a)(ia) of the Income Tax Act, 1961 (in short „the Act‟) and additions were made on account of bad debts u/s.40(a)(ia) of the Act. 3 ITA No. 709/PUN/2018 A.Y.2013-14 3. The Ld. Counsel for the assessee in all fairness submitted that disallowance u/s.40(a)(ia) of the Act has to be made in this case but keeping in view of the amendment amended to Sub-Clause (ia) of Clause (a) of Section 40 of the Act, has held as retrospective by various judgments/ orders of the Hon‟ble Supreme Court and High Courts and Co-ordinate Benches of the Tribunal that disallowance should be restricted to 30% of the total impugned amount. To support this contention, the Ld. Counsel has placed reliance on the decision of the Hon‟ble Supreme Court in the case of CIT Vs. Vatika Township Private Limited, reported in (2014) 367 ITR 466 (SC) wherein it has been observed that in case the amendment is brought to remove the hardship caused to the assessee, the same assumes the character of being clarificatory in nature. The Ld. Counsel for the assesse has also placed reliance on the following decisions : (i) Om Sri Nilamadhab Builders Pvt. Ltd. Vs. ITO, in ITA No.296/CTK/2018 dated 26.11.2019 (ii) M/s. Amruta Quarry Works Vs. ITO, ITA No.1481/Ahd/2013 dated 19.07.2016 (iii) Neena Kaul Vs. ACIT, ITA No.1386/M/2017 dated 21.05.2019 4. Replying to the above, the Ld. SR. DR submitted that disallowance was made due to reason that TDS payment was made on 29.03.2015 which was after the due date of filing return for assessment year 2013-14. The Ld. Counsel for the assessee stated at Bar that the assessee has claimed this payment during assessment year 2015-16 and therefore, the Assessing Officer should be allowed an opportunity to verify that the assessee has made claim of either 30% or 100% and the disallowance should be made equal to that amount. 4 ITA No. 709/PUN/2018 A.Y.2013-14 5. That on careful consideration of the above submissions, we are of the considered view that in the case of the CIT Vs. Vatika Township Private Limited (supra.) and various order of the Tribunals including the Tribunal‟s order as relied on by the Ld. Counsel for the assessee, it has been made clear that the amendment made to Sub-Clause(ia) of Clause (a) of Section 40 of the Act which was inserted w.e.f.01.04.2015, the Finance (Act) 2014 has been held as retrospective and therefore, the same is clarificatory in nature. 6. On behalf of the Department, the Ld. CIT-DR placed vehement reliance on the recent decision of the Hon‟ble Supreme Court in the case of Shree Choudhary Transport Company Vs. Income Tax Officer, reported as 118 taxmann 47 (SC) and drawing attention towards Para 79 and 84 of the said decision and submitted that the Hon‟ble Apex Court after considering all the relevant judgments rendered by it on the issue has held that the proposition rendered by the Hon‟ble Supreme Court itself in the case of Calcutta Export Company reported as 404 ITR 654 dealing with curative amendment, relating more to the procedural aspects concerning deposit of the deducted TDS, be applied to the amendment of the substantive provision by the Finance (No.2) Act, 2014. Thus, it cannot be given retrospective operation. 7. The Ld. Counsel for the assessee did not controvert that the issue is no more res-integra and has been decided by the Hon‟ble Supreme Court in favour of the Department and against the assessee. In our view, the Hon‟ble Supreme Court at Para 84 has held that the provision in question i.e. sub- clause (ia) of Section 40(a) of the Act is not applicable from retrospective effect and thus, benefit of earlier decision of the Hon‟ble Supreme Court in the case of Calcutta Export Company (supra.) is not available for the assessee in the present case. For the sake of completeness of this order, we find it appropriate to reproduce Para 84 of the judgment of the Hon‟ble Supreme 5 ITA No. 709/PUN/2018 A.Y.2013-14 Court in the case of Shree Choudhary Transport Company Vs. Income Tax Officer (supra.) which reads as follows: “84. A bare look at the extraction aforesaid makes it clear that what this Court has held as regards “retrospective operation” is that the amendment of the year 2010, being curative in nature, would be applicable from the date of insertion of the provision in question i.e. sub clause (ia) of Section 40(a) of the Act. This being the position, it is difficult to find any substance in the argument that the principles adopted by this Court in this case of Calcutta Export Company (supra.) dealing with curative amendment, relating more to the procedural aspects concerning deposit of the deducted TDS, be applied to the amendment of the substantive provision by the Finance (No.2) Act, 2014.” 8. Respectfully following the judgment of the Hon‟ble Supreme Court (supra.), the sole ground of the assessee is dismissed. 9. In the result, appeal of the assessee is dismissed. Order pronounced on 11 th day of November, 2021. Sd/- Sd/- R.S.SYAL CHANDRA MOHAN GARG VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; ददनांक / Dated : 11 th November, 2021. SB आदेश की प्रधतधलधप अग्रेधषत / Copy of the Order forwarded to : 1. अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The CIT(Appeals), Pune-5, Pune. 4. The Pr. CIT, Pune-4, Pune. 5. धवभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, “बी” बेंच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गार्ा फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // धनजी सधचव / Private Secretary आयकर अपीलीय अधधकरण, पुणे / ITAT, Pune. 6 ITA No. 709/PUN/2018 A.Y.2013-14 Date 1 Draft dictated on 10.11.2021 Sr.PS/PS 2 Draft placed before author 10.11.2021 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order