M/s. Fortune Infonet, Jaipur V. Income Tax Officer, Ward 6(1), Jaipur

ITA 866/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1797 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 05-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Keywords: Rule of consistency; Period of limitation; Retrospective amendment; Reasonable cause; Corroborative evidences; Non compliance; Right to appeal
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 866/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2011-12 M/S FORTUNE INFONET, 452/3, RAJA PARK, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD 6(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABFF 7779 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SANDEEP JHANWAR (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/11/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 20/11/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 29/05/2017 OF LD. CIT(A)-2, JAIPUR FOR THE A.Y. 201 1-12. 2. SINCE THE APPEAL OF THE ASSESSEE WAS FILED ON 05/ 7/2018 WHICH IS APPARENTLY BEYOND THE PERIOD OF LIMITATION PRESCRIB ED U/S 253 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), THEREFORE, THE LD AR OF THE ASSESSEE WAS ASKED TO EXPLAIN THE DELAY IN FILING TH E PRESENT APPEAL. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT SINCE THE ASS ESSEE DID NOT RECEIVE THE IMPUGNED ORDER, THEREFORE, THE ASSESSEE APPLIED FOR CERTIFIED COPY OF THE SAME, WHICH WAS SUPPLIED TO THE ASSESSEE ONLY ON 08/5/2018 AND ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 2 THEREFORE, THE APPEAL IS WITHIN THE PERIOD OF LIMITA TION. HE HAS ALSO FILED AN AFFIDAVIT OF THE ASSESSEE IN SUPPORT OF THIS EXPLAN ATION THAT PRIOR TO 08/5/2018, THE ASSESSEE DID NOT RECEIVE THE IMPUGNE D ORDER. ON OUR DIRECTION, THE LD DR HAS ALSO VERIFIED THE FACT FRO M THE RECORD AND HAS ACCEPTED THE FACT THAT THE ORDER SENT TO THE ADDRES S GIVEN IN FORM NO. 35, WAS RETURNED BACK UNSERVED. HOWEVER, NON-RECEIPT OF T HE SAID ORDER IS ATTRIBUTABLE TO THE ASSESSEE AND THEREFORE THE ASSE SSEE CANNOT TAKE A PLEA THAT THERE WAS NO SERVICE OF ORDER. HE HAS SUBMITTED THAT THERE WAS A DEEMED SERVICE OF THE ORDER WHEN IT WAS SENT ON 16/6/ 2017 AT THE ADDRESS GIVEN IN FORM NO. 35. HE HAS OBJECTED TO THE MAINTA INABILITY OF THE APPEAL BEING BARRED BY LIMITATION. 3. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL A S THE RELEVANT MATERIAL ON RECORD WE NOTE THAT IN RESPONSE TO THE L ETTER FOR ISSUING A CERTIFIED COPY OF THE IMPUGNED ORDER, THE ADMINISTR ATIVE OFFICER IN THE OFFICE OF LD. CIT(A) HAS INFORMED THE ASSESSEE VIDE LETTER DATED 08 TH MAY, 2018 THAT EARLIER THE ORDER WAS SENT THROUGH SPEED POST D ATED 16/6/2017, HOWEVER, THE SAME WAS RECEIVED BACK UNSERVED. THE SAI D ORDER WAS SENT AT THE ADDRESS GIVEN IN THE FORM NO. 35. WE FIND THAT THE ADDRESS IN THE FORM NO. 35 WAS GIVEN BY THE ASSESSEE OF HIS AUTHORIZED R EPRESENTATIVE, HOWEVER, SUBSEQUENTLY THERE IS A CHANGE OF THE AUTHO RIZED REPRESENTATIVE OF THE ASSESSEE, THEREFORE, IT IS APPARENT THAT THE ORDER SENT TO THE EARLIER ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 3 AUTHORIZED REPRESENTATIVE WAS NOT RECEIVED. CONSEQUE NTLY, WE FIND THAT THE ASSESSEE HAS EXPLAINED THE REASONABLE CAUSE FOR NOT RECEIVING THE IMPUGNED ORDER SENT THROUGH SPEED POST DATED 16/6/2 017 AND FINALLY THE IMPUGNED ORDER WAS GIVEN TO THE ASSESSEE AS A CERTIF IED COPY ISSUED ON 08/5/2018. ACCORDINGLY, WE ADMIT THE APPEAL OF THE A SSESSEE FOR ADJUDICATION ON MERITS. 4. IN THE PRESENT APPEAL, THE ASSESSEE HAS RAISED F OLLOWING GROUNDS OF APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN PARTIALLY UPHOLDING THE FOLLOWING DISALLOWANCES MADE BY THE LD. A.O. ON LUMP SUM BASIS. S. NO. EXPENDITURE HEAD TOTAL EXPENSES EXPENSES DISALLOWED BY A.O. EXPENSES ALLOWED BY THE CIT(A) 1. BUSINESS PROMOTION EXPENSE 2,20,751/ - 58,297(20%) 29,149(10%) 2. OFFICE EXPENSES 81,876 16,375(20%) 8,187(10%) 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN NOT PROPERLY APPRECIATING THE GROUND OF ASSESSEE RELATED TO DISALLOWANCE OF RS. 40,000/- MADE OUT OF TRAVELLING EXPENSES. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN NOT DELETING THE DISALLOWANCE OF RS. 11,90,195/- IN RESPECT OF INTEREST PAID BY APPLYING THE PROVISIONS OF SECTION 40(A)(IA). 4. THE ASSESSEE CRAVES THE RIGHT TO ADD, AMEND, ALT ER OR MODIFY ANY OF THE GROUND OF THE APPEAL. ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 4 5. GROUND NO. 1 OF THE APPEAL IS REGARDING THE DISA LLOWANCE OF 20% OF CERTAIN EXPENSES MADE BY THE ASSESSING OFFICER, WHIC H WAS RESTRICTED BY THE LD. CIT(A) TO 10%. 6. WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL A S THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSE SSING OFFICER WHILE COMPLETING THE ASSESSMENT HAS MADE DISALLOWANCE OF 2 0% OF THE EXPENDITURE ON ACCOUNT OF BUSINESS PROMOTION EXPENS ES AND OFFICE EXPENSES FOR WANT OF SUPPORTING EVIDENCE AND FULL DE TAILS. THE ASSESSING OFFICER HAS STATED IN THE ASSESSMENT ORDER THAT THE ASSESSEE COULD NOT FURNISH COMPLETE DETAILS IN RESPECT OF THE EXPENSES CLAIMED AND FURTHER IT WAS NOT FULLY SUPPORTED BY THE EVIDENCE AS SOME OF T HE VOUCHERS WERE SELF MADE. THE LD. CIT(A) WHILE CONSIDERING THE ISSUE HAS R ESTRICTED THE DISALLOWANCE TO 10% IN PARA 2.3 AS UNDER: 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSES SMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER AS THE ASSESSEE COULD NOT FURNISH COMPLETE DETAILS IN RESPECT OF THE EXPENSES, IT WAS ALSO NOTED THAT IN SOME CASES THE VOUCHERS WERE SELF MADE. IN VIEW OF THE SAME 20% OF THE EXPE NDITURE WAS DISALLOWED. HOWEVER, THE SAME IS FOUND TO BE ON THE HIGHER SIDE AND DISALLOWANCE AT 10% ON THIS EXPENDITURE IS UPHELD. THE GROUND OF APPEAL IS PARTLY ALLOWED. THUS, THERE IS NO DENIAL OF THE FACT THAT THE ASSESS EE HAS FAILED TO PRODUCE COMPLETE DETAILS AND EVIDENCE TO SUBSTANTIATE THE C LAIM OF EXPENDITURE AS ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 5 SOME OF THE VOUCHERS WERE SELF MADE. HAVING REGARD T O THE FACTS AND CIRCUMSTANCES, WHEN THE ASSESSEE HAS NOT SUBSTANTIAT ED THE CLAIM WITH SUPPORTING EVIDENCE, WE FIND THAT THE DISALLOWANCES R ESTRICTED BY THE LD. CIT(A) TO 10% IS JUST AND PROPER AND DOES NOT REQUIR E ANY INTERFERENCE. ACCORDINGLY WE REJECT THE GROUND NO. 1 OF THE ASSESS EES APPEAL. 7. GROUND NO. 2 OF THE APPEAL IS REGARDING THE DISA LLOWANCE OF RS. 40,000/- ON ACCOUNT OF TRAVELLING EXPENSES. 8. WE HAVE HEARD THE LD AR AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER H AS MADE AD HOC DISALLOWANCE OF RS. 40,000/- ON ACCOUNT OF TRAVELLIN G EXPENSES ON THE GROUND THAT THE CLAIM IS NOT FULLY SUPPORTED WITH EV IDENCE AND FURTHER THE ASSESSEE COULD NOT FURNISH COMPLETE DETAILS AND BIL LS AND VOUCHERS AS THE VOUCHERS PRODUCED BY THE ASSESSEE WERE SELF MADE IN RESPECT OF SOME OF THE PETTY EXPENSES. WE FIND THAT THE LD. CIT(A) HAS NOT ADJUDICATED THIS ISSUE AS THE ISSUE OF DISALLOWANCE OF 20% OF THE EXP ENDITURE WAS ADJUDICATED BY THE LD. CIT(A) WHICH WAS RESTRICTED TO 10%, HOWEVER, DESPITE A SPECIFIC GROUND RAISED BY THE ASSESSEE, T HE SAME HAS NOT BEEN ADJUDICATED. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS MADE AN AD HOC DISALLOWANCE WITHOUT ANY B ASIS AND FURTHER THE ASSESSEE HAS PRODUCED ALL VOUCHERS EXCEPT THE SELF MADE VOUCHERS FOR ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 6 PETTY EXPENSES, THEREFORE, AD HOC DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE. 9. ON THE OTHER HAND, THE LD DR HAS RELIED UPON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) AND SUBMI TTED THAT THE LD. CIT(A) HAS CONSIDERED THIS ISSUE ALONGWITH OTHER DISALLOWANC ES MADE BY THE ASSESSING OFFICER IN RESPECT OF BUSINESS PROMOTION EXPENSES AND OFFICE EXPENSES. 10. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ASSESSING OFFICE R HAS MADE AN AD HOC DISALLOWANCE FOR WANT OF COMPLETE DETAILS OF BILLS AN D VOUCHERS AND SOME OF THE VOUCHERS WERE SELF MADE. WE FIND THAT THE ASSESS ING OFFICER ACCEPTED THE FACT THAT THE SELF MADE VOUCHERS WERE PRODUCED BY THE ASSESSEE IN RESPECT OF THE PETTY EXPENSES AND THEREFORE, THE MA JOR EXPENDITURE WAS SUPPORTED BY THE ASSESSEE WITH PROPER VOUCHERS. ACCO RDINGLY, IN ABSENCE OF ANY SPECIFIC DEFECT IN THE CLAIM OF THE ASSESSEE EX CEPT THE SELF MADE VOUCHERS FOR PETTY EXPENSES, THE AD HOC DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. THE ASSESSING OF FICER HAS CONSIDERED THIS ISSUE IN PARA 3.3 AS UNDER: 3.3 TOURS AND TRAVELS EXPENSES: THE ASSESSEE HAS C LAIMED EXPENSES ON A/C OF TOURS AND TRAVELS AT RS. 4,32,544/-. FROM THE DETAI LS FILED AND RECORDS PRODUCED IT IS NOTICED THAT THE ASSESSEE COULD NOT FURNISH COMPLETE DETAILS ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 7 OF BILLS AND VOUCHERS AND IN