ACIT, Bangalore V. Sri. M.K. Gurumurthy, Bangalore

ITA 717/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60721 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-05-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 08-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAVANAN B JT
• Assessee Lawyers: SHAMBU SHARMA
• Keywords: Retrospective amendment
• Section: 194C; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO. 717/BANG/2011 ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3(1), BANGALORE. VS. SHRI M.K. GURUMURTHY, PROP. G.S. POWER SYSTEMS, NO.462/32, 12 TH CROSS, 6 TH MAIN, WILSON GARDEN, BANGALORE. PAN : ACQPG 1668Q APPELLANT RESPONDENT APPELLANT BY : SHRI SARAVANAN B., JT. CIT(DR) RESPONDENT BY : SHRI SHAMBU SHARMA, C.A. DATE OF HEARING : 02.05.2012 DATE OF PRONOUNCEMENT : 10.05.2012 O R D E R PER N.K. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE O RDER DATED 15.03.2011 OF THE CIT(APPEALS)-II, BANGALORE. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: 1. THE ORDER OF THE CIT(A) IS CONTRARY TO THE FACT S OF THE CASE. ITA NO.717/BANG/11 PAGE 2 OF 12 2. THE CIT(A) IS NOT CORRECT IN DELETING THE ADDIT ION OF RS.17,30,932/- MADE BY THE ASSESSING OFFICER AS THE ASSESSEE HAD BELATEDLY DEDUCTED TAX FROM APRIL 2007 TO FEBRUARY, 2008 IN THE MONTH OF MARCH 2008 AND DEPOSITED THE SAME BEFORE T HE DUE DATE FOR FILING THE RETURN U/S.139(L) BUT NOT BEFORE THE END OF THE PREVIOUS YEAR I.E. 31/03/2008. 3. THE CIT(A)S DECISION THAT SEC.40(A)(IA) IS NOT ATTRACTED WHERE TAX HAS BEEN DEDUCTED AT SOURCE ON AN EXPENDI TURE INCURRED OR PAYMENT MADE IN THE MONTH OF THE RELEVANT PREVIO US YEAR BUT DEPOSITED TO THE GOVT. ACCOUNT ON OR BEFORE THE DUE DATE OF FILING OF RETURN IS NOT ACCEPTABLE. 4. THE TAX DEDUCTABLE DURING THE PERIOD OTHER THAN THAT OF THE LAST MONTH OF THE YEAR IS COVERED BY PROVISO B OF S ECTION 40(A)(IA), ACCORDING TO WHICH, THE DUE DATE FOR REM ITTING THE TAX DEDUCTED WOULD BE THE LAST DAY OF THE PREVIOUS YEAR IN ORDER TO AVOID DISALLOWANCE U/S.40(A)(IA) OF THE ACT. 5. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING OF THE APPEAL, THE ORDER OF THE LEA RNED CIT(A) MAY BE SET ASIDE AND THAT THE ORDER OF THE AO MAY B E RESTORED. 3. FROM THE ABOVE GROUNDS IT IS GATHERED THAT THE G RIEVANCE OF THE ASSESSEE RELATES TO THE DELETION OF THE ADDITION OF Q 70,13,932 MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC TION 40(A)(IA) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS T HE ACT IN SHORT]. 4. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE IS A PROPRIETOR OF M/S. G.S. POWER SYSTEMS WHICH WAS TRADING IN GENERA TOR AND SPARE PARTS. THE ASSESSEE FILED HIS RETURN OF INCOME ON 30.09.20 08 DECLARING AN INCOME OF Q 18,01,980. THE ASSESSEE REVISED THE RETURN ON 01. 