TMI Blog2018 (5) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... on existed even at the time of its insertion. Since the assessee has filed its returns on 01.08.2005 i.e., in accordance with the due date under the provisions of Section 139 IT Act, hence, is allowed to claim the benefit of the amendment made by Finance Act, 2010 to the provisions of Section 40(a)(ia) of the IT Act. - Civil Appeal Nos. 4339-4340 of 2018 (Arising out of Special Leave Petiton (C) Nos. 24362-24363 of 2013 - - - Dated:- 24-4-2018 - CIVIL APPEAL No.4622 OF 2018 (Arising out of Special Leave Petition (C) No. 11139 OF 2014 CIVIL APPEAL No. 4621 OF 2018 (Arising out of Special Leave Petition (C) No. 18274 OF 2014 CIVIL APPEAL No. 4467 OF 2018 (Arising out of Special Leave Petition (C) No. 11140 OF 2014 CIVIL APPEAL No. 4660 OF 2018 (Arising out of Special Leave Petition (C) No. 6406 OF 2017 CIVIL APPEAL No. 4446 OF 2018 (Arising out of Special Leave Petition (C) No. 14698 OF 2014 CIVIL APPEAL No. 4449 OF 2018 (Arising out of Special Leave Petition (C) No. 26649 OF 2014 CIVIL APPEAL No. 4448 OF 2018 (Arising out of Special Leave Petition (C) No. 22282 OF 2014 CIVIL APPEAL No. 4451 OF 2018 (Arising out of Special Leave Petition (C) No. 19974 OF 2014 CIVIL APPEAL No. 4468 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petition (C) No. 9747 OF 2015 CIVIL APPEAL No. 4483 OF 2018 (Arising out of Special Leave Petition (C) No. 17567 OF 2016 CIVIL APPEAL No. 4648 OF 2018 (Arising out of Special Leave Petition (C) No. 9904 OF 2015 CIVIL APPEAL No. 4391 OF 2018 (Arising out of Special Leave Petition (C) No. 19169 OF 2015 T.C. (C) No. 102 OF 2015 CIVIL APPEAL No. 4649 OF 2018 (Arising out of Special Leave Petition (C) No. 28514 OF 2015 CIVIL APPEAL No. 4480 OF 2018 (Arising out of Special Leave Petition (C) No. 28447 OF 2015 CIVIL APPEAL No. 4615 OF 2018 (Arising out of Special Leave Petition (C) No. 13854 OF 2016 CIVIL APPEAL No. 4485 OF 2018 (Arising out of Special Leave Petition (C) No. 16454 OF 2016 CIVIL APPEAL No. 4618 OF 2018 (Arising out of Special Leave Petition (C) No.11452 OF 2018 @ SLP(Civil)... CC No. 11917 OF 2016 CIVIL APPEAL No. 4552 OF 2018 (Arising out of Special Leave Petition (C) No.11202 OF 2018 @ SLP(C)... CC No. 12371 OF 2016 CIVIL APPEAL No. 4650 OF 2018 (Arising out of Special Leave Petition (C) No. 23676 OF 2016 CIVIL APPEAL No. 4486 OF 2018 (Arising out of Special Leave Petition (C) No. 26173 OF 2016 CIVIL APPEAL No. 4651 OF 2018 (Arising out of Special Leave Petition (C) No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the High Court at Calcutta in GA No. 2029 of 2012 ITAT No. 175 of 2012 whereby a Division Bench of the High Court dismissed the appeal filed by the Appellant against the order dated 29.02.2012 passed by the Income Tax Appellate Tribunal (in short the Tribunal ) in ITA No. 1487/Kol/2011. 3) Brief facts:- (a) M/s. Calcutta Export Company - the Respondent is a partnership firm and is a manufacturer and exporter of casting materials having its principal place of business at Kolkata. The Respondent filed its return of income for the Assessment Year 2005-06 for ₹ 4,18,17,910/-. The case was selected for scrutiny and the assessment under Section 143(3) of the Income Tax Act, 1961 (in short the IT Act ) was completed on 28.12.2007. The Assessing Officer, vide order dated 12.10.2009, disallowed the export commission charges paid by the assessee to M/s. Steel Crackers Pvt. Ltd. amounting to ₹ 40,82,089/- while stating that the tax deducted at source (TDS) on such commission amount on 07.07.2004, 07.09.2004 and 07.10.2004 ought to have been deposited by the Respondent before the end of the previous year i.e. 31.03.2005 to get the commission amount deducted from the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relying on the decision given by the jurisdictional High Court in ITAT No. 302/2011 (G.A. No. 3200/2011) considering the fact that no appeal was preferred against the said judgment considering the low tax effect in the said matter. 9) Learned senior counsel finally contended that though the tax effect is low in the present case also and the High Court has decided the issue in favour of the tax payer but in similar situation in the case of Bharati Shipyard Ltd. vs. Deputy CIT (ITA No. 404/Mumb/2009) the Special Bench of the ITAT has decided the issue in favour of the Revenue on 09.09.2011. Learned senior counsel finally contended that in view of the conflicting opinions by the coordinate Benches, correct interpretation of law is required by this Court. 