Case Law Details
The provisions of section 40(a)(ia) as stood prior to the amendments made by the Finance Act 2010 thus were resulting into unintended consequences and causing grave and genuine hardships to the assessees who had substantially complied with the relevant TDS provisions by deducting the tax at source and by paying the same to the credit of the Government before the due date of filing of their returns u/s 139(1).
In order to remedy this position and to remove the hardships which was being caused to the assessees belonging to such category, amendments have been made in the provisions of section 40(a)(ia) by the Finance Act 2010. The said amendments, in our opinion, thus are clearly remedial/curative in nature.
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES ‘C’ MUMBAI
BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND
SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER
ITA No. 3923/Mum/2012 – Assessment Year 2008-09
M/s.Pratibha JV Vs. The DCIT
Date of Pronouncement: 25/09/2013
ORDER
PER I.P.BANSAL, JM:
This is an appeal filed by the assessee. It is directed against the order passed by Ld. CIT(A)33, Mumbai dated 31/3/2012 for assessment year 2008- 09. Grounds of appeal read as under:
“ 1. On the facts and circumstances of the case and judicial proposition, appellate order of Ld. CIT (Appeals) is bad in law and erroneous in facts and liable to be quashed.
2. On the facts and circumstances of the case and judicial proposition, Ld. CIT (Appeals) erred in making the dis allowances of expenses on account of late payment of TDS without giving any notice under section 251 which is bad in law and erroneous in facts and liable to be quashed.
3. On the facts and circumstances of the case and judicial proposition, Ld. Commissioner of Income Tax (Appeals) erred in making the dis allowances of expenses on account of late payment of TDS which Ld. Assessing Officer had not made in assessment order, such dis allowance is bad in law and erroneous in facts and liable to be deleted.
| S.No. | Particulars |
Amount |
Paid on |
| 1. | TDS Professional Fees | 6944 | 09.04.2008 |
| 2. | 2893 | 28.07.2008 | |
| 3. | TDS Professional Fees payable | 62388 | 09.04.2008 |
| 4. | 6468 | 21.04.2008 | |
| 5. | TDS rent (Hiring) charge | 27398 | 09.04.2008 |
| 6. | TDS sub contract Co Ltd. payable | 5062 | 09.04.2008 |
| 7. | TDS sub contract payable | 119551 | 09.04.2008 |
| 1133 | 09.04.2008 | ||
| Total | 231837 |
2.1 Ld. AR submitted that the dispute as described in Ground No.3 which relates to dis allowance of Rs. 7,43,955/- on which, according to Ld. CIT(A) the tax was deposited beyond the due date. He submitted that according to well established law if the payment is made before the due date of filing the return then dis allowance cannot be made. He in this regard referred to the paper book in which copies of these decisions are enclosed as under:
| S.No. | Content | Page No. |
| 1 | CIT vs. Virgin Creations | 1 |
| 2 | CIT vs. M/s. JK Construction Co. | 2-3 |
| 3 | CIT vs. Mr. Rajinder Kumar | 4-16 |
| 4 | Piyush Mehta v/s. ACIT | 17-2 5 |
| 5 | Maharashtra State Electricity Distribution Co. Ltd. vs. ACIT |
26-5 1 |
| 6 | M/s.Bansal Parivahan (India) Pvt. Ltd. vs. ITO | 52-73 |
| 7 | ITO v/s. SK Mofizul Ali Purba Medinipur | 74-77 |
| 8 | M/s.Designer Exports Vs. DCIT | 78-8 1 |
| 9 | Shri Kanubhai Ramjibhai Makwana v/s. ITO | 82-92C |
| 10 | B.M.S. Projects Pvt. Ltd. v/s. DCIT | 93-105 |
| 11 | Rana Builders V/s. ITO | 106-115 |
| 12 | Punjab State Co-operative Federation of Housing Building Societies Ltd. vs. DCIT | 116-121 |
In aforementioned cases it has been held that amendment made in the provisions by Finance Act, 2010 being remedial / curative in nature have retrospective application. For the sake of brevity we may reproduce the relevant observation of Mumbai Tribunal in the case of Bansal Parivahan India Ltd., decision dated 22/9/2010 in ITA No.2355/Mum/2010.
“28. The assessee in the present case thus had not only deducted tax at source from the payments of freight charges made during the period 1.4.2005 to 28.2.2006, but the tax so deducted was also entirely paid by him to the credit of the Government although beyond the due date as stipulated in section 200 but before the due date of filing of his return of income for the year under consideration. The relevant TDS provisions thus were substantially complied by him and he was in a position to establish such compliance by filing the required documentary evidence along with his return of income. Still he was made to suffer by way of a dis allowance of freight charges for which he was otherwise eligible for deduction giving rise to a huge demand as per the provisions of section 40(a)(ia) which was never the legislative intention behind enacting the said provisions. The provisions of section 40(a)(ia) as stood prior to the amendments made by the Finance Act 2010 thus were resulting into unintended consequences and causing grave and genuine hardships to the assessees who had substantially complied with the relevant TDS provisions by deducting the tax at source and by paying the same to the credit of the Government before the due date of filing of their returns u/s 139(1). In order to remedy this position and to remove the hardships which was being caused to the assessees belonging to such category, amendments have been made in the provisions of section 40(a)(ia) by the Finance Act 2010. The said amendments, in our opinion, thus are clearly remedial/curative in nature as held by Hon’ble Supreme Court in the case of Allied Motors Pvt. Ltd. (supra) and Alom Extrusions Ltd. (supra) and the same therefore would apply retrospectively w.e.f. 1st April, 2005. In the case of R.B. Jodha Mal Kuthiala 82 ITR 570, it was held by the Hon’ble Supreme Court that a proviso which is inserted to remedy unintended consequences and to make the provision workable, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole. In the present case, the amount of tax deducted at source from the freight charges during the period 01/04/2005 to 28/02/2006 was paid by the assessee in the months of July and August 2006 ie well before the due date of filing of its return of income for the year under consideration. This being the undisputed position, we hold that the dis allowance made by the A.O. and confirmed by the learned CIT(A) on account of freight charges by invoking the provisions of section 40(a)(ia) is not sustainable as per the amendments made in the said provisions by the Finance. Act, 2010 which, being remedial/curative in nature, have retrospective application. Accordingly, we delete the said dis allowance and allow ground No. 2 of this appeal.”
3. Accordingly, respectfully following the decisions relied upon by Ld. AR, after hearing both the parties we are of the opinion that dis allowance cannot be made if the deposits are made before the due date of filing the return as described in section 139(1). As there is no dispute so as it relates to date of deposit of tax and these dates are stated in the remand report itself we direct the AO to delete dis allowance of Rs.7,43, 955/-
4. In the result, the appeal filed by the assessee is partly allowed in the manner aforesaid.
Order pronounced in the open court on 25/09/2013