10.2008 WHICH WAS PROCESSED U/S. 143(1) OF THE ACT. THEREAFTER THE C ASE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD MADE FOLL OWING PAYMENTS TO VARIOUS PARTIES ON VARIOUS DATES BETWEEN APRIL, 200 7 TO FEBRUARY, 2008, BUT ITA NO.717/BANG/11 PAGE 3 OF 12 DEDUCTED TAX DURING THE MONTH OF MARCH, 2008 AND RE MITTED THE SAME TO THE CREDIT OF GOVT. OF INDIA ONLY AFTER 31.03.2008: - A) ANAND ELECTRICAL ENGINEERS RS. 1,42,434 (CONTA CT) B) AMEER CRANES RS. 2,72,600 (CONTRACT) C) CREATIVE DIESEL SERVICES RS. 2,90,955 (CONTRAC T) D) GET IT BIZ LIST RS. 1,18,630 (ADVERTISEMENT) E) G R GENERATORS RS. 71,380 (CONTRACT) F) R R POWER SYSTEMS RS. 3,42,405 (CONTRACT) G) SRI LALITHA ENTERPRISES RS. 4,65,561 (CONTRACT ) H) ASIAN POWER CONTROLS LTD. RS. 21,349 (CONTR ACT) ---------------- TOTAL RS.17,25,314/- ---------------- 5. THE AO DISALLOWED THE AFORESAID AMOUNT OF Q 17,25,314 BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 6. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A ) AND SUBMITTED THAT SINCE THE PAYMENTS WERE MADE IN THE LAST MONTH OF P REVIOUS YEAR AND TAX WAS DEDUCTED THEREFROM WHICH WAS REMITTED TO THE GO VERNMENT ACCOUNT BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME, THEREFORE THE ASSESSEE WAS ENTITLED FOR DEDUCTION OF THE EXPENDITURE. TH E WRITTEN SUBMISSIONS FURNISHED BY THE ASSESSEE AS MENTIONED IN PARA 2.2 OF THE IMPUGNED ORDER IS REPRODUCED VERBATIM AS UNDER:- THE ASSESSEE HERE EVEN THOUGH MADE PAYMENTS TO VAR IOUS CONTRACTORS/SUBCONTRACTORS THROUGHOUT THE YEAR, BUT ACTUALLY DEDUCTED THE TAX DURING THE LAST MONTH OF THE PREVI OUS YEAR (I.E. IN THE MONTH OF MARCH 2008) AND PAID SUCH TAX ON OR BE FORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 (D UE DATE BEING SEPTEMBER 2008 AND SUCH TAXES HAS BEEN PAID ON 30-0 5-2008 & 28-09-2008). FOLLOWING TABLE SHOWS THE DETAILS OF SUCH DEDUCTION S AND PAYMENTS OF TDS ITA NO.717/BANG/11 PAGE 4 OF 12 NAME OF CONTRACTOR/ PROFESSIONALS AMOUNT CREDITED TO PAYEES BETWEEN APR 08 & & FEB. 09 TDS AMOUNT (RS.) DATE OF DEDUCTION DATE OF TDS DEPOSIT TO GOVT. SHARMA MORAS & CO. 5,618 579 31/3/08 30/5/08 ANAND ELECTRICAL ENGINEERS 1,42,434 1,42,434 31/3/08 30/5/08 AMEER CRANES 2,72,600 24,949 31/3/08 30/5/08 CREATIVE DIESEL SERVICES 48,735 502 31/3/08 30/5/08 GET IT BIZ LIST 1,18,630 1,222 31/3/08 30/5/08 G.R. GENERATORS 71,380 1,470 31/3/08 30/5/08 RR POWER SYSTEMS 3,42,405 7,054 31/3/08 30/5/08 SRI LALITHA ENTERPRISES 4,65,561 9,591 31/3/08 30/5 /08 ASIAN POWER CONTROLS LTD. 21,349 440 31/3/08 30/5/08 TOTAL 17,30,932 54,355 31/3/08 30/5/08 FROM THE ABOVE STATEMENT IT IS EVIDENT THAT ALL DED UCTIONS HAVE BEEN MADE ON THE LAST MONTH OF THE PREVIOUS YEAR AN D SUCH TDS HAS BEEN PAID ON OR BEFORE THE DUE DATE OF FILING T HE RETURN; AND ACCORDINGLY AS PER SUB-CLAUSE (A) OF SECTION 40(A)( IA), THE ASSESSEE IS ENTITLED FOR DEDUCTION OF THE EXPENDITU RE. THE ASSESSEE PLACED THE RELIANCE ON