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ACIT, Circle-16 (2) Hyderabad Versus M/s. Parnika Constructions P. Ltd., Hyderabad

2015 (7) TMI 644 - ITAT HYDERABAD

Disallowance under section 40(a)(ia) - late deposit of TDS into the Government account - CIT(A) deleted disallowance by holding that the relevant amendment made to section 40(a)(ia) by Finance Act, 2010 was applicable with retrospective effect - Held that:- The issue involved in this appeal of the Revenue is squarely covered in favour of the assessee by the decision of CIT vs. Virgin Creations (2011 (11) TMI 348 - CALCUTTA HIGH COURT ) as well as the various decisions of the Coordinate Benches o .....

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29.10.2007 i.e., before the due date of filing of return of income for the year under consideration and this being the undisputed position, we uphold the impugned order of the Ld. CIT(A) deleting the disallowance made by the A.O. under section 40(a)(ia). - Decided against revenue. - ITA.No.470/Hyd/2015 - Dated:- 10-7-2015 - Shri P.M Jagtap and Shri Saktijit Dey, JJ. For the Petitioner : Mr. Ramakrishna Bandi For the Respondent : Mr. Mohd. Afzal ORDER PER P.M. JAGTAP, A.M. This appeal filed by th .....

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ring total income of ₹ 13,02,069. During the course of assessment proceedings, the assessee was called upon by the A.O. to furnish the relevant details of TDS made on sub-contract payments of ₹ 1,16,89,768 made during the year under consideration and also to file the proof of payment of the same into Government account within the stipulated time. From the perusal of the details furnished by the assessee, it was noticed by the A.O. that the tax amount of ₹ 1,19,236 deducted by t .....

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7.12.2009. 3. Against the order passed by the A.O. under section 143(3), an appeal was preferred by the assessee before the Ld. CIT(A) disputing the disallowance made by the A.O. under section 40(a)(ia). During the course of appeal proceedings before the Ld. CIT(A), the following submissions were made by the assessee in writing in support of its stand on this issue. "The assessee is a private limited company engaged in the business of executing civil works, filed its return of income electr .....

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was of the opinion that in the facts and circumstances of the case the provisions of the section 40[a][ia] of the IT Act are applicable and therefore, disallowed the amount paid to subcontractors amounting to ₹ 96,39,767/-. In this regard it is respectfully submitted the provisions of section 40[a][ia] of the IT Act, were inserted by the Finance Act [No.2] 2004 w.e.f. 01-04- 2005 and subsequently it was amended by the Finance Act 2008 and further amended by the Finance Act 2010 with retros .....

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technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work); on which tax is deductible at source under Chapter XVIIB and such tax has not been deducted or, after deduction, [has not been paid on or before the due date specified in sub-section (J) of section 139:J [Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has .....

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amendment is that now the assessee deducting tax either in the last month of the previous year or first eleven months of previous year shall be entitled to deductions of the expenditure in the year of incurring it, if the tax so deducted at source is paid on or before the due date u/s 139[1]. The question as whether the amendment by the Finance Act 2010 is prospective or retrospective from 01-04-2005, The issue came up before the Hon'ble ITAT, Kolkatta Bench, in the case of Virgin Creations .....

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decision of Hon'ble I TAT, Kolkatta and also the Hon'ble Kolkatta High Court, it has extracted the relevant parts from the Kolkatta High Court, which is in para 16, is reproduced here under; 16. As against the aforesaid decision the Revenue preferred appeal before the Hon'ble Calcutta High Court. The Hon'ble Calcutta High Court in ITA No. 302 of 2011 GA 3200/2011 decided on 23.11.2011, held as follows: "We have heard Mr. Nizamuddin and gone through the impugned judgment and .....

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filing of the return of income for the year under consideration. This factual position was undisputed. Moreover, the Supreme Court, as has been recorded by the learned Tribunal, in the case of Allied Motors Pvt. Ltd. and also in the case of Alom Extrusions Ltd., has already decided that the aforesaid provision has retrospective application. Again, in the case reported in 82 ITR 570, the Supreme Court held that the provision, which has inserted the remedy to make the provision workable, requires .....

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s of Sec. 40(a)(ia) of the Act, by the Finance Act, 2010 as aforesaid was held to be retrospective from 1.4.2005. If the amendment is considered as retrospective from 1.4.2005, the effect will be that payments of TDS to the credit of the Government on or before the last date for filing return of income u/s. 139(1) of the Act for the relevant A Y have to be allowed as deduction. Admittedly in the case of the Assessee payments were so made before the said due date and in terms of the decision of t .....

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h Hyderabad has held that the provisions are retrospective in nature. The Hon'ble Bench has considered all its earlier decisions and also the Bombay Special Bench decision and also the Hon'ble Calcutta High Court decision, while reiterating the retrospective nature of the provision. Copy of the judgment in the case of M/s IVRCL Infrastructure & Projects Ltd Hyderabad, is enclosed for kind perusal. Therefore, it is respectfully submitted that considering the rationale of Hon'ble I .....

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er clarifications the under signed is obliged to furnish the same. 4. Keeping in view the submissions made by the assessee, the Ld. CIT(A) held that the relevant amendment made to section 40(a)(ia) by the Finance Act, 2010 was applicable retrospectively from 01.04.2005 as held by the Hon ble Kolkata High Court in the case of CIT vs. Virgin Creations in ITA.No.302 of 2011 GA 3200/2011 dated 23.11.2011 as well as the various Benches of the ITAT in the cases cited by the assessee and consequently, .....

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