Special Bench Mumbai 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 revenue’s case, 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 from 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 the Notes on Clauses and the Memorandum Explaining the Provisions of the Finance Bill does not particularly indicate any relaxation 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. 139(1) shall not suffer any disallowance in the asst. yr. 2005-06. “
However, the Hon’ble Calcutta High Court has taken a different view in the case of CIT v. Virgin Creations (supra) and the issue stands decided against the revenue. Therefore considering the precedent in the judicial hierarchy, we are bound to follow the decision of the Hon’ble Calcutta High Court because it is the only judgment of any High Court which is brought to our notice.
Similar view has been taken in the Third Member decision in the case of Kane! Oi! & Export Inds. Ltd. v. JCIT [2009] 121 ITD 596 (Ahd) (TM)
On the issue under consideration, the lone decision of non-jurisdictional High Court i.e., the Hon’ble Calcutta High Court is available on the very same issue, so that has to be followed because it will prevail over the order of the Special Bench of the ITAT, Mumbai Bench, since the Hon’ble High Court in the judicial hierarchy is above the Tribunal. We, therefore considering the totality of the facts as narrated hereinabove, do not see any valid ground to interfere with the findings of the ld. CIT(Appeals).
INCOME TAX APPELLATE TRIBUNAL, BANGALORE
ITA No. 717/Bang/2011
Assessment year : 2008-09
Assistant Commissioner of Income Tax Vs. Shri M.K. Gurumurthy
Date of Pronouncement : 10.05.2012
O R D E R
This is an appeal by the department against the order dated 15.03.2011 of the CIT(Appeals)-II, Bangalore.
2. Following grounds have been raised in this appeal:
“1. The order of the CIT(A) is contrary to the facts of the case.
2. The CIT(A) is not correct in deleting the addition 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 the due date for filing the return u/s.139(l) but not before the end of the previous year i.e. 3 1/03/2008.
3. The CIT(A)’s decision that Sec.40(a)(ia) is not attracted where tax has been deducted at source on an expenditure incurred or payment made in the month of the relevant previous 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 section 40(a)(ia), according to which, the due date for remitting 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 urged at the time of hearing of the appeal, the order of the learned CIT(A) may be set aside and that the order of the AO may be restored.”
3. From the above grounds it is gathered that the grievance of the assessee relates to the deletion of the addition of T 70,13,932 made by the Assessing Officer by invoking the provisions of section 40(a)(ia) of the Income-tax Act, 1961 [hereinafter referred to as “the Act” in short”].
4. The facts of the case in brief are that the assessee is a proprietor of M/s. G.S. Power Systems which was trading in generator and spare parts. The assessee filed his return of income on 30.09.2008 declaring an income of T 18,01,980. The assessee revised the return on 01 .10.2008 which was processed u/s. 143(1) of the Act. Thereafter the case was selected for scrutiny. The Assessing Officer during the course of assessment proceedings noticed that the assessee had made following payments to various parties on various dates between April, 2007 to February, 2008, but deducted tax during the month of March, 2008 and remitted the same to the credit of Govt. of India only after 31.03.2008:-
a) Anand Electrical Engineers Rs. 1,42,434 (Contact)
b) Ameer Cranes Rs. 2,72,600 (Contract)
c) Creative Diesel Services Rs. 2,90,955 (Contract)
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. 4,65,56 1 (Contract)
h) Asian Power Controls Ltd. Rs. 21,349 (Contract)
Total Rs.17,25,314/-
5. The AO disallowed the aforesaid amount of Rs. 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 previous year and tax was deducted therefrom which was remitted to the Government account before the due date for filing of return of income, therefore the assessee was entitled for deduction of the expenditure. The 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 various contractors/subcontractors throughout the year, but actually deducted the tax during the last month of the previous year (i.e. in the month of March 2008) and paid such tax on or before the due date specified in sub-section (1) of section 139 (due date being September 2008 and such taxes has been paid on 30-05-2008 & 28-09-2008).
Following table shows the details of such deductions and payments of TDS
