TMI Blog2016 (6) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... b-contract payments as part of its receipts. The grounds of appeal raised by the assessee are thus, allowed as directed. - Decided in favour of assessee. - ITA No. 508/PN/2016, S.A. No. 34/PN/2016 - - - Dated:- 31-5-2016 - Ms. Sushma Chowla, JM And Shri Pradip Kumar Kedia, AM For the Appellant : Shri Vaibhav Rathi For the Respondent : Shri Dheeraj Kumar Jain ORDER Per Sushma Chowla, JM This appeal filed by the assessee is against the order of CIT(A)-2, Nashik, dated 19.01.2016 relating to assessment year 2012-13 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has filed the following grounds of appeal:- 1. The order of the CIT(Appeal) is prejudicial against the assessee on the facts and in the law. On the facts and in the circumstances of the case he ought to have allowed deduction in A.Y. 2012 -13 itself. 2. The learned CIT(Appeals) has erred in ruling by confirming the addition of Piece Work Expense of ₹ 1,52,95,475/- u/s 40(a)(ia) in the year under appeal and allowed as deduction in subsequent year. While doing so the Honourable CIT-Appeal has ignored the fact that assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sub-contract, where the contract or a part of it is executed by another person or a company. The assessee in this regard produced ledger extract of said expenditure in his books of account. The Assessing Officer noted that the assessee had failed to deduct tax at source on the aforesaid payments and since the nature of payment was covered under section 194C of the Act, provisions of section 40(a)(ia) of the Act were attracted. The assessee before the Assessing Officer admitted that no tax was deducted at source after payment made to Mr. Anil Patil, who was the subcontractor. Thereafter, the assessee pointed out that by the Finance Act, 2012, proviso has been inserted and where it had taken into account the said sum in computing his income and had paid taxes due thereon and had also furnished his return of income under section 139 of the Act, the assessee could not be said to be at default. The Assessing Officer was of the view that the said amendment was applicable after the relevant financial year. However, the assessee had placed reliance on the ratio laid down by the Mumbai Bench of Tribunal in Bharti Shipyard Ltd. Vs. DCIT in ITA No.2404/Mum/2009, relating to assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce it is to be allowed in which payee had filed return of income. Consequently, the above said amount was disallowed in the hands of assessee. On the other hand, the plea of assessee was two-fold that, all the amounts which were due to the subcontractor, were paid to him, before the close of year. Secondly, applying the concept of paid or payable, the aforesaid amounts having been paid by the assessee to the payee, did not attract the TDS provisions. We find no merit in the said claim of assessee, in view of various decisions rendered by Pune Bench of Tribunal and reference is being made to ITA No.1752/PN/2013, relating to assessment year 2007-08, order dated 20.02.2015. 8. Now, coming to the second aspect of the issue. The assessee claims that once he had made payments to the sub-contractor, who in turn, had accepted the same as its receipts and had paid taxes thereon and also furnished return of income under section 139(1) of the Act, then the assessee was prevented from deducting the tax at source. We find that the Finance Act, 2012 has inserted a proviso to section 40(a)(ia) of the Act, which inter alia, provides that where the payment has been made to a resident and such r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the disallowance u/s 40(a)(ia) of the Act would not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the Act. The stand of the assessee is that the said proviso should be understood as retrospective in nature as it has been introduced to eliminate unintended consequences which may cause undue hardships to the tax payers. It was pointed out that in similar circumstances, the Pune Bench of the Tribunal in the case of ITO vs. M/s Gaurimal Mahajan Sons vide ITA No.185 2/PN/2012 dated 06.01.2014 following the decision of the Cochin Bench of the Tribunal in the case of Antony D. Mundackal vs. ACIT vide ITA No.38/Coch/2013 dated 29.11 .2013 has restored the matter back to the file of the Assessing Officer. In the precedent dated 06.01.2014 (supra), the Tribunal noted that such a plea was raised for the first time before the Tribunal and the correctness or otherwise of the contentions raised was not examined by the lower authorities. Therefore, the Tribunal restored the matter back to the file of the Assessing Officer for examination afresh, following the decision of the Cochin Bench of the Tribunal in the case of Anton ..... X X X X Extracts X X X X X X X X Extracts X X X X
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