10) Per contra, learned senior counsel appearing on behalf of the Respondent submitted that the purpose of insertion of provisions of Section 40(a)(ia) of the IT Act was to ensure the compliance of TDS provisions and not to punish those assessees who have deducted and paid the TDS to the government sooner or later. The said purpose is also very much clear from the amendment made in 2008 and further by the amendment in 2010 to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section(1) of section 200; 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 in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. 15) The purpose of bringing the said amendment to the existing provision of Section has been highlighted in the memorandum explaining the provision which reads as under:- With a view to augment compliance of TDS provisions, it is proposed to extend the provisions of the section 40(a)(ia) to payments of interest, commission or brokerage, fee for professional services or fee for technical services to the residents and payments to a residential contractor or sub-contractor for carrying out any work (including supply of labour for carrying out any work), on which tax has not been deducted or after deduction, has not been paid before the expiry of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in sub-section (1) of section 139; or (B) in any other case, on or before the last day of the previous year; Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted (A) during the last month of the previous year but paid after the said due date; or (B) during any other month of the previous year but paid after the end of the said previous year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. 19) The above amendments made by the Finance Act, 2008 thus provided that no disallowance under Section 40 (a) (ia) of the IT Act shall be made in respect of the expenditure incurred in the month of March if the tax deducted at source on such expenditure has been paid before the due date of filing of the return. It is important to mention here that the amendment was given retrospective operation from the date of 01.04.2005 i.e., from the very date of substitution of the provision. 20) Therefore, the assesses were, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 deducted in computing the income of the previous year in which such tax has been paid. 24) Thus, the Finance Act, 2010 further relaxed the rigors of Section 40(a)(ia) of the IT Act to provide that all TDS made during the previous year can be deposited with the Government by the due date of filing the return of income. The idea was to allow additional time to the deductors to deposit the TDS so made. However, the Memorandum explaining the provisions of the Finance Bill, 2010 expressly mentioned as follows: This amendment is proposed to take effect retrospectively from 1st April, 2010 and will, accordingly, apply in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d uniform or in cases of big assessees having substantial turnover and equally huge expenses and necessary cushion to absorb the effect. However, marginal and medium taxpayers, who work at low gross product rate and when expenditure which becomes subject matter of an order under Section 40(a)(ia) is substantial, can suffer severe adverse consequences if the amendment made in 2010 is not given retrospective operation i.e., from the date of substitution of the provision. Transferring or shifting expenses to a subsequent year, in such cases, will not wipe off the adverse effect and the financial stress. Such could not be the intention of the legislature. Hence, the amendment made by the Finance Act, 2010 being curative in nature required to be given retrospective operation i.e., from the date of insertion of the said provision. 29) Further, in Allied Motors (P) Limited (supra), this Court while dealing with a similar question with regard to the retrospective effect of the amendment made in section 43-B of the Income Tax Act,1961 has held that the new proviso to Section 43B should be given retrospective effect from the inception on the ground that the proviso was added to remedy uni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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