THE FOLLOWING C ASE LAWS:- (I) BAPUSAHEB NANASAHEB DHUMAL V. ACIT, ITA.NO. 6628/MUM/2009 (MUM ITAT) (II) BANSAL PARIVAHAN (INDIA) PVT. LTD. V. ITO, 36(II) 4 27 (MUM. B TRIB) (III) ITO V. KULWANT SINGH RANDHWA (ITAT) DT. 16/12/2010 7. THE LD. CIT(APPEALS) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE DIRECTED THE AO TO ALLOW THE DEDUCTION OF EXPENDITURE OF RS.17,30,932 BY OBSERVING IN PARAS 3 AND 3.1 OF THE IMPUGNED ORDER AS UNDER:- ITA NO.717/BANG/11 PAGE 5 OF 12 3. I HAVE CONSIDERED THE FACTS OF THE CASE, THE AP PELLANTS SUBMISSION AND PERUSED THE ASSESSMENT ORDER. THE AS SESSMENT ORDER REVEALS THAT THE APPELLANT HAD MADE PAYMENTS TO VARIOUS PARTIES LISTED AS PER THE APPELLANTS SUBMISSION AB OVE TOTALLING TO RS.17,25,314/- DURING APRIL 2007 TO FEBRUARY 2008 A ND REMITTED THE SAME INTO THE CENTRAL GOVERNMENT ACCOUNT AFTER 31/3/2008. ACCORDING TO THE AO, SINCE THE TDS AMOUNT WAS DEPOS ITED AFTER MARCH 2008, IT ATTRACTS THE PROVISIONS OF SUB-CLAUS E (B) OF SECTION 40(A)(IA) OF THE ACT. HOLDING THUS, THE EXPENDITURE (CONTRACT PAYMENT) OF RS.17,25,314/- WAS DISALLOWED AND BROUG HT TO TAX. HOWEVER, THE APPELLANTS CONTENTION IS THAT THE TDS DEDUCTED IN THE LAST MONTH OF THE PREVIOUS YEAR IN RESPECT OF A LL PAYMENTS TO THE VENDORS WERE REMITTED TO THE CENTRAL GOVERNMENT ACCOUNT BEFORE THE DUE DATE OF FILING OF THE RETURN AND, TH EREFORE, IT SHALL BE ALLOWED AS EXPENDITURE AS PER THE PROVISIONS OF SUB-CLAUSE (A) OF SECTION 40(A)(IA) OF THE ACT IN VIEW OF THE DECI SION OF THE HONBLE ITATS CITED ABOVE. THE DECISION DATED 26/6 /2010 OF THE HONBLE ITAT, MUMBAI BENCH IN THE CASE OF BAPUSAHEB NANASAHEB DHUMAL V. ACIT (SUPRA) IS IN FAVOUR OF TH E APPELLANT, THE RELEVANT PORTION OF WHICH IS REPRODUCED BELOW: 11. AS PER CLAUSE (IA) OF SUBSECTION (A) OF SECTI ON 40 WHEN TAX IS DEDUCTIBLE AT SOURCE ON THE PAYMENT UNDER CH APTER XVII AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTI ON HAS NOT BEEN PAID THEN THE SAID DEDUCTION IS NOT ALLOWABLE. AS PER THE SUB-CLAUSE A OF CLAUSE (IA) IF THE TAX IS DEDUCTE D DURING THE LAST MONTH OF PREVIOUS YEAR AND PAID ON OR BEFORE THE DU E DATE OF FILING OF RETURN AS PER THE PROVISIONS OF SECTION 1 39(1) THEN SUCH SUM SHALL BE ALLOWED AS DEDUCTION. IN THE CASES WHE RE THE TAX IS DEDUCTED DURING PREVIOUS YEAR OTHER THAN THE LAST M ONTH OF PREVIOUS YEAR BUT IS DEPOSITED BEFORE THE LAST DAY OF PREVIOUS YEAR THEN IT WILL BE ALLOWED AS DEDUCTION. THEREFO RE, THE CONDITIONS FOR ALLOWABILITY OF THE DEDUCTION IS PRE SCRIBED UNDER SECTION 40(A)(IA) ITSELF AND PROVISIONS OF CHAPTER - XVII AND SECTION 194C UNDER CHAPTER XVIIB AT THAT RELEVANT P OINT OF TIME ARE RELEVANT ONLY FOR THE PURPOSES OF ASCERTAINING THE DEDUCTIBILITY OF THE TAX ON THE PAYMENT. ONCE THE N ATURE OF PAYMENT IS FALLING UNDER THE PROVISIONS OF CHAPTER - XVII/XVIIB THEN THE DISALLOWANCE U/S 