SOME CASES THE VOUCHER S PRODUCED WERE SELF MADE FOR PETTY EXPENSES. AS SUCH THE EXPENSES CLAIM ED ARE NOT FULLY SUPPORTED WITH EVIDENCE AND LOOKING TO THE QUANTUM OF EXPENSES CLAIMED I CONSIDER IT APPROPRIATE TO DISALLOW A LUMP SUM OF RS. 40,000/- OUT OF THE EXPENSES CLAIMED AND THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AS IT IS APPARENT FROM THE ORDER OF THE ASSESSING O FFICER, THE ASSESSING OFFICER HAS NOT CONDUCTED ANY PROPER ENQUIRY OR HAS GIVEN A FINDING THAT THE CLAIM OF THE ASSESSEE IS EXCESSIVE OR BOGUS. AC CORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DELETE THE AD HOC DISALLOWANCE OF RS. 40,000/- MADE BY THE ASSESSING OFFICER. 11. GROUND NO. 3 OF THE APPEAL IS REGARDING THE DIS ALLOWANCE MADE U/S 40(A)(IA) OF THE ACT IN RESPECT OF THE INTEREST PAI D TO VARIOUS NON-BANKING FINANCIAL COMPANIES (NBFCS). THE ASSESSING OFFICER H AS DISALLOWED AN AMOUNT OF RS. 11,90,195/- PAID TO NBFCS ON THE LOAN BORROWED BY THE ASSESSEE FOR WANT OF DEDUCTION OF TDS. 12. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESS ING OFFICER BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ACCEPTED THE FACT THAT THE AMOUNT OF RS. 20,000/- PAID TO RASHI PEREPHARALS PVT. LTD. IS SUB JECTED TO TDS AND THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING OF FICER IN RESPECT OF THE SAID PAYMENT WAS DELETED. AS REGARDS THE PAYMENT TO THE OTHER NBFCS, THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCES MADE BY TH E ASSESSING OFFICER ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 8 BY REJECTING THE CONTENTION OF THE ASSESSEE THAT SE COND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS PROSPECTIVE IN NATURE AND N OT RETROSPECTIVE. 13. WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSE SSING OFFICER HAS MADE DISALLOWANCE OF INTEREST BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, DETAILS OF THE SAME ARE AS UNDER: SL.NO. NAME OF THE NBFC INTEREST PAID 1. BAJAJ AUTO FINANCE LTD. 234064 2. BARCLAYS FINANCE 162898 3. HDB FINANCIAL SERVICES 64598 4. TATA CAPITAL LTD. 84811 5. RELIGARE FINANCE 287806 6. INDIA BULLS 336018 7. RASHI PEREPHARALS PVT. LTD. 20000 TOTAL 1190195 WE FURTHER NOTE THAT THE ASSESSEE PRODUCED COPY OF FORM 26A IN RESPECT OF NBFCS AT SERIAL NO. 1 TO 6 OF THE ABOVE TABLE. THIS FACT HAS NOT BEEN DISPUTED BY THE LD. CIT(A), THEREFORE, THE ASSESSEE PRODUCED THE RECORD TO SHOW THAT THESE NBFCS HAVE CONSIDERED THE AMOUNT OF INTEREST IN QUESTION IN THEIR INCOME AND FILED RETURN OF INCOME. THUS, ON CE THE RECIPIENT HAS INCLUDED THE AMOUNT IN THE INCOME AND FILED THE RET URN OF INCOME THEN AS PER SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, NO DISALLOWANCE IS CALLED FOR U/S 40(A)(IA) OF THE ACT. HOWEVER, THE LD. CIT(A ) HAS REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE DE CISIONS RELIED UPON BY THE ASSESSEE ARE CHALLENGED IN THE HON'BLE SUPREME COURT BY THE ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 9 DEPARTMENT. AT THE OUTSET WE NOTE THAT THIS ISSUE HA S BEEN CONSIDERED BY THIS TRIBUNAL IN A SERIES OF DECISIONS AS WELL AS BY THE VARIOUS HON'BLE HIGH COURTS. THE LD AR OF THE ASSESSEE HAS ALSO FILED COP IES OF DECISIONS INCLUDING THE DECISION OF THIS TRIBUNAL IN THE CASE OF ACCME (URVASHI PUMPS) ENG. (P.) LTD. VS. JCIT (OSD) (2018) 90 TAXMA NN.COM 189 (JP TRIB). THE TRIBUNAL IN THE SAID DECISION HAS CONSIDERE D AND DECIDED THIS ISSUE AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE CONTENDED BEFORE T HE LD. CIT(A) THAT THE INTEREST PAID TO 3 NBFCS NAMELY RELIANCE C APITAL LIMITED, BARCLAYS BANK AND CHOLAMANDALAM DBC FINANCE LIMITED WAS INCLUDED IN THE RETURN OF INCOME FILED BY THESE NON BANKING FINANCIAL COMPANIES THEREFORE, IN VIEW OF THE SECO ND PROVISO TO SECTION 40(A)(IA) OF THE ACT NO DISALLOWANCE IS CAL LED FOR IN RESPECT OF THIS AMOUNT ON WHICH THE RECIPIENT HAVE PAID THE TA XES. THE ASSESSEE URGED THAT THE SECOND PROVISO TO SECTION 4 0(A)(IA) IS REMEDIAL IN NATURE AND THEREFORE, THE SAID AMENDMEN T WILL HAVE RETROSPECTIVE EFFECT. WE FIND THAT HONBLE DELHI HI GH COURT IN CASE OF CIT VS. NARESH KUMAR (SUPRA) WHILE DEALING WITH AN IDENTICAL ISSUE HAS HELD IN PARA 15 TO 29 AS UNDER:- 15. QUESTION WHETHER THE AMENDMENT IS RETROSPECTIVE O R PROSPECTIVE IS VEXED AND RIGID RULE CAN BE APPLIED UNIVERSALLY. VA RIOUS RULES OF INTERPRETATION HAVE DEVELOPED IN ORDER TO DETERMINE WHETHER OR NOT, AN