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2016 (12) TMI 1493 - ITAT AHMEDABAD

2016 (12) TMI 1493 - ITAT AHMEDABAD - TMI - Disallowance made u/s 40(a)(ia) - No tax deducted at source on the expenditure of job work - time of depositing TDS before the due date of filing return - Held that:- From going through the judgment of Hon. Jurisdictional High Court in the case of CIT vs. Omprakash R. Chaudhary (2015 (2) TMI 150 - GUJARAT HIGH COURT ) and the appellate order of ld. CIT(A) and various other judicial pronouncements it is now settled issue that amendment u/s 40(a)(ia) of .....

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ive, we do not find any reason to interfere with the order of ld. CIT(A) and uphold the same. - Decided against revenue - ITA No. 2776/Ahd/2013 - Dated:- 23-12-2016 - Shri R. P. Tolani, JM & Shri Manish Borad, AM. For The Appellant : Shri K. Madhusudan, Sr.DR For The Respondent : Shri U. S. Bhati, AR ORDER PER Manish Borad, Accountant Member. This appeal of Revenue for Asst. Year 2006-07 is directed against the order of ld. CIT(A) -XX, Ahmedabad, dated 30.09.2013 vide appeal No.CIT(A)-XX/104 .....

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holding that the amendment introduced by Finance Act 2000 in Section 40(a)(ia) of the Act are clarificatory & have retrospective effect and hence no disallowance be made u/s.40(a)(ia) of the Act, where T.D.S. has been paid before the due date of filing of R.o.l. 2) On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals)-XX, Ahmedabad ought to have upheld the order of the Assessing Officer. 3) It is therefore, prayed that the order of the Ld. Commissio .....

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Thereafter it was noticed by the Assessing Officer from form No.26Q that tax deducted u/s 194-C of the Act was deposited after the expiry of time limit prescribed u/s 200(1) of the Act and, therefore, notice u/s 148 of the Act was issued on 20.09.2011. The assessee vide its letter dated 10.10.2011 replied that the return filed on 30.10.2006 may be treated as return filed u/s 148 of the Act. The Assessing Officer further issued notice u/s 143(2) of the Act on 20.10.2011. Due to change of incumben .....

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sing Officer. 6. At the outset the ld. AR submitted that the issue is covered in favour of assessee by the judgment of Hon. Gujarat High Court in the case of CIT vs. Omprakash R. Chaudhary in Tax Appeal No.412 of 2013 and others. Therefore, ld. CIT(A) has rightly deleted the impugned addition. 7. We have heard the rival contentions and perused the material placed before us. Solitary grievance of the Revenue in this appeal is against the action of ld. CIT(A) deleting the disallowance made u/s 40( .....

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g of return. The only anomany between the two parties arises as the ld. Assessing Officer made disallowance with the contention that TDS deducted was not deposited within the prescribed time limit as provided u/s 40(a)(ia) of the Act whereas assessee s submission was that TDS for first three quarters was duly deducted and deposited before the close of the Financial Year and the remaining amount of TDS was paid well before the due date of filing the return as per section 139(1) of the Act. We fur .....

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The A.R. of the appellant has contended that although TDS was made correctly but the same was deposited in government account by the due date u/s 139(1) of I.T. Act. The total TDS amount was at ₹ 90.264/- Out of the same Rs,62,620/- was deposited by 31.6.06 and the balance of ₹ 28,014/- deposited on 30.05.06 i.e. in the subsequent year but before due date of filing of return of income. Further it was contended that since all TDS amounts were deposited within due date u/s 139 and hen .....

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filing of the return, requirements of law would be fulfilled. It Was oft this basis that tribunal was of (he opinion (hat (he assessee committed no wrong and was therefore, entitled to seek deduction of ₹ 32,94,14 from the income which amount the assessee had deducted from payments of contractors and had also deposited with revenue before the last date of filing of the return. We do not find any illegality in order of tribunal. Appeal is therefore dismissed". In view of the judgments .....