40(A)(IA) SHALL BE AS PER THE CONDITIONS AS PROVIDED UNDER THIS SECTION ITSELF. THE PROVISO TO SECTION 40(A)(IA) MAKES IT FURTHER CLEAR THAT EVEN IN THE C ASE WHEN THE TAX HAS BEEN DEDUCTIBLE AS PER THE PROVISIONS OF CH APTER-XVII BUT DEDUCTED IN THE SUBSEQUENT YEAR OR DEDUCTED DUR ING THE LAST MONTH OF PREVIOUS YEAR BUT PAID AFTER THE DUE DATE U/S 139(1) OR DEDUCTED DURING THE OTHER MONTH OF THE PREVIOUS YEA R EXCEPT LAST MONTH BUT PAID AFTER THE END OF THE SAID PREVIOUS Y EAR THEN THE SAID SUM SHALL NOT BE ALLOWED AS DEDUCTION IN COMPU TING THE INCOME OF THE PREVIOUS YEAR BUT ALLOWED IN THE PREV IOUS YEAR IN WHICH THE SAID TAX HAS BEEN PAID. IF THE CONDITION OF DEDUCTION ITA NO.717/BANG/11 PAGE 6 OF 12 AND PAYMENT PRESCRIBED UNDER CHAPTER XVII/XVIIB ARE APPLICABLE FOR DISALLOWANCE OF THE DEDUCTION U/S 40 (A)(IA) THEN THE PROVISIONS OF SECTION 40(A)(IA) WILL BE RENDERE D AS MEANINGLESS, ABSURDITY AND ETIOS. AS PER THE PROVIS IONS OF SECTION 40(A)(IA) THE DEDUCTION IS DISALLOWED ONLY IN THE CASE WHEN EITHER NO TAX WAS DEDUCTED OR IT WAS NOT PAID AFTER DEDUCTION. BUT WHEN THE TAX IS DEDUCTED MAY BE BELA TEDLY AND DEPOSITED BELATEDLY THEN DEDUCTION IS ALLOWABLE IN THE PREVIOUS YEAR IN WHICH IT WAS DEPOSITED. THEREFORE, IF THE P ROVISIONS OF SECTION 194C WITH RESPECT TO THE TIME OF DEDUCTION AND PAYMENTS ARE APPLIED FOR THE DISALLOWANCE U/S 40(A) (IA) THEN THERE WILL BE NO PURPOSE OR OBJECT FOR PROVIDING TH E CERTAIN CONDITIONS OF ACTUAL DEDUCTION OF TAX AND PAYMENT O F TAX U/S 40(A)(IA). IN OUR VIEW, THE PROVISIONS OF CHAPTER X VII ARE RELEVANT ONLY FOR ASCERTAINING THE DEDUCTIBILITY OF TAX AT S OURCE AND NOT FOR THE ACTUAL DEDUCTION AND PAYMENT FOR ATTRACTING THE PROVISIONS OF SECTION 40(A)(IA). SINCE IN THE CASE IN HAND WHEN T HE ASSESSEE HAD DEDUCTED THE TAX IN THE LAST MONTH OF THE PREVI OUS YEAR I.E. MARCH 2005 AND DEPOSITED THE SAME BEFORE THE DUE DA TE OF FILING OF THE RETURN U/S 139(1) THEN IT IS COVERED UNDER CLAUSE A OF SECTION 40(A)(IA). THEREFORE WHEN THE ASSESSEES CASE IS COVERED UNDER THE MAIN PROVISIONS OF EXISTING LAW T HEN WE NEED NOT GO TO THE ISSUE OF PROSPECTIVE OR RETROSPECTIVE EFFECT OF THE AMENDMENT IN THE PROVISIONS INSERTED BY THE FINANCE ACT, 2010. AS REGARDS THE DECISION RELIED UPON BY THE LEARNED DR, WHEN THE PROVISO TO SECTION 40(A)(IA) IS NOT CONTRARY TO THE MAIN SECTION/ENACTMENT THEN THE SAID DECISION WILL NOT H ELP THE CASE OF THE REVENUE. EVEN OTHERWISE WHEN THE CASE OF THE ASSESSEE FALLS UNDER THE MAIN PROVISIONS OF SECTION 40(A)(IA ) THEN THE SAID DECISION RELIED UPON BY THE LEARNED DR IN THE CASE OF CIT V/S MADURAI MILLS AND CO. LTD. (SUPRA) IS NOT RELEVANT. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AN D ALLOW THE CLAIM OF DEDUCTION OF THE ASSESSEE. 