AMENDMENT IS RETROSPECTIVE OR PROSPECTIVE. FISCAL STATUTES IMPOSING LIABILITIES ARE GOVERNED BY NORMAL PRESUMP TION THAT THEY ARE NOT RETROSPECTIVE. THE CARDINAL RULE IS THAT TH E LAW TO BE APPLIED, IS THAT WHICH IS IN FORCE ON THE FIRST DAY OF THE ASSESSMENT YEAR, UNLESS OTHERWISE MANDATED EXPRESSLY OR PROVID ED BY NECESSARY IMPLICATION. THE AFORESAID DICTUM IS BASE D UPON THE PRINCIPLE THAT A NEW PROVISION CREATING A LIABILITY OR AN OBLIGATION, ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 10 AFFECTING OR TAKING AWAY VESTED RIGHTS OR ATTACHING NEW DISABILITY IS PRESUMED TO BE PROSPECTIVE. HOWEVER, IT IS ACCEPTED THAT LEGISLATURES HAVE PLENARY POWER TO MAKE RETROSPECTI VE AMENDMENTS, SUBJECT TO CONSTITUTIONAL RESTRICTIONS. 16. BASED UPON THE AFORESAID BROAD DICTUM, JUDGES AND JURISTS HAVE DRAWN DISTINCTION BETWEEN PROCEDURAL AND SUBSTANTIV E PROVISIONS. SUBSTANTIVE PROVISIONS DEAL WITH RIGHTS AND THE SAM E ARE FUNDAMENTAL, WHILE PROCEDURAL LAW IS CONCERNED WITH THE LEGAL PROCESS INVOLVING ACTIONS AND REMEDIES. AMENDMENTS TO SUBSTANTIVE LAW ARE TREATED AS PROSPECTIVE, WHILE A MENDMENTS TO PROCEDURAL LAW ARE TREATED AS RETROSPECTIVE. THIS D ISTINCTION ITSELF IS NOT FREE FROM DIFFICULTIES AS RIGHT TO APPEAL HAS B EEN HELD TO BE A SUBSTANTIVE LAW, BUT LAW OF LIMITATION IS REGARDED AS PROCEDURAL. THERE IS AN INTERPLAY AND INTERCONNECT BETWEEN WHAT CAN BE REGARDED AS SUBSTANTIVE AND PROCEDURAL LAW [SEE CIT V. SHRAWAN KUMAR SWARUP & SONS [1998] 232 ITR 123(ALL.) ]. 17. THERE ARE DECISIONS, WHICH HOLD THAT PROCESS OF L ITIGATION OR ENFORCEMENT OF LAW IS PROCEDURAL. SIMILARLY, MACHIN ERY PROVISION FOR COLLECTION OF TAX, RATHER THAN TAX ITSELF IS PROCED URAL. READ IN THIS CONTEXT, IT CAN BE STRONGLY ARGUED THAT SECTION 40( A)(IA) AT LEAST TO THE EXTENT OF THE AMENDMENT IS PROCEDURAL AS BY ENA CTING SECTION 40(A)(IA) THE LEGISLATURE DID NOT WANT TO IMPOSE A NEW TAX BUT WANTED TO ENSURE COLLECTION OF TDS AND THE AMENDMEN TS MADE STREAMLINE AND REMEDY THE ANOMALIES NOTICED IN THE SAID PROCEDURE BY ALLOWING DEDUCTION IN THE YEAR WHEN THE EXPENDIT URE IS INCURRED PROVIDED TDS IS PAID BEFORE THE DUE DATE FOR FILING OF THE RETURN. REMEDIAL STATUTES ARE NORMALLY NOT RETROSPECTIVE, O N THE GROUND THAT THEY MAY AFFECT VESTED RIGHTS. BUT THESE STATU TES ARE CONSTRUED LIBERALLY WHEN JUSTIFIED AND RULE AGAINST RETROSPEC TIVITY MAY BE APPLIED WITH LESS RESISTANCE [SEE BHARAT SINGH V. M ANAGEMENT OF NEW DELHI TUBERCULOSIS CENTRE [1986] 2 SCC 614 AND WORKMEN FIRESTONE TYRE & RUBBER CO. OF INDIA (P.) LTD. V. M ANAGEMENT AIR 1973 SC 1227. 18. IT IS INTERESTING TO NOTE THAT EARLIER ENGLISH DE CISIONS HAVE HELD THAT AN ENACTMENT FIXING A PENALTY OR MAXIMUM PENALTY FO R OFFENCE IS MERELY PROCEDURAL FOR THE PURPOSE OF DETERMINING RE TROSPECTIVITY [SEE DPP V. LAMB [1941] 2 KB 89) AND R V. OLIVER [1 944] 29 CR. APP. 137. THIS VIEW, HOWEVER, HAS BEEN CRITICIZED IN REH ERD ATHLUMNEY, IN RE [1898] 2 QB 547 ON THE GROUND THAT HIGHER OR GREATER PUNISHMENT IMPAIRS EXISTING RIGHTS OR OBLIGATION; 'NO RULE OF CONSTRUCTION IS MORE FIRMLY ESTABLISHED THAN THIS; THAT A RETROSPECTIVE OPERATION IS NOT TO BE GIVEN TO A STA TUTE SO AS TO IMPAIR AN EXISTING RIGHT OR OBLIGATION, OTHERWISE T HAN AS REGARDS ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 11 MATTERS OF PROCEDURE, UNLESS THAT EFFECT CANNOT BE AVOIDED WITHOUT DOING VIOLENCE TO THE LANGUAGE OF THE ENACTMENT. IF THE ENACTMENT IS EXPRESSED IN LANGUAGE WHICH IS FAIRLY CAPABLE OF EITHER INTERPRETATION, IT OUGHT TO BE CONSTRUED AS PROSPEC TIVE ONLY.' 19. THE WORD 'FAIRLY' USED IN THE AFORESAID QUOTATION IS IMPORTANT AND RELEVANT, BUT FOR APPLICATION OF ANOTHER RULE OF IN TERPRETATION. G.P. SINGH IN 'PRINCIPLES OF STATUTORY INTERPRETATION', 13TH EDITION, 2012 AT PAGE 538 UNDER THE SUB-HEADING 'RECENT STATEMENT S OF THE RULE AGAINST RETROSPECTIVITY' HAS GREATLY EMPHASIZED THE PRINCIPLE OF FAIRNESS AND OBSERVED THAT CLASSIFICATION OF STATUT E EITHER SUBSTANTIVE OR PROCEDURAL DOES NOT NECESSARILY DETE RMINE WHETHER THE ENACTMENT OR AMENDMENT HAS RETROSPECTIVE OPERAT ION, E.G., LAW OF LIMITATION IS PROCEDURAL BUT ITS APPLICATION TO PAST CAUSE OF ACTION MAY RESULT OF REVIVING OR EXTINGUISHING A RI GHT, AND SUCH OPERATION CANNOT BE SAID TO BE PROCEDURAL. SIMILARL Y, WHEN REQUISITES OF AN ACTION UNDER THE NEW STATUTE, DRAW S FROM A TIME INCIDENT TO ITS PASSING, RULE AGAINST RETROSPECTIVI TY MAY NOT BE APPLICABLE. 