TMI Blog2015 (2) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... relaxing the time for deposit of TDS was made retrospective from the year 2005 [1st April 2005], the amendment by Finance Act 2010 with regard to other limb of time limit for payment of TDS has to be held retrospective not from 1st April 2010 only. If we recall at this stage the speech of Finance Minister while introducing this provision by way of Finance Act, 2010, this amendment essentially has been brought for relaxing the current provision on disallowance of expenditure. The tax, if is deducted at any time during the financial year and paid before the date of filing of the return, the Legislature intended to allow deduction on such expenditure with an intention to permit additional time for most deductors upto September of the next financial year. CIT(A) has rightly deleted the disallowance. See Commissioner of Income Tax, Ahmedabad IV Vs. Om Prakash R Chaudhary [2015 (2) TMI 150 - GUJARAT HIGH COURT]. - Decided in favour of assessee. - ITA No. 176/PNJ/2014, ITA No. 22/PNJ/2013 - - - Dated:- 14-8-2014 - Shri P. K. Bansal And Shri D. T. Garasia,JJ. For the Petitioner : Jitendra Jain, Adv. Pranav Naik, CA For the Respondent : B. Barthakur, Ld. DR ORDER Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid, on or before the due date specified in sub-section (1) of section 139: Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso. Explanation: For the purposes of this sub-clause,- (i) commission or brokerage shall have the same meaning as in Explanation 2 to clause (i) of the Explanation to section 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o whether the amended provision aims to expand the prevailing position and whether the same being in the nature of curative, retrospectivity of the same is permissible as is being contended for and on behalf of the assessee. At this stage, therefore, the true effect of such amendment needs to be discerned. 16.1: It is demonstrated before us that the TDS provision caused unintended inexplicable situation whereby the assessee who deducted the tax at source from the payments made by it for and on behalf of the Government and then if misses out the time limit of depositing the same with the Treasury within the time prescribed, the amount spent for its business purposes on account of the late deposit of such tax would result into disallowance of entire expenditure under Section 40[a](ia). The said proviso thereby caused immense hardship. The amendment under consideration made by the Finance Act 2010 relaxes the rigors of such provision by permitting payment of Tax till the filing of return as provided under sub-section (1) of Section 139 of the Act. 16.2: One can notice that the object of brining about provision of Section 40(a)(ia) in the year 2005 - 06 was to augment compliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is possible apart from literal construction, then that construction needs to be preferred as held in a decision in case of CIT V. Alom Extrusion Limited [Supra]. 16.6: We also cannot be oblivious of submissions not denied by the other side that various representations were made to the Finance Minister to bring about suitable amendment as the assessee otherwise was losing genuine deduction of expenditure on this count as also reflected in the speech of Finance Minister so also in the memorandum explaining the provision of the Finance Bill. 16.7: Giving plain or natural meaning to the amendment as contended by the Department, if is likely to create a situation enhancing the hardship and advance discrimination, purposive and reasonable interpretation is required to be given by the Court. When plain interpretation frustrates the very legislative intent, the Court is expected to bear in mind the legislative intent from the language used in the statue with the help of permissible tools of interpretation of statute. 17: The core issue as to whether the amendment made by the Finance Act 2010 to Section 40[a](ia) of the Act is retrospective from the date of insertion of the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that the rates of TDS may vary between 1% to 10%, whereas, legitimate business expenditure denied is 100% - resulting into taxation of gross receipts coupled with levy of interest and penalty, which would mean that the possibility cannot be ruled out of business of the tax payer getting closed down permanently, if there is absence of any scope of claiming any expenses in the next year. 5.2 Similar view has been taken by the Hon'ble Delhi High Court in the cases of CIT Vs. Oracle Software India Limited reported in 293 ITR page 253 and H.S. Mohindra Traders Vs. I.T.O., Ward 39 (2), New Delhi and Calcutta High Court in the case of CIT Vs. Virgin Creations and by the Hon'ble Karnataka High Court in ITA No. 590/2013 C/W ITA Nos. 333/2012, 457/2013, 319/2009, 242/2012, 334/2012, 12/2013 and 595/2013 in the case of Santosh Kumar Shetty Ors. 5.3 No contrary decision was brought to our knowledge. Respectfully following the aforesaid decision of the Hon'ble Gujarat High Court, in our opinion, no interference is called for in the order of CIT(A). CIT(A) has rightly deleted the disallowance. We, accordingly, dismiss the ground taken by the Revenue. 6. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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