3.1 IN VIEW OF THE HONBLE ITATS DECISION CITED A BOVE, THE APPELLANT IS ENTITLED TO THE DEDUCTION OF THE EXPEN DITURE OF RS.17,30,932/-. THE AO IS DIRECTED TO ALLOW THE SAM E. 8. NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR STR ONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND FURTHER SUBMITTE D THAT SINCE THE TAX DEDUCTED WAS NOT DEPOSITED IN TIME, THEREFORE THE A O WAS JUSTIFIED IN DISALLOWING THE EXPENDITURE BY INVOKING THE PROVISI ONS OF SECTION 40(A)(IA) OF THE ACT. ITA NO.717/BANG/11 PAGE 7 OF 12 9. IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND FURTHER SUBMITTED THAT THE ISSUE WAS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY THE FOLLOWING DECISIONS OF VARIOUS BENCHES OF THE TRIB UNAL:- (I) M/S. ALPHA PROJECTS SOCIETY P. LTD. V. DCIT, I TA NO.2869/AHD/2011 (AHD.) (II) SHRI SURESHBHAI G PATEL V. ITO, ITA NO.673/AH D/2010 (AHD) (III)RAJAMAHENDRI SHIPPING & OIL FIELD SERVICES LTD . V. ADDL. CIT, ITA NO.352/VIZAG/2008 (VIZAG.) 10. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED THAT THERE IS A DIRECT JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN FAVOUR OF THE ASSESSEE IN THE CASE OF CIT V. VIRGIN CREATIONS, ITA NO.302 OF 2011 , ORDER DATED 23.11.2011, COPY OF THE SAME IS PLACED AT PAG ES NO.15 & 16 OF THE ASSESSEES PAPERBOOK. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THAT THE ASSESSEE D EDUCTED TDS WHICH WAS NOT PAID TO THE ACCOUNT OF CENTRAL GOVT. WITHIN THE PRESCRIBED TIME, HOWEVER, IT WAS PAID BEFORE THE DUE DATE OF FILING THE RETURN SPECIFIED IN SECTION 139(1) OF THE ACT. ON A SIMILAR ISSUE, TH E HONBLE CALCUTTA HIGH COURT HELD THAT AMENDMENT IN SEC. 40(A)(IA) IS HAVI NG RETROSPECTIVE OPERATION AND UPHELD THE ORDER OF THE ITAT IN THE C ASE OF CIT V. VIRGIN CREATIONS, ITA NO.302 OF 2011 , JUDGMENT DATED 23.11.2011, COPY OF WHICH ITA NO.717/BANG/11 PAGE 8 OF 12 IS PLACED AT PAGES 15 AND 16 OF THE ASSESSEES COMP ILATION, BY OBSERVING AS UNDER:- THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESS EE HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEE N THE PERIOD APRIL 1, 2005 AND APRIL 28, 2006 AND THE SAME WERE PAID BY THE ASSESSEE IN JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER C ONSIDERATION. THIS FACTUAL POSITION WAS UNDISPUTED. 12. ALTHOUGH THE AFORESAID JUDGMENT WAS RELATING TO THE ISSUE AS TO WHETHER THE AMENDMENT IN SECTION 40(A)(IA) WAS HAVI NG RETROSPECTIVE EFFECT OR NOT, BUT FROM THE RATIO LAID DOWN IN THE SAID CA SE, IT IS CLEAR THAT ADDITION U/S. 40(A)(IA) OF THE ACT CANNOT BE MADE IF THE PAY MENT OF TAX DEDUCTED AT SOURCE HAS BEEN MADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. IN THE PRESENT CASE , PAYMENT OF THE TDS HAS BEEN MADE BEFORE THE DUE DATE FOR FILING OF THE RETURN U/S. 139(1) OF THE ACT, THEREFORE THE LD. CIT(A) WAS FULLY JUSTIFIED I N DELETING THE ADDITION MADE BY THE AO BY FOLLOWING THE DECISION OF THE ITAT MUM BAI BENCH IN THE CASE OF BAPUSAHEB