TMI Blog2015 (3) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... a new legal argument that the Finance Act, 2010 has amended the first proviso to section 40(a)(ia) w.e.f. 01-04-2010 and it has been held by various judicial authorities that such amendment is retrospective in nature. It is the submission of the Ld. Counsel for the assessee that the second proviso to section 40(a)(ia) was inserted by the Finance Act, 2012 w.e.f. 01-04-2013 wherein it is stated that disallowance u/s.40(a)(ia) of the Act need not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the I.T. Act., therefore, this should also be held as retrospective since it has been introduced to eliminate unintended consequences which may cause undue hardship to the tax payers. We find some force in the above argument of the Ld. Counsel for the assessee. We find the Cochin Bench of the Tribunal in the case of Antony D. Mundackal [2013 (12) TMI 67 - ITAT COCHIN] relied on by Ld. Counsel for the assessee, had an occasion to decide an issue in the light of the above argument and has restored the issue to the file of the Assessing Officer with certain directions. the assessee is that the second proviso to sec, 40(a)(ia) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58,81,847/- being the labour charges paid. Applying the provisions of section 40(a)(ia) the Assessing Officer disallowed an amount of ₹ 58,81,847/- on which tax has not been deducted and added the same to the total income of the assessee. 4. In appeal the Ld.CIT(A) following the decision of the Special Bench of the Tribunal in the case of Merilyn Shipping and Transport reported in 70 DTR 81 (Visakhapatnam) (SB) deleted the addition on the ground that the assessee has already paid the labour charges to the various persons and no amount remains payable as on 31st March. Therefore, the provisions of section 40(a)(ia) are not applicable to the facts of the present case since nothing remains payable at the end of the accounting year. 4.1 Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 5. The Ld. Departmental Representative referring to the decision of Pune Bench of the Tribunal in the case of Vinay Ashwinikumar Joneja Vs. ITO vide ITA No.1514/PN/2012 order dated 22-10-2013 submitted that the Coordinate Bench of the Tribunal in the said decision has held that provisions of section 40(a)(ia) are applicable even if nothing remains payable if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/Coch/2013 order dated 29-11-2013 for A.Y. 2009-10 he submitted that the Tribunal after thoroughly considering the issue has restored the matter to the file of the Assessing Officer with certain directions. He submitted that since the assessee is arguing this aspect for the first time before the Tribunal which has not been raised before the lower authorities, therefore, he has no objection if the matter is restored to the file of the Assessing Officer to decide the issue in the light of the direction of the Tribunal. 7. The Ld. Departmental Representative in his rejoinder strongly opposed the new arguments being advanced by the Ld. Counsel for the assessee. He, however, submitted that it is upto the discretion of the Bench to take a view as to whether the matter should be restored to the file of the Assessing Officer. 8. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions brought to our notice by both the sides. There is no dispute to the fact that the assessee has not deducted TDS on an amount of ₹ 58,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the polishing works entrusted by the assessee. Further we notice that the CBDT, vide circular No.433 dated 25-09-1985 (1986)(157 ITR St. 27) has clarified that the provisions of sec. 194C are wide enough to cover oral contracts also. A contract is normally reduced in writing in order to make clear the terms and conditions, obligations of the parties to the contract etc. If the conditions of contract are otherwise understood by the parties, in view of the repeated transactions, in our view, the absence of a written contract would not make any difference. In the instant case, the assessee is repeatedly given works to the polishing people and hence the terms and conditions of the work would be clearly understood by both the parties. Accordingly, we reject this contention of the assessee and hold that the provisions of sec. 194C shall apply to the polishing works given by the assessee. 7.1 According to Ld A.R, the assessee has acted as a conduit pipe in connection with the polishing works between the customers and the person doing polishing job. Accordingly, it was submitted that there is no profit element in the said transactions. The Ld A.R further submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to reject the contentions of the assessee on this point also. 7.3 The assessee placed reliance on the decision of Hon'ble Supreme Court in the case of Hindustan Coco-Cola beverages Ltd (supra) in order to contend that the revenue is not entitled to recover taxes, if the recipient has declared the payments in his return of income. We notice that the above said decision was rendered in the context of the provisions of sec. 201(1) and hence, we are of the view that the ratio of the said decision cannot be applied to the disallowance made u/s 40(a)(ia) of the Act, 7.4 The last contention of the assessee is that the second proviso to sec, 40(a)(ia) of the Act, inserted by the Finance Act, 2012 with effect from 1.4.2013 is clarificatory in nature and hence the benefit of the same should be applied retrospectively. However, the correctness of this contention has not been examined by the tax authorities. Hence, in the interest of natural justice, we are of the view that this contention of the assessee requires examination at the end of the assessing officer. Accordingly, we modify the order of the Ld.CIT(A) and set aside this ground to the file of the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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