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2015 (3) TMI 1067 - ITAT MUMBAI

2015 (3) TMI 1067 - ITAT MUMBAI - TMI - TDS U/S 194C not made within the due date - Disallowance made under section 40(a)(ia) - CIT(A) deleted the disallowance - Held that:- CIT(A) has committed no error in deleting the disallowance by following the decision of IT AT Mumbai in the case of Piyush C. Mehta(2012 (4) TMI 349 - ITAT MUMBAI ) in which it has followed the decision of Hon'ble Calcutta High Court in the case of Virgin Creation (2011 (11) TMI 348 - CALCUTTA HIGH COURT ) to held Amendment .....

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filing return of income u/s.139(1) of the Act and therefore the impugned disallowance deserves to be deleted - Decided in favour of assessee. - ITA No. 1456/MUM/2013 - Dated:- 24-3-2015 - I. P. Bansal (Judicial Member) And Rajendra (Accountant Member) For the Petitioner : Shri Rajesh Ranjan Prasad For the Respondent : None ORDER I. P. Bansal (Judicial Member) This is an appeal filed by the Revenue and it is directed against order passed by Ld. CIT(A)-I, Mumbai dated 7/12/2012 for assessment yea .....

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the case and in law, the Ld CIT(A) erred in deleting the disallowance without considering the decision of the Hon'ble Andhra Pradesh High Court granting interim suspension of the order of Hon'ble ITAT, Spl.Bench, Visakhapatnam in the case of M/s.Merilyn Shipping & Transports, Visakhapatnam for A. Y .2005-06 where in the similar issue of applicability of the amendment in the provisions of section 40(a)(ia) of the Act was contested 3. For these and other reasons it is submitted that th .....

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disallowed amount TDS has been deducted and paid on 26/09/2009 i.e. before the due date of filing the return and on these facts Ld. CIT(A) has given relief to the assessee by following the order of ITAT Mumbai in the case of Piyush C. Mehta vide order dated 1114/2012 in ITA No.1321/Mum/2009, the relevant observations from the said order has been reproduced in the order of Ld. CIT(A) in para 4.5 and in this manner Ld. CIT(A) has granted relief to the assessee. The Department is aggrieved, hence, .....

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ns of Finance Act,2010 issued by CBDT for section 40(a)(ia), it has been clearly mentioned that the provision would be applicable from 01/04/2010 and will be applicable to assessment year 2010-11 and subsequent years. Thus the only case of the Department in the present case is that the benefit of payment upto due date of filing the return cannot be extended to assessment earlier to assessment years 2010-11. The present year being 2009-10 such benefit has wrongly been granted by Ld. CIT(A) and hi .....

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cer and the written submissions of the Authorized Representative of the appellant. The fact is that appellant claimed sub­ contract charges of ₹ 33, 43, 18,934/- in the Profit & Loss Account. Out of this the Assessing Officer has held that in the case of following RA bills TDS has been deducted and paid into the government account in time. The bills are RA Bill No. 4 ₹ 4,90,00,031/-(Part) RA Bill No. 5 ₹ 8,29,87,749/- RA bill No. 6 Rs.21,04,07,107/- The Assessing Office .....

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turn they have to be disallowed as per the provisions of section 40(a) (ia). He has disallowed amount of ₹ 12,39,11,8271-. As has been discussed earlier appellant has claimed that his case is covered by the decision of Calcutta High Court in the case of Virgin Creations ITA No. 302 of 2011. I find that the only issue is to be decided is whether in the case of the appellant, disallowance can be made under the provisions of section 40(a)(ia) taking into consideration the fact that the appell .....

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of Piyush C. Mehta in ITA No. 13211M/09 dt. 11.4.2012. In the order of Piyush C. Mehta the Jurisdictional ITAT has followed Kolkatta High Court in the case of Virgin Creation ITA No. 302 of2011 and has concluded as under: 18. The question now is as to whether to follow the decision. of the Hon'ble Special bench which has taken the view that Amendment by the Finance Act, 2010 to the provisions of Sec.4 0 (a) (ia) of the Act is prospective and not retrospective from 1.4.2005 or the decision of .....