NANASAHEB DHUMAL V. ACIT, [2010] 40 SOT 3 61 (MUM) WHEREIN IT HAS BEEN HELD AS UNDER: THE CONTROVERSY IN THE INSTANT CASE REVOLVED AROUN D THE APPLICABILITY OF THE PROVISIONS OF SECTION 194C WHI LE DISALLOWING THE EXPENDITURE UNDER THE PROVISION OF SECTION 40(A )(IA). IT WAS UNDISPUTED FACT THAT THE ASSESSEE MADE THE PAYMENT TO THE SUB- CONTRACTOR DURING THE PREVIOUS YEAR BUT THE TAX WAS DEDUCTED ONLY ON 31-3-2005. THE ASSESSING OFFICER HAD ALREADY ALL OWED THE DEDUCTION IN RESPECT OF PAYMENT MADE DURING THE MON TH OF MARCH, 2005 BUT DISALLOWED THE DEDUCTION IN RESPECT OF THE PAYMENT WHICH WAS CREDITED AND MADE DURING THE PERI OD OTHER THAN THE MONTH OF MARCH, 2005. NO DOUBT THAT AS PER THE PROVISIONS OF CHAPTER XVII-B AND PARTICULARLY SECTI ON 194C AS THE PAYMENT UNDER CONSIDERATION WAS COVERED UNDER T HE PROVISIONS OF SECTION 194C, TAX HAD TO BE DEDUCTED AT THE TIME OF ITA NO.717/BANG/11 PAGE 9 OF 12 PAYMENT OR CREDIT OF SUCH SUM IN WHICH THE TAX WAS DEDUCTED WITHIN 7DAYS FROM THE END OF THE MONTH AND HAD TO B E DEPOSITED WITH THE GOVERNMENT WITHIN THE PERIOD PRESCRIBED UN DER SECTION 194C. IN CASE OF FAILURE OF DEDUCTION OF TAX AND/OR DEPOSITING THE SAME AS PER THE PROVISIONS OF SECTION 194C OR THE P ROVISIONS OF CHAPTER XVII AS THE CASE MAY BE, THE ASSESSEE HAD T O FACE THE CONSEQUENCES AS PROVIDED UNDER THE SAID CHAPTER XVI I OF THE ACT BY ATTRACTING THE PENALTY OR INTEREST. THE PROVISIO NS OF SECTION 40(A)(IA) ARE IN ADDITION TO THE PROVISIONS OF CHAP TER XVII AS WELL AS CHAPTER XXII TO ENSURE THE DEDUCTION AND DEPOSIT OF TDS. AS PER SUB-CLAUSE (IA) OF CLAUSE (A) OF SECTION 40 WHEN TAX IS DEDUCTIBLE AT SOURCE ON THE PAYMENT UNDER CHAPTER X VII AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION H AS NOT BEEN PAID THEN THE SAID DEDUCTION IS NOT ALLOWABLE. AS P ER CLAUSE (A) OF PROVISO TO CLAUSE (A)(IA), IF THE TAX IS DEDUCTED D URING THE LAST MONTH OF PREVIOUS YEAR AND PAID ON OR BEFORE THE DU E DATE OF FILING OF RETURN AS PER THE PROVISIONS OF SECTION 1 39(1), THEN SUCH SUM SHALL BE ALLOWED AS DEDUCTION. IN THE CASES WHE RE THE TAX IS DEDUCTED DURING PREVIOUS YEAR OTHER THAN THE LAST M ONTH OF PREVIOUS YEAR BUT IS DEPOSITED BEFORE THE LAST DAY OF PREVIOUS YEAR THEN IT WILL BE ALLOWED AS DEDUCTION. THEREFORE, T HE CONDITION FOR ALLOWABILITY OF DEDUCTION IS PRESCRIBED UNDER SECTI ON 40(A)(IA) ITSELF AND PROVISIONS OF CHAPTER XVII AND SECTION 1 94C UNDER CHAPTER XVII-B ARE RELEVANT ONLY FOR PURPOSES OF AS CERTAINING DEDUCTIBILITY OF TAX ON PAYMENT. ONCE, THE NATURE O F PAYMENT IS FALLING UNDER THE PROVISIONS OF CHAPTER XVII/VII-B THEN DISALLOWANCE UNDER SECTION 40(A)(IA) SHALL BE AS PE R CONDITION AS PROVIDED UNDER THIS SECTION ITSELF. THE PROVISO TO SECTION 40(A)(IA) MAKES IT FURTHER CLEAR THAT EVEN IN THE CASE WHEN T HE TAX HAS BEEN DEDUCTIBLE AS PER THE PROVISIONS OF CHAPTER