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ction 40(a)(ia) is called for. The disallowance made by the A.O. is deleted subject to verification of TDS deposits made on aforesaid dates from challans and other records. The ground of the appellant is allowed for statistical purposes. 8. We further observe that in the judgment of Hon. Gujarat High Court in the case of CIT vs. Omprakash R. Chaudhary (supra) relied on by the assessee it has been held that amendment introduced by the Finance Act 2010 in section 40(a)(ia) of the Act is not just c .....

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ate of tiling of the return in respect of even those instances where TDS has been deducted during the first eleven months of the previous year. The additional time till the due date of filing of the return, in case of TDS made during the last month of the previous year was already available by the amendment made by Finance Act 2008. Thus, it is apparent that the relaxation made by the amendment made under the Finance Act, 2010 brings the law in parity with the aforementioned situation and accord .....

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while introducing this provision by way of Finance Act, 2010, this amendment essentially has been brought for relaxing the current provision on disallowance of expenditure. The tax, if is deducted at any time during the financial year and paid before the date of filing of the return, the Legislature intended to allow deduction on such expenditure with an intention to permit additional time for most deduc.tors upto September of the next financial year. 17.1 We draw further support from the fact t .....

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correspondingly from one per cent to one and half per cent for every month or part of month for discouraging delay in deposit. 17.1 As rightly contended by the respondents arithmetical discrepancy can be well judged from the fact that the rates of TDS may vary between 1% to 10%, whereas, legitimate business expenditure denied is 100% - resulting into taxation of gross receipts coupled with levy of interest and penalty, which would mean that the possibility cannot be ruled out of business of the .....

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1) of the Act, considered the apparent difference where an unintended benefit was given to the assessee who deducted the entire year's TDS in the month of March of the previous year which were eligible to pay TDS so deducted to the Government by due date of filing of the return under Section 139 (1) of the Act. However, the assesses who may have deducted the tax in earlier months beginning from April to the end of February of the previous year, did not get such benefit of extended time and t .....

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challenging the constitutional validity of this provision of Section 40 [a](ia) of the Act, Delhi High Court has read down a similar provision, as reported in case of Commissioner of Income-tax v. Oracle Software India Limited, reported in 293ITR 353. 17.4 We also notice that the Calcutta High Court in case of CIT v. Virgin Creations [Supra], relying on the decision in cases of Allied Motors Private Limited and Alom Extrusions Limited [Supra], held that the said provision would have retrospectiv .....

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rs Private Limited and also in the case of Alorn Extrusions Limited 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 provisions workable, requires to be treated with retrospective operation so that reasonable deduction can be given to the selection as well. In view of the authoritative pronouncement of the Supreme Court, this Court cannot .....

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did deduct, as required before 31ht March 2006. The same was, however, deposited with the Revenue on 30th May 2006. We are concerned with the Assessment Year 2006- 07. Revenue contends that such deposit of the tax at source was beyond the time prescribed and therefore, provision of Section 40[a](ia) of the Act would apply. The Tribunal, however, ruled in favour of the assessee relying on the decision of the Delhi Bench of the Tribunal in case of H.S Mohindra Traders v. Income-tax Officer, Ward .....

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partment in April 2007 ie., much before the due date specified in sub-section (1) of Section 139 of the Income Tax Act for filing the return. In these circumstances, we are of the opinion that the Income Tax Appellate Tribunal [hereinafter referred to as, "the Tribunal"] has rightly interpreted the provision of Section 40 (a)(ia) and particularly, sub-clause (A) thereof which clearly gives the time to the assessee to deposit the IDS on or before the due date specified in sub-section (1 .....

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r before the expiry of the time prescribed under sub-section (1) of Section 200" of the Act. We, thus, find no merit in this appeal. This Appeal is accordingly dismissed." We are broadly in agreement with the view expressed by the Delhi High Court. The issue being identical, the present Tax Appeal is also dismissed." 18. From the discussion held hereinabove, we answer the substantial question of law raised in these Appeals in favour of the assessee and against the Revenue by holdi .....

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