METAKAPS ENGINEERING (JV),MUMBAI V. COMMISSIONER OF INCOME TAX (APPEALS), NFAC, DELHI, DELHI

ITA 6552/MUM/2024

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Metakaps Engineering (JV) filed an appeal against the order of the Commissioner of Income-tax (Appeals), which upheld the disallowance of expenditure of Rs. 4,69,61,421 made by the Assessing Officer. The disallowance was initially made under section 40(a)(ia) of the Income Tax Act, 1961, due to the late deposit of TDS on certain payments. The assessee argued that the amendment by the Finance Act, 2010, which allowed deduction if TDS was paid before the due date of filing the return, should apply retrospectively. The Tribunal, referencing a Supreme Court decision, agreed with the assessee, allowing the appeal and reversing the disallowance.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473337 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Other Referred Cases: CIT- Calcutta v/s Calcutta Export Company (2018) 93 taxmann.com 51 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.R. MAKWANA
• Assessee Lawyers: M.S. SHETH
• Keywords: TDS
• Section: 147; 143(3); 250; 139(1); 139; 40(a)(ia)

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No. 6552/MUM/2024 (A.Y. 2009-10) Metakaps Engineering (JV) 303 Salvation Apartment, Dadar, Mumbai-400028 v/s. बनाम CIT, (A), Delhi National Faceless Appeal Centre, Delhi-110001 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAAAM8327K Appellant/अपीलार्थी .. Respondent/प्रतिवादी Assessee by : Shri M. S. Sheth Revenue by : Shri R. R. Makwana Date of Hearing 11.02.2025 Date of Pronouncement 18.02.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 18.10.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2009-10. 2. The assessee has raised the following grounds of appeal: “1. In the facts and circumstances of the case, Hon'ble Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi ('CIT(A)') erred in P a g e | 2 ITA No. 6552/Mum/2024 A.Y. 2009-10 Matakaps Engineerings (JV) passing the Appeal Order under Section 250 of the Income Tax Act, 1961 ('the Act') upholding the disallowance of expenditure of Rs. 4,69,61,421/- made by the Learned Assessing officer. 2. Hon'ble CIT(A) erred in law by not appreciating that the amendment introduced by the Finance Act, 2010, relevant to the issue under appeal is clarificatory in nature and fully applicable to the appellant. 3. The Consequential interest levied/ recovered under Section 234B, 234D & 244A may please be deleted. 4. Without Prejudice to the (1) above, the Appellant states that in the event of disallowance continued, the expenses may please be allowed in the year in which said TDS was actually paid by the appellant. 5. The Appellant craves leave to add, amend, modify alter and / or delete any of the above grounds before or during the course of hearing of appeal.” 3. Subsequently, vide letter dated 04.02.2025, the assessee filed additional grounds as under: “1. Kindly refer to the above appeal matter. In the grounds of appeal filed before Your Honour, the appellant has inadvertently omitted to file ground for challenging the Assessment order under Section 147 r.w.s. 148 of the Income Tax ssAct, 1961. 2. We are enclosing herewith the additional ground which the appellant intends to raise before Your Honour. It is submitted that the additional ground of appeal raised requires no new facts to be brought on record. It is, therefore, humbly prayed that the additional ground of appeal may kindly be admitted and adjudicated by Your Honours. 3. In view of the above, it is most humbly submitted that the enclosed additional ground may kindly be admitted, adjudicated and decided by Your Honour.” 4. Brief facts of the case are that the assessee filed its return declaring income of Rs. 59,35,706/- on 30.09.2009. The case was selected for scrutiny and assessment u/s 143(3) was completed on 30.11.2011 at returned income. Subsequently, the case was reopened and notice u/s 148 was issued on 31.03.2016. It was noticed that the assessee had deducted tax on certain payments during the previous year but failed to deposit the same on or before the last day of the previous year as required u/s 40(a)(ia) of the Act. The assessee submitted that TDS was deposited before the due date of filing of P a g e | 3 ITA No. 6552/Mum/2024 A.Y. 2009-10 Matakaps Engineerings (JV) return of income u/s 139(1). The details of TDS deducted out of labour charges paid to the sub-contractor amounting to Rs. 4,69,61,421/- are as under: Sr. No. Amount paid Date of payment TDS amount Date on which Tax was deposited 1 28,53,163 12.06.2008 32,236 16.04.2009 2. 2,65,80,000 15.06.2008 3,01,151 15.07.2009 3. 1,75,28,258 01.01.2009 1,98,595 15.07.2009 Total 4,69,61,421 5,32,072 5. The assessee relied upon the amendment brought by the Finance Act, 2010 whereby the deduction was allowable in case TDS was paid before the due date specified in section 139(1) of the Act. However, Ld. AO observed that this amendment is effective from 01.04.2010 and is therefore not applicable in the case of the assessee for AY 2009-10. Accordingly, he made a disallowance of Rs. 4,69,61,421/- u/s 40(a)(ia) of the Act and finalized assessment u/s 143(3) r.w.s 147 of the Act at an income of Rs. 5,28,97,130/-. 6. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A). Vide order dated 18.10.2024, Ld. CIT(A) upheld the order of Ld. AO after observing that the amendment in section 40(a)(ia) giving the benefit of extended time to the assessee to deposit TDS before the due date of filing of return u/s 139(1) was prospective and hence applicable from AY 2010- 11 onwards. The amendment was held to be not applicable to the assessee as the year involved is AY 2009-10. P a g e | 4 ITA No. 6552/Mum/2024 A.Y. 2009-10 Matakaps Engineerings (JV) Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before the Tribunal. 7. Before us, the assessee has argued that in several cases, the Hon’ble Supreme Court, different High Courts as well as the co-ordinate benches of the Tribunal have decided the issue in assessee’s favour. In particular, the Ld. AR has placed reliance on the decision of the Hon’ble Apex Court in the case of CIT- Calcutta v/s Calcutta Export Company (2018) 93 taxmann.com 51 (SC) wherein it has been held as under: “30. Hence, in light of the forgoing discussion and the binding effect of the judgment given in Allied Moters (P.) Ltd. case (supra), we are of the view that the amended provision of Sec 40(a)(ia) of the IT Act should be interpreted liberally and equitable and applies retrospectively from the date when Section 40(a)(ia) was inserted i.e., with effect from the Assessment Year 2005-2006 so that an assessee should not suffer unintended and deleterious consequences beyond what the object and purpose of the provision mandates. As the developments with regard to the Section recorded above shows that the amendment was curative in nature, it should be given retrospective operation as if the amended provision existed even at the time of its insertion. Since the assessee has filed its returns on 01.08.2005 i.e., in accordance with the due date under the provisions of Section 139 IT Act, hence, is allowed to claim the benefit of the amendment made by Finance Act, 2010 to the provisions of Section 40(a)(ia) of the IT Act.” 8. Respectfully following the decision of the Hon’ble Apex Court, we hold that the addition made u/s 40(a)(ia) in respect of labour charges of Rs 46,96,61,421/- is allowable and provisions of section 40(a)(ia) are not applicable as the amount of TDS deducted has been deposited before the due date of filing of return u/s 139(1) of the Act. The assessee’s appeal on this issue is allowed. P a g e | 5 ITA No. 6552/Mum/2024 A.Y. 2009-10 Matakaps Engineerings (JV) 9. The additional grounds taken by the assessee pertain to reopening of the assessment. Since the substantive issue stands decided in favour of the assessee, these grounds become academic in nature and hence are not being adjudicated upon. 10. In the result, the appeal of the assessee is allowed Order pronounced in the open court on 18.02.2025. Sd/- Sd/- RAHUL CHAUDHARY RENU JAUHRI (न्यातयक सदस्य/JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai दिनाुंक /Date 18.02.2025 अननक ेत स ुंह राजपूत/ स्टेनो आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतिकरण/ ITAT, Bench, Mumbai. "