XVII BU T DEDUCTED IN THE SUBSEQUENT YEAR OR DEDUCTED DURING THE LAST MON TH OF PREVIOUS YEAR BUT PAID AFTER THE DUE DATE UNDER SECTION 139( 1) OR DEDUCTED DURING THE OTHER MONTH OF THE PREVIOUS YEAR EXCEPT LAST MONTH BUT 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 W HICH THE SAID TAX HAS BEEN PAID. IF THE CONDITION OF DEDUCTION AN D PAYMENT PRESCRIBED UNDER CHAPTER XVII/XVII-B ARE APPLICABLE FOR DISALLOWANCE OF THE DEDUCTION UNDER SECTION 40(A)(I A) THEN THE PROVISIONS OF SECTION 40(A)(IA) WILL BE RENDERED AS MEANINGLESS, ABSURD AND ETIOSE. AS PER THE PROVISIONS OF SECTION 40(A)(IA), THE DEDUCTION IS DISALLOWED ONLY IN THE CASE WHEN EITHE R NO TAX WAS DEDUCTED OR IT WAS NOT PAID AFTER DEDUCTION. BUT WH EN THE TAX IS DEDUCTED MAY BE BELATEDLY AND DEPOSITED BELATEDLY T HEN DEDUCTION IS ALLOWABLE IN THE PREVIOUS YEAR IN WHIC H IT WAS SO ITA NO.717/BANG/11 PAGE 10 OF 12 DEPOSITED. THEREFORE, IF THE PROVISIONS OF SECTION 194C WITH RESPECT TO THE TIME OF DEDUCTION AND PAYMENTS ARE A PPLIED FOR THE DISALLOWANCE UNDER SECTION 40(A)(IA), THEN THERE WI LL BE NO PURPOSE OR OBJECT FOR PROVIDING THE CERTAIN CONDITI ONS OF ACTUAL DEDUCTION OF TAX AND PAYMENT OF TAX UNDER SECTION 4 0(A)(IA). THE PROVISIONS OF CHAPTER XVII ARE RELEVANT ONLY FOR AS CERTAINING THE DEDUCTIBILITY OF THE TAX AT SOURCE AND NOT FOR THE ACTUAL DEDUCTION AND PAYMENT FOR ATTRACTING THE PROVISION OF SECTION 40(A)(IA). SINCE IN THE INSTANT CASE, WHEN THE ASSESSEE HAD DE DUCTED TAX IN THE LAST MONTH OF THE PREVIOUS YEAR I.E. MARCH, 200 5 AND DEPOSITED THE SAME BEFORE THE DUE DATE OF FILING OF THE RETURN UNDER SECTION 139(1), THEN IT WAS COVERED UNDER CLA USE (A) OF PROVISO TO SECTION 40(A)(IA). THEREFORE, WHEN THE A SSESSEE S CASE WAS COVERED UNDER THE MAIN PROVISIONS OF EXISTING L AW THEN THERE WAS NO NEED TO GO TO THE ISSUE OF PROSPECTIVE OR RE TROSPECTIVE EFFECT OF THE AMENDMENT IN THE PROVISIONS BY THE FI NANCE ACT, 2010. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORIT IES WERE TO BE SET ASIDE AND THE CLAIM OF DEDUCTION OF THE ASSESSE E WAS TO BE ALLOWED. 13. AS REGARDS TO THE DECISION OF SPECIAL BENCH MUM BAI IN THE CASE OF BHARTI SHIPYARD LTD. V. DCIT (132 ITD 53) RELIED BY THE LD. DR IS CONCERNED, ALTHOUGH THAT DECISION MAY SUPPORT THE REVENUES CA SE, PARTICULARLY THE OBSERVATIONS IN PARA 25 OF THE DECISION WHICH READ AS UNDER:- THE AMENDMENT TO S. 40(A)(IA) BY THE FINANCE ACT, 2010 HAS BEEN SPECIFICALLY MADE RETROSPECTIVELY APPLICABLE F ROM THE ASST. YR. 2010-11. IT HAS NOWHERE BEEN EXPRESSLY SET OUT THAT THE AMENDMENT IS CURATIVE OR MERELY DECLARATORY OF THE PREVIOUS LAW. THE INTENTION OF THE LEGISLATURE AS GATHERED FROM T HE NOTES ON CLAUSES AND THE MEMORANDUM EXPLAINING THE PROVISION S OF THE FINANCE BILL DOES NOT PARTICULARLY INDICATE ANY REL AXATION IN THE PROVISION RETROSPECTIVELY FROM ASST. YR. 2005-06 BY PROVIDING THAT THE EXPENDITURE ON WHICH DUE TAX WAS DEDUCTED UPTO FEBRUARY, 2005 BUT PAID BEFORE THE DUE DATE SPECIFIED IN S. 1 39(1) SHALL NOT SUFFER ANY DISALLOWANCE IN THE ASST. YR. 2005-06. 