TMI Blog2013 (1) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... ned - decided in favor of assessee - IT APPEAL NOS. 523 & 524 (RAJKOT) OF 2012 - - - Dated:- 24-1-2013 - T. K. SHARMA (JUDICIAL MEMBER) and D. K. SRIVASTAVA (ACCOUNTANT MEMBER) D. M. Rindani, for the Appellant. Avinash Kumar, for the Respondent. ORDER D.K. Srivastava, Accountant Member Both the appeals have been filed by the assessee. They relate to assessment year 2006-07. While the appeal bearing ITA No. 524/Rjt/2011 is directed against the order passed by the Commissioner of Income-tax on 18-03-2011 u/s 263 of the Income-tax Act by which he has set aside the original order of assessment passed by the AO u/s. 143(3) on 19-11-2008, the other appeal bearing ITA No.523/Rjt/2012 is directed against the order passed by the Commissioner of Income-tax (Appeals) on 20-06-2012. They are being disposed of by a consolidated order for the sake of convenience. 2. The assessee is a firm. It is engaged in the business as a civil contractor. It filed its return of income for the assessment year under appeal on 29-12-2006 returning total income at ₹ 38,960/-. Assessment u/s 143(3) was completed on 19-11-2008 assessing the total income at ₹ 97,670/- after di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. 5. Aggrieved by the aforesaid order of assessment, the assessee filed appeal before the CIT (A), which was dismissed by him with the following observations: 6. I have gone through the assessment order and submissions of appellant. The assessment order has been passed by the Assessing Officer in pursuance of the directions of CIT-III, Rajkot u/s.263 of the I.T. Act with the remark that: Assessing Officer is directed to disallow the sub contract payment to M/s. Rajdhani Construction of ₹ 7047160/- u/s.40(a)(ia) of the IT Act. Similarly, sub-contract payment of ₹ 2082537/- to Ms. Parth Construction should also be verified with reference to payment being made in the Govt. Account on or before the due date of filing of return. CIT-III, Rajkot has given clear directions to the Assessing Officer in respect of disallowance of sub contract payment to M/s. Rajdhani Construction of ₹ 7047160/-. The assessment order of the Assessing Officer is simply giving effect to the direction of CIT-III, Rajkot in respect of disallowance of sub contract payment to M/s. Rajdhani Construction of ₹ 7047160/-. Therefore no appeal can be filed before CIT (A) u/s.246A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law. 2. The Learned C.I.T.-III, Rajkot erred in setting aside the original order u/s.143(3) passed by the I.T.O. Ward 2(2), Junagadh and further erred in directing the I.T.O. to make disallowance u/s.40(a)(ia) of the Act. 3. The earlier C.I.T.-III, Rajkot failed to appreciate that the Proviso to clause (ia) was clarificatory in nature and hence it ought to have been applied to the year under appeal. 8. The aforesaid appeal filed by the assessee is barred by limitation by as many as 485 days. The assessee has applied for condonation of delay. Written submissions filed by the assessee in this behalf read as under: The appellant abovenamed has preferred appeal before the Hon'ble Tribunal against order u/s.263 passed by the C.I.T.-III, Rajkot. The said appeal is delayed by 485 days. An affidavit from the appellant in support of the reasons for the said delay is enclosed herewith. The relevant dates of the history of assessment for the year under appeal may be stated here as under: Date Remarks 19-11-2008 Order passed u/s.143(3) for ₹ 97,670/- 18-03-2911 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prayer for condonation of delay. 10. We have heard both the parties. There is no dispute that there is delay of 485 days in filing the appeal. The delay is not of a few days or few weeks but as long as of 593 days. In Vedabai alias Vaijayanatabai Baburao Patil v. Shantaram Baburao Patil [2002] 253 ITR 798 / 122 Taxman 114 (SC), it has been held that pragmatic approach should be adopted while exercising discretion in condoning delay but a distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former consideration of prejudice to the other side will be a relevant factor and calls for a more cautious approach, in the latter case no such consideration may arise and such a case deserves liberal approach. It is the case of the assessee that it was under bona-fide belief that appeal would lie first before the first appellate authority against the order passed by the AO u/s.143(3) pursuant to the directions given by the Commissioner u/s.263 and therefore it has not filed appeal before this Tribunal against the order passed by the Commissioner. The aforesaid submission is completely unsupported by any material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r submissions. Section 40(a)(ia), as it is now worded, reads as under: Amounts not deductible. 40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession , (a) in the case of any assessee (i) .. (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for 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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d deducted tax at source from the paid charges between the period April 1, 2005 and April 28, 2006 and the same were paid by the assessee in July and August 2006, i. e., well before the due date of 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 to be treated with retrospective operation so that reasonable deduction can be given to the sections as well. In view of the authoritative pronouncement of the Supreme Court, this court cannot decide otherwise. Hence we dismiss the appeal without any order as to costs. 17. Following the aforesaid judgment, we agree with the ld. authorized representative for the assessee that disallowance u/s 40(a)(ia) would not be called for where the assessee has deducted the tax at source in conformity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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