20. IN THE SAID TEXT, REFERENCE HAS BEEN MADE TO FORM ULATION BY DIXON, C.J. IN MAXWELL V. MURPHY [1957] 96 CLR 261 HOLDING : 'THE GENERAL RULE OF THE COMMON LAW IS THAT A STATU TE CHANGING THE LAW OUGHT NOT, UNLESS THE INTENTION APPEARS WITH RE ASONABLE CERTAINTY, TO BE UNDERSTOOD AS APPLYING TO FACTS OR EVENTS THAT HAVE ALREADY OCCURRED IN SUCH A WAY AS TO CONFER OR IMPO SE OR OTHERWISE AFFECT THE RIGHTS OR LIABILITIES WHICH THE LAW HAD DEFINED BE REFERENCE TO THE PAST EVENTS. BUT GIVEN THE RIGHTS AND LIABILITIES FIXED BY REFERENCE TO THE PAST FACTS, MATTERS OR EV ENTS, THE LAW APPOINTING OR REGULATING THE MANNER IN WHICH THEY A RE TO BE ENFORCED OR THEIR ENJOYMENT IS TO BE SECURED BY JUD ICIAL REMEDY IS NOT WITHIN THE APPLICATION OF SUCH A PRESUMPTION'. 21. IDENTICALLY, IN SECRETARY OF STATE FOR SOCIAL SEC URITY V. TUNNICLIFFE [1991] 2 ALL ER 712 (CA), STAUGHTON, L.J. HAS EXPRE SSED THE SAID PRINCIPLE IN THE FOLLOWING WORDS: 'THE TRUE PRINCIPLE IS THAT PARLIAMENT IS PRESUMED NOT TO HAVE INTENDED TO ALTER THE LAW APPLICABLE TO PAST EVENTS AND TRANSACTIONS IN A MANNER WHICH IS UNFAIR TO THOSE CONCERNED IN T HEM UNLESS A CONTRARY INTENTION APPEARS. IT IS NOT SIMPLY A QUES TION OF CLASSIFYING AN ENACTMENT AS RETROSPECTIVE OR NOT RETROSPECTIVE. RATHER IT MAY WELL BE A MATTER OF DEGREE- THE GREATER THE UNFAIRN ESS, THE MORE IT IS TO BE EXPECTED THAT PARLIAMENT WILL MAKE IT CLEA R IF THAT IS INTENDED'. ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 12 22. HOUSE OF LORDS IN L' OFFICE CHERIFIEN DES PHOSPHA TES V. YAMASHITA SHINNIHON STEAMSHIP CO. LTD. [1994] 1 ALL ER 20 HAS SAID THE QUESTION OF FAIRNESS HAS TO BE ANSWERED BY TAKING I NTO ACCOUNT VARIOUS FACTORS, VIZ., VALUE OF THE RIGHTS WHICH TH E STATUTE AFFECTS; EXTENT TO WHICH THAT VALUE IS DIMINISHED OR EXTINGU ISHED BY THE SUGGESTED RETROSPECTIVE EFFECT OF THE STATUTE; UNFA IRNESS OF ADVERSELY AFFECTING THE RIGHTS; CLARITY OF THE LANG UAGE USED BY PARLIAMENT AND THE CIRCUMSTANCES IN WHICH THE LEGIS LATION WAS CREATED. THESE FACTORS HAVE TO BE WEIGHED TOGETHER TO PROVIDE AN ANSWER WHETHER THE CONSEQUENCES OF READING THE STAT UTE WITH SUGGESTED DEGREE OF RETROSPECTIVITY IS UNFAIR; THAT THE WORDS USED BY THE PARLIAMENT COULD NOT HAVE BEEN INTENDED TO M EAN WHAT THEY MIGHT APPEAR TO SAY. THIS PRINCIPLE WAS APPLIED WHI LE INTERPRETING A NEW PROVISION IN ARBITRATION ACT IN THIS CASE OBSER VING THAT THE DELAY ATTRIBUTABLE TO THE CLAIMANT IN PURSUING A CL AIM BEFORE ENACTMENT OF THE NEW PROVISION, COULD BE TAKEN INTO CONSIDERATION FOR DISMISSAL. 23. PRINCIPLE OF 'FAIRNESS' HAS NOT LEFT US UNTOUCHED AND WAS APPLIED BY THE SUPREME COURT IN VIJAY V. STATE OF MAHARASHTRA [2006] 6 SCC 289 IN THE FOLLOWING WORDS: 'THE NEGOTIATION IS NOT A RIGID RULE AND VARIES WI TH THE INTENTION AND PURPORT OF THE LEGISLATION, BUT TO APPLY IT IN SUCH A CASE IS A DOCTRINE OF FAIRNESS. WHEN A NEW LAW IS ENACTED FOR THE BENEFIT OF THE COMMUNITY AS A WHOLE, EVEN IN ABSENCE OF A PROV ISION THE STATUTE MAY BE HELD TO BE RETROSPECTIVE IN NATURE.' 24. IN ALLIED MOTORS (P.) LTD. V. CIT [1997] (224) IT R 677/91 TAXMAN 205 (SC) IT WAS HELD THAT THE NEW PROVISO TO SECTION 43B SH OULD BE GIVEN RETROSPECTIVE EFFECT FROM THE INCEPTION ON THE GROU ND THAT THE PROVISO WAS ADDED TO REMEDY UNINTENDED CONSEQUENCES AND SUPPLY AN OBVIOUS OMISSION. THE PROVISO ENSURED REASONABLE INTERPRETATION AND RETROSPECTIVE EFFECT WOULD SERVE THE OBJECT BEH IND THE ENACTMENT. 25. IN STATE THROUGH C.B.I DELHI V. GIAN SINGH AIR 19 99 SC 3450 EXTREME PENALTY OF DEATH WAS DILUTED TO ALTERNATIVE OPTION OF IMPRISONMENT FOR LIFE RECORDING THAT THE LEGISLATIVE BENEVOLENCE COULD BE EXTENDED TO AN ACCUSED, WHO AWAITS JUDICIAL VERDICT S AGAINST HIS SENTENCE. EARLIER IN RATTAN LAL V. STATE OF PUNJAB AIR 1965 SC 444 REFERENCE WAS MADE TO SECTION 6 OF THE PROBATION OF OFFENDERS ACT, 1958 AND IT WAS OBSERVED THAT IF THE ACT WAS NOT GI VEN RETROSPECTIVE OPERATION, IT WOULD LEAD TO ANOMALIES AND THUS COULD NOT BE THE INTENTION OF THE LEGISLATURE. ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 13 26. PRINCIPLE OF MATCHING WHICH IS DISTURBED BY SECTI ON 40(A)(IA) OF THE ACT, MAY NOT MATERIALLY BE OF CONSEQUENCE TO THE RE VENUE WHEN THE TAX RATES ARE STABLE AND UNIFORM OR IN CASES OF BIG ASSESSEES HAVING SUBSTANTIAL TURNOVER AND EQUALLY HUGE EXPENS ES AS THEY HAVE NECESSARY CUSHION TO ABSORB THE EFFECT. HOWEVE R, MARGINAL AND MEDIUM TAXPAYERS, WHO WORK AT LOW G.P. RATE AND WHEN EXPENDITURE WHICH BECOMES SUBJECT-MATTER OF AN ORDE R UNDER SECTION 40(A)(IA) IS SUBSTANTIAL, CAN SUFFER SEVERE ADVERSE CONSEQUENCES AS IS APPARENT FROM THE CASE OF NARESH KUMAR. TRANSFERRING OR SHIFTING EXPENSES TO A SUBSEQUENT Y EAR, IN SUCH CASES, WILL NOT WIPE OFF THE ADVERSE EFFECT AND THE FINANCIAL STRESS. NEVERTHELESS THE SECTION 40(A)(IA) HAS TO BE GIVEN FULL PLAY KEEPING IN MIND THE OBJECT AND PURPOSE BEHIND THE SECTION. AT THE SAME TIME, THE PROVISION CAN BE AND SHOULD BE INTERPRETE D LIBERALLY AND EQUITABLE SO THAT AN ASSESSEE SHOULD NOT SUFFER UNI NTENDED AND DELETERIOUS CONSEQUENCES BEYOND WHAT THE OBJECT AND PURPOSE OF THE PROVISION MANDATES. CASE OF NARESH KUMAR IS NOT ONE OF RARE CASES, BUT ONE OF SEVERAL CASES AS WE FIND THAT SEC TION 40(A)(IA) IS INVOKED IN LARGE NUMBER OF CASES. 27. ONE IMPORTANT CONSIDERATION IN CONSTRUING A MACHI NERY SECTION IS THAT IT MUST BE SO CONSTRUED SO AS TO EFFECTUATE TH E LIABILITY IMPOSED BY THE CHARGING SECTION AND TO MAKE THE MAC HINERY WORKABLE. HOWEVER, WHEN THE MACHINERY SECTION RESULTS IN UNIN TENDED OR HARSH CONSEQUENCES WHICH WERE NOT INTENDED, THE REM EDIAL OR CORRECTION ACTION TAKEN IS NOT TO BE DISREGARDED BU T GIVEN DUE REGARD. 28. IT IS, IN THIS CONTEXT, THAT WE HAD IN RAJINDER K UMAR'S CASE (SUPRA) OBSERVED AS UNDER: '22. NOW, WE REFER TO THE AMENDMENTS WHICH HAVE BEE N MADE BY THE FINANCE ACT, 2010 AND THE EFFECT THEREOF. WE HA VE ALREADY QUOTED THE DECISION OF THE CALCUTTA HIGH COURT IN V IRGIN CREATIONS (SUPRA). THE SAID DECISION REFERS TO THE EARLIER DECISION OF THE SUPREME COURT IN THE CASE OF ALLIED MOTORS (P.) LTD(SUPRA) AND COMMISSIONER OF INCOME TAX V. ALOM EXTRUSIONS L TD, [2009] 319 ITR 306 (SC) . IN THE CASE OF ALLIED MOTORS (P.) LTD. (SUPRA), T HE SUPREME COURT WAS EXAMINING THE FIRST PROVISO TO SE CTION 43B AND WHETHER IT WAS RETROSPECTIVE. SECTION 43B WAS INSER TED IN THE ACT WITH EFFECT FROM 1ST APRIL 1984 FOR CURBING CLAIMS OF TAXPAYERS WHO DID NOT DISCHARGE OR PAY STATUTORY LIABILITIES BUT CLAIMED DEDUCTIONS ON THE GROUND THAT THE STATUTORY LIABILITY HAD ACCR UED. SECTION 43B STATES THAT THE STATUTORY LIABILITY WOULD BE ALLOWE D AS A DEDUCTION OR AS AN EXPENSE IN THE YEAR IN WHICH THE PAYMENT W AS MADE AND ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 14 WOULD NOT BE ALLOWED, EVEN IN CASES OF MERCANTILE S YSTEM OF ACCOUNTANCY, IN THE YEAR OF ACCRUAL. IT WAS NOTICED THAT IN SOME CASES HARDSHIP WOULD BE CAUSED TO ASSESSEES, WHO PA ID THE STATUTORY DUES WITHIN THE PRESCRIBED PERIOD THOUGH THE PAYMENTS SO MADE WOULD NOT FALL WITHIN THE RELEVANT PREVIOUS YEAR. ACCORDINGLY, A PROVISO WAS ADDED BY FINANCE ACT, 19 87 APPLICABLE WITH EFFECT FROM 1ST APRIL, 1988. THE PROVISO STIPU LATED THAT WHEN STATUTORY DUES COVERED BY SECTION 43B WERE PAID ON OR BEFORE THE DUE DATE FOR FURNISHING OF THE RETURN UNDER SECTION 139(1), THE DEDUCTION/EXPENSE, EQUAL TO THE AMOUNT PAID WOULD B E ALLOWED. THE SUPREME COURT NOTICED THE PURPOSE BEHIND THE PR OVISO AND THE REMEDIAL NATURE OF THE INSERTION MADE. OF COURSE, T HE SUPREME COURT ALSO REFERRED TO EXPLANATION 2 WHICH WAS INSE RTED BY FINANCE ACT, 1989 WHICH WAS MADE RETROSPECTIVE AND WAS TO T AKE EFFECT FROM 1ST APRIL, 1984. HIGHLIGHTING THE OBJECT BEHIN D SECTION 43B, IT WAS OBSERVED THAT THE PROVISO MAKES THE PROVISION W ORKABLE, GIVES IT A REASONABLE INTERPRETATION. IT WAS ELUCIDATED: '12. IN THE CASE OF GOODYEAR INDIA LTD. V. STATE O F HARYANA THIS COURT SAID THAT THE RULE OF REASONABLE CONSTRUCTION MUST BE APPLIED WHILE CONSTRUING A STATUTE. LITERAL CONSTRUCTION SH OULD BE AVOIDED IF IT DEFEATS THE MANIFEST OBJECT AND PURPOSE OF THE A CT. 13. THEREFORE, IN THE WELL-KNOWN WORDS OF JUDGE LE ARNED HAND, ONE CANNOT MAKE A FORTRESS OUT OF THE DICTIONARY; AND S HOULD REMEMBER THAT STATUTES HAVE SOME PURPOSE AND OBJECT TO ACCOM PLISH WHOSE SYMPATHETIC AND IMAGINATIVE DISCOVERY IS THE SUREST GUIDE TO THEIR MEANING. IN THE CASE OF R.B. JUDHA MAL KUTHIALA V. CIT, THIS COURT SAID THAT ONE SHOULD APPLY THE RULE OF REASONABLE I NTERPRETATION. A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONS EQUENCES AND TO MAKE THE PROVISION WORKABLE, A PROVISO WHICH SUP PLIES AN OBVIOUS OMISSION IN THE SECTION AND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETA TION, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CAN BE GIVEN TO THE SECTION AS A WHO LE. 14. THIS VIEW HAS BEEN ACCEPTED BY A NUMBER OF HIG H COURTS. IN THE CASE OF CIT V. CHANDULAL VENICHAND, THE GUJARAT HIG H COURT HAS HELD THAT THE FIRST PROVISO TO SECTION 43-B IS RETROSPEC TIVE AND SALES TAX FOR THE LAST QUARTER PAID BEFORE THE FILING OF THE RETURN FOR THE ASSESSMENT YEAR IS DEDUCTIBLE. THIS DECISION DEALS WITH ASSESSMENT YEAR 1985-85. THE CALCUTTA HIGH COURT IN THE CASE O F CIT V. SRI JAGANNATH STEEL CORPN. HAS TAKEN A SIMILAR VIEW HOL DING THAT THE STATUTORY LIABILITY FOR SALES TAX ACTUALLY DISCHARG ED AFTER THE EXPIRY OF THE ACCOUNTING YEAR IN COMPLIANCE WITH THE RELEV ANT STATUTE IS ENTITLED TO DEDUCTION UNDER SECTION 43-B. THE HIGH COURT HAS HELD ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 15 THE AMENDMENT TO BE CLARIFICATORY AND, THEREFORE, R ETROSPECTIVE. THE GUJARAT HIGH COURT IN THE ABOVE CASE HELD THE A MENDMENT TO BE CURATIVE AND EXPLANATORY AND HENCE RETROSPECTIVE . THE PATNA HIGH COURT HAS ALSO HELD THE AMENDMENT INSERTING TH E FIRST PROVISO TO BE EXPLANATORY IN THE CASE OF JAMSHEDPUR MOTOR A CCESSORIES STORES V. UNION OF INDIA. THE SPECIAL LEAVE PETITIO N FROM THIS DECISION OF THE PATNA HIGH COURT WAS DISMISSED. THE VIEW OF THE DELHI HIGH COURT, THEREFORE, THAT THE FIRST PROVISO TO SECTION 43-B WILL BE AVAILABLE ONLY PROSPECTIVELY DOES NOT APPEA R TO BE CORRECT. AS OBSERVED BY G.P. SINGH IN HIS PRINCIPLES OF STAT UTORY INTERPRETATION, 4TH EDN. AT P. 291: 'IT IS WELL-SET TLED THAT IF A STATUTE IS CURATIVE OR MERELY DECLARATORY OF THE PREVIOUS L AW RETROSPECTIVE OPERATION IS GENERALLY INTENDED.' IN FACT THE AMEND MENT WOULD NOT SERVE ITS OBJECT IN SUCH A SITUATION UNLESS IT IS C ONSTRUED AS RETROSPECTIVE. THE VIEW, THEREFORE, TAKEN BY THE DE LHI HIGH COURT CANNOT BE SUSTAINED.' 23. SECTION 43B DEALS WITH STATUTORY DUES AND STIP ULATES THAT THE YEAR IN WHICH THE PAYMENT IS MADE THE SAME WOULD BE ALLOWED AS A DEDUCTION EVEN IF THE ASSESSEE IS FOLLOWING THE MER CANTILE SYSTEM OF ACCOUNTANCY. THE PROVISO, HOWEVER, STIPULATES THAT DEDUCTION WOULD BE ALLOWED WHERE THE STATUTORY DUES COVERED B Y SECTION 43B STAND PAID ON OR BEFORE THE DUE DATE OF FILING OF R ETURN OF INCOME. SECTION 40(A)(IA) IS APPLICABLE TO CASES WHERE AN A SSESSEE IS REQUIRED TO DEDUCT TAX AT SOURCE AND FAILS TO DEDUC T OR DOES NOT MAKE PAYMENT OF THE TDS BEFORE THE DUE DATE, IN SUC H CASES, NOTWITHSTANDING SECTIONS 30 TO 38 OF THE ACT, DEDUC TION IS TO BE ALLOWED AS AN EXPENDITURE IN THE YEAR OF PAYMENT UN LESS A CASE IS COVERED UNDER THE EXCEPTIONS CARVED OUT. THE AMENDE D PROVISO AS INSERTED BY FINANCE ACT, 2010 STATES WHERE AN ASSES SEE HAS MADE PAYMENT OF THE TDS ON OR BEFORE THE DUE DATE OF FIL ING OF THE RETURN UNDER SECTION 139(1), THE SUM SHALL BE ALLOWED AS A N EXPENSE IN COMPUTING THE INCOME OF THE PREVIOUS YEAR. THE TWO PROVISIONS ARE AKIN AND THE PROVISOS TO SECTIONS 40(A)(IA) AND 43B ARE TO THE SAME EFFECT AND FOR THE SAME PURPOSE. 24. IN PODAR CEMENT (P.) LTD. (SUPRA), THE SUPREME COURT CONSIDERED WHETHER TERM 'OWNER' WOULD INCLUDE UNREGISTERED OWN ERS WHO HAD PAID SALE CONSIDERATION AND WERE COVERED BY SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THE CONTENTION OF THE ASS ESSEES WAS THAT THE AMENDMENTS MADE TO THE DEFINITION OF TERM 'OWNE R' BY FINANCE BILL, 1987 SHOULD BE GIVEN RETROSPECTIVE EF FECT. IT WAS HELD THAT THE AMENDMENTS WERE RETROSPECTIVE IN NATURE AS THEY RATIONALISE AND CLEAR THE EXISTING AMBIGUITIES AND DOUBTS. REFERENCE WAS MADE TO CRAWFORD: 'STATUTORY CONSTRUC TION' AND 'THE PRINCIPLE OF DECLARATORY STATUTES', FRANCIS BE NNION: 'STATUTORY ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 16 INTERPRETATION', JUSTICE G.P. SINGH'S 'PRINCIPLES O F STATUTORY INTERPRETATION', IT WAS OBSERVED THAT SOMETIMES AME NDMENTS ARE MADE TO SUPPLY AN OBVIOUS OMISSION OR TO CLEAR UP D OUBTS AS TO THE MEANING OF THE PREVIOUS PROVISION. THE ISSUE WAS AC CORDINGLY DECIDED HOLDING THAT IN SUCH CASES THE AMENDMENTS W ERE RETROSPECTIVE THOUGH IT WAS NOTICED THAT AS PER TRA NSFER OF PROPERTY ACT, REGISTRATION ACT, ETC. A LEGAL OWNER MUST HAVE A REGISTERED DOCUMENT. 