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ws on a an issue, normally, the decision of the higher judicial authority is to be followed. The Bench has further held that the fact that the judgment of the higher judicial forum is from a non- jurisdictional High court does not really alter this position, as laid down by the Hon'ble Bombay High Court in the case of CIT v. Godavaridevi Saraf 113 ITR 589(Bom) . 19. In view of the above, we hold following the decision of the Hon'ble' Calcutta High Court that Amendment to the provisio .....

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for filing return of income u/s.139(J) of the. Act and, therefore the impugned disallowance deserves to be deleted. We order accordingly and allow the appeal by the Assessee". In other words the ITAT has held that the decision of Bharati Shipyard Ltd. by Special Bench Mumbai has been reversed by the decision of Virgin Creations by Kolkotta High Court. It is concluded by ITA T that the order of the High Court will prevail over the decision of Special Bench. It is also observed by the ITAT th .....

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aid to the Government account before filing of return of income. Respectfully following the decision of Calcutta High Court and also decision of jurisdictional IT AT in the cases cited supra the disallowance u/s. 40(a)(ia) amounting to ₹ 12,39, 11,827/- is deleted. " 5.1 In view of above discussion, the only question we have to decide is that whether Ld. CIT(A) has committed any error in deleting the disallowance by following the decision of IT AT Mumbai in the case of Piyush C. Mehta .....

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2010 is retrospective. The Revenue had taken a plea that Finance Act, 2010 expressly states that such provision would come into w.e.f. 114/2010, therefore, it was not permissible by Tribunal or Courts to give it a retrospective effect prior to date. To such arguments of Department it was held that the amendment was curative in nature i.e. it allows additional time upto to due date of filing of return in respect of even those instances where TDS had been deducted during the first eleven months o .....

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f Karnataka High Court are reproduced below: "5. The argument of the Revenue is, when the Finance Act, 2010, expressly states that the said provision would come into effect from 01.04.2010, it is not permissible for the Tribunals or the Courts to give it a retrospective effect prior to the date and therefore, it is submitted that the order passed by the Tribunal holding it as retrospective notwithstanding the fact that the parliament made its intention clear by declaring that it comes into .....

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d as under: "15.4: Thus, considering relevant legislative changes made by the Parliament from time to time and. some of the decisions relevant to consider the question of retrospectively raised in these present appeals, the focal question, therefore, would be whether the amendment brought about by way of Finance Act 2010 in Section 40 (a)(ia) with effect from 1st April 2010 could be said to be clarificatory in nature for attending to unintended consequences, and therefore, is having retrosp .....

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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 .....

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with the other provisions of Chapter XVIL such amount shall not be deducted in computing the 'income' chargeable under the head 'Profit & Gains' of business or profession. Such provision starts with non obstante clause which states that notwithstanding anything contained in Section 30 to 38 of the Income-tax Act, if the tax deducted at source is not paid within prescribed time [under Section 200 (1)}, no amount could be deducted while computing the income, under Chapter IV of .....

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anomaly whereby tax deducted in the last month was permitted payment till filing of return as per sub-section (1) of Section 139 whereas for the TDS deducted during the rest of the months, period was provided only till 31st March of the previous year, Finance Act, 2010 was brought. To bring parity, to remedy unintended consequences and to make the provision workable, it proposed to amend the said provision and provided inter alia that no disallowance would be made if after deduction of tax durin .....

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the effect is limited to A. y. 2010-11 and subsequent years only. Strict construction if leads to a result not intended to be fulfilled by the object of legislation and another construction 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 bri .....

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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 provision i.e., 1st April 2005 therefore needs to be answered in affirmation. It can be seen that the amendment made by th .....

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w in parity with the aforementioned situation and accordingly, for the TDS deducted all throughout the year, time is extended from payment till the filing of return. It is thus apparent that when the amendment introduced by the Finance Act, 2008 of relaxing the time for deposit of TDS was made retrospective from the year 2005 [lst 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 20 I 0 only. .....

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next financial year. 17.1: We draw further support from the fact that the rigor of payment of interest is also enhanced by increasing the interest charged on tax deducted, if any deposit by the specified date i.e., up to the filing of the return is not made from 12% to 18% per annum in the provision of Section 201( 1 A). Prior to the said amendment of Finance Act, 2010 under Section 201(IA), assessee was liable to pay simple interest at one per cent for every month or part of month, in case of f .....

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