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2016 (2) TMI 508 - ITAT PUNE

2016 (2) TMI 508 - ITAT PUNE - TMI - Applicability of the provisions of section 40(a)(ia) - whether the provisions of section 40(a)(ia) are attracted to the facts of the present case after the amendment introduced by the Finance Act, 2010 where the tax has not been paid by the specified date but paid before the due date of filing of return u/s.139(1) - Held that:- Since in the instant case the assessee has admittedly deposited the tax so deducted before the due date of filing of return of income .....

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e Revenue is directed against the order dated 31-10-2013 of the CIT(A)-I, Pune relating to Assessment Year 2007-08. 2. The only effective ground raised by the Revenue reads as under : "1. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the disallowance of ₹ 60,02,351/- made u/s.40(a)(ia) of the I.T. Act, 1961 holding that the amendment introduced by the Finance Act, 2010 was retrospective in operation de hors the decision of the Special Bench of Hon .....

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were incurred by the assessee till the month of February 2007. According to the AO tax on these expenses was deductible on 7th day of the month following the month in which such expenses are debited. Since the assessee has deducted the tax at source in the month of March 2007 and paid the same in the month of April 2007, therefore, the AO applying the provisions of section 40(a)(ia) of the I.T. Act disallowed the amount of ₹ 60,02,351/- to the total income of the assessee. 4. Before CIT(A .....

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expenditure in the relevant assessment year if the TDS is credited to the Government Treasury on or before the due date of filing of return of income u/s.139(1) of the I.T. Act. Relying on the following decisions it was submitted that the amendment made by the said Finance Act, 2010 are retrospective in nature : 1. Virgin Creations - GA 3200/2011 dated 23-11-2011 2. CIT Vs. Rajinder Kumar - ITA No.65/2013 3. CIT Vs. Naresh Kumar - ITA No.24/2013 and CIT Vs. Talbross P. Ltd 4. ITO Vs. Anand Buil .....

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T(A) the Revenue is in appeal before us. 7. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only dispute in the ground raised by the Revenue is regarding the applicability of the provisions of section 40(a)(ia) of the Act to the assessee or not in view of the amendment introduced by the Finance Act 2010 where the tax has not .....

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introduced by the Finance Act, 2010. We find an identical issue had come up before the Pune Bench of the Tribunal in the case of ITO Vs. Anand Buildcon vide ITA No.1168/PN/2011 for A.Y. 2007-08. We find the Tribunal vide order dated 27-09-2012 has decided the issue in favour of the assessee and dismissed the ground raised by the Revenue by observing as under : "6. We have carefully considered the rival submissions. Factually speaking, in this case, the tax has been deducted at source on pa .....

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ing tax at source at any time in the previous year shall be entitled to deduction of the expenditure in the year of its incurrence so long as the tax deducted has been deposited in the State Exchequer on or before the due date for filing of the return specified u/s 139(1) of the Act. Clearly, the case of the assessee is covered by the said amendment inasmuch as the tax deducted at source of ₹ 21,144/- with respect to labour payment of ₹ 19,99,800/- has been deposited on 31-5-2007 whi .....

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d not be held to be retrospective from the A.Y. 2005-06. It was therefore, submitted that the contents of the aforesaid amendment carried out by the Finance Act, 2010 cannot ipso facto apply to the present case of assessment year 2007-08, which is prior to the assessment year 2010- 11. 7. However, it is noticed that subsequent to the decision of the Special Bench in the case of Bharati Shipyard Ltd (supra), an identical issue came up before the Calcutta High Court in the case of Virgin Creations .....

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ed 23-11-2011 (supra), the impugned amendment made to the provision of section 40(a)(ia) by the Finance Act, 2010 has been held to be retrospective from 1-4-2005. As a result thereof, it has to be understood that from 1- 4-2005 the effect would be that the payment of TDS to the credit of Government made on or before the due date for filing of the return u/s 139(1) of the Act for the relevant assessment year would mitigate the rigors of section 40(a)(ia) of the Act with respect to the correspondi .....

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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 2010to the provisions of sec. 40(a)(ia) of the Act are prospective and not retrospective from 1-4-2005 or the decision of the Hon'ble Calcutta High Court taking a contrary view. On the above question, the learned counsel for the assessee brought to our notice the decision of the ITAT Delhi Bench in the case of Tej International (P) Ltd. Vs. Dy. CIT .....

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o 1168 and CO 76/PN/11 Anand Buildcon A.Y. 2007-08 Court does not really alter this position as laid down by the Hon'ble Bombay High Court in the case of CIT Vs. 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 provisions of sec. 40(a)(ia) of the Act by the Finance Act, 2010 is retrospective from 1-4-2005. Consequently, any payment of tax deducted at source during previous years releva .....

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