14. HOWEVER, THE HONBLE CALCUTTA HIGH COURT HAS TA KEN A DIFFERENT VIEW IN THE CASE OF CIT V. VIRGIN CREATIONS (SUPRA) AND THE ISSUE STANDS DECIDED ITA NO.717/BANG/11 PAGE 11 OF 12 AGAINST THE REVENUE. THEREFORE CONSIDERING THE PRE CEDENT IN THE JUDICIAL HIERARCHY, WE ARE BOUND TO FOLLOW THE DECISION OF T HE HONBLE CALCUTTA HIGH COURT BECAUSE IT IS THE ONLY JUDGMENT OF ANY HIGH C OURT WHICH IS BROUGHT TO OUR NOTICE. 15. SIMILAR VIEW HAS BEEN TAKEN IN THE THIRD MEMBER DECISION IN THE CASE OF KANEL OIL & EXPORT INDS. LTD. V. JCIT [2009] 121 IT D 596 (AHD) (TM) WHEREIN IT HAS BEEN HELD AS UNDER:- IN THE INSTANT CASE, QUESTION THAT CAME UP FOR CON SIDERATION WAS AS TO WHETHER THE ORDER OF THE SPECIAL BENCH UPHOLD ING THE LEVY OF INTEREST IN THE LIGHT OF SUB-SECTION (4) OF SECT ION 115JA SHOULD BE FOLLOWED OR THE JUDGMENT OF THE BOMBAY HIGH COUR T IN SNOWCEM INDIA LTD.S CASE (SUPRA), ALSO RENDERED IN THE CONTEXT OF SECTION 115JA, HAD TO BE APPLIED. BOTH THE DECIS IONS WERE UNDER SECTION 115JA. ONE WAS OF A SPECIAL BENCH OF THE TRIBUNAL, AHMEDABAD AND THE OTHER WAS OF A HIGH COU RT, THOUGH NOT A JURISDICTIONAL HIGH COURT. A SIMPLE ANSWER WO ULD BE THAT THE JUDGMENT OF A HIGH COURT, THOUGH NOT OF A JURIS DICTIONAL HIGH COURT, PREVAILS OVER AN ORDER OF THE SPECIAL BENCH EVEN THOUGH IT IS FROM THE JURISDICTIONAL BENCH (OF THE TRIBUNAL) ON THE BASIS OF THE VIEW THAT THE HIGH COURT IS ABOVE THE TRIBUNAL IN THE JUDICIAL HIERARCHY. BUT THIS SIMPLE VIEW IS SUBJECT TO SOME EXCEPTIONS. IT CAN WORK EFFICIENTLY WHEN THERE IS ONLY ONE JUDGMEN T OF A HIGH COURT ON THE ISSUE AND NO CONTRARY VIEW HAS BEEN EX PRESSED BY ANY OTHER HIGH COURT. BUT WHEN THERE ARE SEVERAL DE CISIONS OF NON-JURISDICTIONAL HIGH COURTS EXPRESSING CONTRARY VIEWS, IT HAS BEEN RECOGNIZED THAT THE TRIBUNAL IS FREE TO CHOOSE TO ADOPT THAT VIEW WHICH APPEALS TO IT. 16. ON THE ISSUE UNDER CONSIDERATION, THE LONE DECI SION OF NON- JURISDICTIONAL HIGH COURT I.E., THE HONBLE CALCUTT A HIGH COURT IS AVAILABLE ON THE VERY SAME ISSUE, SO THAT HAS TO BE FOLLOWED BEC AUSE IT WILL PREVAIL OVER THE ORDER OF THE SPECIAL BENCH OF THE ITAT, MUMBAI BENCH, SINCE THE HONBLE HIGH COURT IN THE JUDICIAL HIERARCHY IS ABO VE THE TRIBUNAL. WE, THEREFORE CONSIDERING THE TOTALITY OF THE FACTS AS NARRATED HEREINABOVE, DO ITA NO.717/BANG/11 PAGE 12 OF 12 NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FIND INGS OF THE LD. CIT(APPEALS). 17. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF MAY, 2012. SD/- SD/- ( GEORGE GEORGE K. ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 10 TH MAY , 2012. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.