25. IN VIEW OF THE AFORESAID DISCUSSION IN PARAS 1 8,19 AND 20, IT IS APPARENT THAT THE RESPONDENT ASSESSEE DID NOT VIOLA TE THE UNAMENDED SECTION 40(A)(IA) OF THE ACT. WE HAVE NOT ED THE AMBIGUITY AND REFERRED THEIR CONTENTION OF REVENUE AND REJECTED THE INTERPRETATION PLACED BY THEM. THE AMENDED PROV ISIONS ARE CLEAR AND FREE FROM ANY AMBIGUITY AND DOUBT. THEY W ILL HELP CURTAIL LITIGATION. THE AMENDED PROVISION CLEARLY SUPPORT V IEW TAKEN IN PARAGRAPHS 17 - 20 THAT THE EXPRESSION 'SAID DUE DA TE' USED IN CLAUSE A OF PROVISO TO UNAMENDED SECTION REFERS TO TIME SPECIFIED IN SECTION 139(1) OF THE ACT. THE AMENDED SECTION 40(A )(IA) EXPANDS AND FURTHER LIBERALISES THE STATUTE WHEN IT STIPULA TES THAT DEDUCTIONS MADE IN THE FIRST ELEVEN MONTHS OF THE P REVIOUS YEAR BUT PAID BEFORE THE DUE DATE OF FILING OF THE RETURN, W ILL CONSTITUTE SUFFICIENT COMPLIANCE.' 29. IN VIEW OF THE AFORESAID DISCUSSION, WE DO NOT FI ND ANY MERIT IN THE PRESENT APPEALS FILED BY THE REVENUE AND THEY ARE D ISMISSED. WE FURTHER NOTE THAT THE COORDINATE BENCH OF THIS T RIBUNAL IN CASE OF RAJESH YADAV IN ITA NO. 895/JP/2012 VIDE ORDER DATED 29.01.2016 HAS HELD AS UNDER:- 6.1. RECENTLY IN THE MATTER OF P.M.S. DIESELS 201 5 ] 59 TAXMANN.COM 100 (PUNJAB & HARYANA), HONBLE PUNJAB & HARYANA HI GH COURT HAD ELABORATELY DISCUSSED THE JUDGMENT PASSED BY THE HO NBLE CALCUTTA HIGH COURT AND HONBLE GUJARAT HIGH COURT, HONBLE ALLAH ABAD HIGH COURT AND OTHER JUDGMENTS AS AVAILABLE AND THEREAFTER HAS COM E TO THE CONCLUSION THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE MANDAT ORY IN NATURE AND NON COMPLIANCE/NON DEDUCTION OF TAX ATTRACTS DISALLOWAN CE OF THE ENTIRE AMOUNT. HAVING SAID SO, WE WILL BE FAILING IN OUR D UTY IF WE DO NOT DISCUSS THE AMENDMENT BROUGHT IN BY THE FINANCE (NO. 2) ACT 2014 WITH EFFECT FROM 1.4.2015 BY VIRTUE OF WHICH PROVISO TO SECTION 40(A)(IA) HAS BEEN INSERTED, WHICH PROVIDES THAT IF ANY SUCH SUM TAXED HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 17 PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1 ) OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE IN COME OF PREVIOUS YEAR, AND FURTHER, SECTION 40(A)(IA) HAS BEEN SUBSTITUTED WHEREIN THE 30% OF ANY SUM PAYABLE TO A RESIDENT HAS BEEN SUBSTITUTED. IN THE PRESENT CASE, THE AUTHORITIES BELOW HAS ADDED THE ENTIRE SUM OF RS. 7 ,51,322/- BY DISALLOWING THE WHOLE OF THE AMOUNT. THOUGH THE SUB STITUTION IN SECTION 40 HAS BEEN MADE EFFECTIVE WITH EFFECTIVE FROM 1.4.201 5, IN OUR VIEW THE BENEFIT OF THE AMENDMENT SHOULD BE GIVEN TO THE ASS ESSEE EITHER BY DIRECTING THE AO TO CONFIRM FROM THE CONTRACTORS, N AMELY, M/S. GARVIT STONEX, M/S. CHANDA MARBLES AND M/S. NIDHI GRANITES AS TO WHETHER THE SAID PARTIES HAVE DEPOSITED THE TAX OR NOT AND FURT HER OR RESTRICT THE ADDITION TO 30% OF RS. 11 ITA NO. 895/JP/2012 A.Y 2 007-08. SHRI RAJENDRA YADAV VS. ITO AJMER. 7,51,322/-. IN OUR VIEW, IT WI LL BE TIED OF JUSTICE IF THE DISALLOWANCE IS ONLY RESTRICTED TO 30% OF RS. 7,51, 322/-. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE ABO VE SAID MANNER. FURTHER THIS TRIBUNAL HAS TAKEN A SIMILAR VIEW ON T HIS ISSUE BY FOLLOWING THE ABOVE DECISIONS AND THEREFORE EVEN IF THERE IS DIVERGENT VIEW TAKEN BY THE HONBLE KERALA HIGH COU RT THE VIEW TAKEN IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNAL BY FOLLOWING THE VARIOUS DECISIONS ARE TO BE FOLLOWED TO MAINTAIN TH E RULE OF CONSISTENCY. ACCORDINGLY, WE ARE OF THE VIEW THE SE COND PROVISO TO SECTION 40(A)(IA) OF THE ACT WOULD BE EFFECTIVE RET ROSPECTIVE AS IT WAS UNDISPUTEDLY INSERTED TO REMOVABLE THE HARDSHI P FACED BY THE ASSESSES. HENCE, WE SET ASIDE THIS ISSUE TO THE REC ORD OF THE ASSESSING OFFICER FOR LIMITED PURPOSE TO VERIFY THE FACT THAT THE INTEREST INCOME RECEIVED BY THESE NBFCS HAVE BEEN I NCLUDED IN THE RETURN OF INCOME AND OFFERED TO TAX AND THEN DECIDE THIS ISSUE IN LIGHT OF ABOVE OBSERVATION. ACCORDINGLY BY FOLLOWING THE DECISION OF THIS TRIBUNA L (SUPRA) AS WELL AS THE VARIOUS DECISIONS OF THE HON'BLE HIGH COURTS ON THI S POINT WE DECIDE THIS ITA 866/JP/2018_ M/S FORTUNE INFONET VS ITO 18 ISSUE IN FAVOUR OF THE ASSESSEE AND CONSEQUENTLY TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE ACT IS D ELETED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/11/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20 TH NOVEMBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S FORTUNE INFONET, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD 6(1), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 866/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR