TMI Blog2016 (4) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... re the ld.CIT(A), the assessee has given separate account of replacement of spares and labour charges. The assessee has relied on the judgement of the Hon’ble High Court of Delhi in the case of CIT vs. Ansal Land Mark Township (P) Ltd. reported at (supra), wherein it has been held that the amendment in the Finance Act, 2012, dated 01/04/2013 being curative to be treated as retrospective in nature. Accordingly we direct the AO to decide the issue in the light of the judgement of the Hon’ble High Court of Delhi in the case of Ansal Land Mark Township (P) Ltd. The rationale behind the insertion of the second proviso to section 40(a)(ia) of the Act and its conclusion that the said proviso is declaratory and curative and has retrospective effect from April 1, 2005, merits acceptance.” Needless to say that the Assessing Officer will afford reasonable opportunity of being heard to the assessee(s) and then decide the issue afresh" - MA No. 99/Ahd/2015, MA No.100/Ahd/2015, I.T.A. Nos.1414 & 1415/Ahd/2011 - - - Dated:- 4-3-2016 - SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER And SHRI KUL BHARAT, JUDICIAL MEMBER For The Applicant : Shri S.N. Soparkar, AR For The Respondent : Shri Nagendra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.] 3.1. We find that this Tribunal in ITA Nos.1414 1415/Ahd/2011 for AY 2006-07 vide order dated 21/10/2015 has decided the issue by observing as under:- 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The AO made disallowance on the basis that the assessee was required to deduct the tax on the commission receipts. It is the contention of the assessee that these receipts are not of the contractual in nature. However, the ld.counsel for the assessee submitted that the receipts have been offered to tax by the concerned party. In respect of other issues, i.e. non-deduction of tax, the authorities have failed to appreciate the fact that the payments were not exceeded ₹ 50,000/- and wherever such payments which exceeded ₹ 20,000/- has been accepted for disallowance. 4.1. After considering the rival submissions and perusing the material available on record, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusing the material available on record, we find that the ld.CIT(A) in respect of disallowance of ₹ 3,66,469/-, has held that the tax was required to be deducted. The contention of the ld.counsel for the assessee is that there was no contractual terms for the payment of commission. Alternatively, it is submitted that the concerned party has offered the receipts as income for the year under appeal and in respect of the second disallowance of ₹ 4,58,971/-, it is contended that the payments did not exceed the prescribed limit, therefore there was no requirement to deduct the tax. We find that the AO has made disallowance on the basis that the expenditure, like spare-parts expenses of ₹ 1,17,237/- and tyre tube expenses of ₹ 5,23,119/- are separately debited in the profit loss account. Therefore, it can be assumed that the repairs and maintenance expenses of ₹ 4,58,971/- debited to the profit loss account was purely in the nature of labour charges for repairs and maintenance and did not include any expenditure on account of purchase of any components/parts. We find that the AO has not made any enquiry with regard to the nature of expenditure. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... punishing a lapse are two different things and have distinctly different, and sometimes mutually exclusive, connotations. When we appreciate the object of scheme of section 40(a)(ia), as on the statute, and to examine whether or not, on a 'fair, just and equitable' interpretation of law-as is the guidance from the hon'ble Delhi High Court on interpretation of this legal provision, in our humble understanding, it could not be an 'intended consequence' to disallow the expenditure, due to non-deduction of tax at source, even in a situation in which corresponding income is brought to tax in the hands of the recipient. The scheme of section 40(a)(ia), as we see it, is aimed at ensuring that an expenditure should not be allowed as deduction in the hands of an assessee in a situation in which income embedded in such expenditure has remained untaxed due to tax withholding lapses by the assessee. It is not, in our considered view, a penalty for tax withholding lapse but it is a sort of compensatory deduction restriction for an income going untaxed due to tax withholding lapse. The penalty for tax withholding lapse per se is separately provided for in section 271C, and, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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