TMI Blog2010 (3) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... AL NO. 665 (MAD.) OF 2009 - - - Dated:- 12-3-2010 - ABRAHAM P. GEORGE, ACCOUNTANT MEMBER J. AND VIJAY PAL RAO, JUDICIAL MEMBER J. Mrs. P.N. Kamala Devi for the Appellant. K.P. Chandrasekaran for the Respondent. Order Per Abraham P. George, Accountant Member. In this appeal filed by the revenue, the effective grounds taken by it are as under : 2. The ld. CIT(A) erred in deleting the disallowance of Rs. 46,70,365 under section 40(a)(ia) on account of freight payments. 2.1 The ld. CIT(A) failed to note that the amendment to section 194C(3) of the Income-tax Act, 1961 came into force w.e.f. 1-6-2005 and therefore the assessee is not entitled to claim exemption from TDS under the shelter of truck operators owning up to two trucks for assessment year 2005-06 under consideration for which previous year had ended on 31-3-2005. 2.2 The ld. CIT(A) failed to observe that the case laws cited by the assessee are not related to an identical issue. 3. The ld. CIT(A) failed to appreciate the fact that the assessee having exceeding the total turn over specified under section 44AB shall be liable to deduct income-tax under section 194C. 3.1 The ld. CIT(A) fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned assessment year. Hence, he came to a conclusion that assessee had failed to deduct tax at source as specified under section 194C. Therefore, on account of such failure, he disallowed the entire expenditure of freight payments Rs. 46,70,365 claimed by the assessee relying on section 40(a)(ia) of the Act. 4. Assessee moved in appeal before the ld. CIT(A) on the above disallowance as well as certain other disallowances made by the Assessing Officer. Two limbs of arguments were taken by the assessee before the CIT(A) on the issue regarding disallowance under section 40(a)(ia) of the Act. First was that the second proviso to clause (i) of sub-section (3) to section 194C, which was added by Finance Act, 2005 had retrospective effect, which as aforesaid, was the same plea taken by the assessee before Assessing Officer also. Second limb of the argument was that the payment of freight charges was not a type of expense coming within sections 30 to 38 of the Act and therefore, the disallowance mentioned in section 40(a)(ia) of the Act could not be applied. Ld. CIT(A) relying on certain comments of ld. writer Sampath Iyengar s Law of Income-tax , Volume 6, 10th Edition, was of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997] 224 ITR 677 and Bharat Hari Singhania v. CWT [1994] 207 ITR 1 for arguing that vis-a-vis provisos, that were inserted to remedy an unintended consequence, rule of reasonable construction had to be applied and treated as retrospective. For arguing that rule of reasonable construction had to be applied while construing a statute, ld. counsel relied on the decision of R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (SC). 7. We have perused the orders and heard the rival contention. The issue involved in this appeal is summarized at para 2 above. Second, and third provisos to clause (i) of sub-section (3) to section 194C was introduced by Finance Act, 2005 with effect from 1-6-2005. Assessee s submission is that these provisos are having only curative effect and by reason of rule of reasonable interpretation, ought to be considered retrospectively. The facts are not disputed that assessee had paid the sum without deducting tax at source and such truck owners to whom the payment of freight charges were made were owning not more than two trucks. Therefore, if the provisos mentioned above had retrospective effect, no doubt, assessee would not be liable to deduct tax at source. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the amount of any sum credited or paid or likely to be credited or paid to the account of, or to the contractor or sub-contractor if such sum does not exceed twenty thousand rupees: Provided that, where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds fifty thousand rupees, the person responsible for paying such sums referred to in sub-section (1) or, as the case may be, sub-section (2) shall be liable to deduct income-tax (under this section) : [ Provided further that no deduction shall be made under sub-section (2), from the amount of any sum credited or paid or likely to be credited or paid during the previous year to the account of the sub-contractor during the course of business of plying, hiring or leasing goods carriages, on production of a declaration to the person concerned paying or crediting such sum, in the prescribed form and verified in the prescribed manner and within such time as may be prescribed, if such sub-contractor is an individual who has not owned more than two goods carriages at any time during the previous year : Provided also that the person responsible for paying an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oming into effect would not make any sense. Hence when Legislature mentions a date from which an amendment has to come into effect, then by implication, it means there is an alteration in law, and more so for provisos added to a statutory section. Here second and third provisos to clause (i) of sub-section (3) to section 194C have been explicitly stated to be coming into effect on 1-6-2005 and hence the argument of the assessee that it has to be construed as retroactive cannot be accepted. No doubt, rule of reasonable construction has to be followed while interpreting a statute, but, nevertheless, when the statute is very clear and there are no unintended hardships insofar as the aggrieved assessee is concerned, there is no reason to read retrospectively to a provision, which has been specifically mentioned to be applicable from a particular date. In the case of Allied Motors (P.) Ltd. (supra), relied on by the assessee, the Hon ble Apex Court was dealing with first proviso to section 43B(a) and Explanation 2 thereof. It was held that Explanation 2 being retrospective, first proviso also had put so construed. This was on account of reason that the proviso supplied an obvious omissi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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