TMI Blog2012 (8) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... the motive of earning profit, the Assessing Officer treated the short term capital gain as business income. 4. By the impugned order after recording following findings, the CIT(A) held that capital gain earned on sale of shares were short term capital gains and not business income - 4.1 Ground No.1 relates to treatment given by the AO to Short Term Capital Gains as business income. In the case of the assessee himself, the issue has been decided against him by my predecessor in his order dtd. 19-03-08 in appeal No. IT- 317/07-08/236 for AY 2005-06. In assessment year 2005-06, even after availing sufficient time and opportunity the assessee did not make written submissions; during appeal proceedings and the appeal had to be decided in a best judgment manner. But this is not the case this year. The appellant has made very elaborate and exhaustive submissions discussed hereinabove. It is also pertinent to mention here that the Assessing Officer had accepted the claim of the assessee in the earlier assessment years which is apparent from the copies of orders filed during appeal proceedings. During discussions, the AR explained that from the total turnover of the assessee in const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nth of March itself. The assessee deducted the tax at the time of credit of bill i.e. in the month of March and deposited the same in Government A/c on 31/10/2007, which is the due date for assessee to file the income tax return. The Ld. A.O. has taken recourse to the provisions of section 40(a)(ia) of the Act, as retrospectively amended by the Finance Act, 2008 and accordingly disallowed all such amounts paid till February, 2007 on which TDS was not deducted and paid in the financial year itself. Although, he stated in the order that he allowed the expenses incurred in the month of March '07 on the basis of the above amendment. 8. By the impugned order, the ld. CIT(A) deleted the disallowance after having the following observations :- 4.4 Grounds No. 4,6,7 and 8 relate to disallowances made u/s 40(a)(ia) of ₹ 18,89,506/-, ₹ 67,94,274/-, ₹ 3,50,108/- and ₹ 25,33,828/- on accrual of Transport charges, labour expenses, machinery hire charges and payments made to subcontractors respectively. The above disallowances have been made on account of late payment of tax deducted at source and no other adverse finding are recorded by the Assessing Officer in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect from 01.04.2005 in which in sub sec(B) it was made mandatory to pay TDS deducted/deductable upto February of previous year (i.e. from April, 2006 to Feb, 2007) upto 31.03.2007. But assessee paid this amount in govt. a/c on 31.10.2007 and therefore committed default u/s 40(a)(ia). The Finance Act, 2010 amended this provision u/s 40(a)(ia) with effect from 01.04.2010, whereby TDS deducted was allowed to be paid in Govt. a/c upto due date for filing return i.e. in present case upto 31.10.2007. But this amended provision is expressly made applicable by parliament from 01.04.2010 and not with retrospective effect from 01.04.2005. It is pertinent to note that when assessee deducted TDS in F.Y. 2006-07 upto March, 2007 or when assessee paid TDS in Govt. a/c on 31.10.2007 or when assessee filed return of income on 31.03.2008 for A.Y. 2007- 08, or when assessment order was passed on 31.11.2009, the amendment in provisions of section 40(a)(ia) made by Finance Act, 2010 w.e.f. 01.04.2010 was not even in existence. The provisions which were not even in the statute when relevant act of deduction of TDS was made or when TDS was paid in Govt. a/c, could not be guiding provisions governing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to the provisions of section 30(2) for determining the scope of retrospective relief intended by Parliament in the matter of enhanced solatium. 13. In view of the above decisions, the ld. CIT DR argued that it is settled law as per the aforesaid two judgments of three member five member bench on retrospective application of an amendment in the Act, That the degree of retrospectivity has to be gathered from the language of the relevant provision itself. Their lordship went on to such an extent to say that what one may believe or think to be the intention of parliament cannot prevail if the language of the statute does not support that view. Now if we apply this principle to the present case the wordings of Amendment in section 40(a)(ia) of the I.T. Act are absolutely clear through Finance Act' 2008 which makes it applicable from 01.04.2005, whereas the Finance Act'2010 makes amendment in this section applicable from 01.04.2010. When there is no ambiguity in date of application of such amendments, there is no scope of any interpretation regarding retrospectivity of such amendments. 14. Heavy reliance was also placed by ld. CIT DR on the decision of I.T.A.T. Special B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eria to be taken into consideration for arriving at the decision about the retrospective or prospective effect of a later provision, is to unearth the intention of the legislature at the time of introducing the original provision and not whether it caused hardship to the taxpayers. The reason for not holding such later amendment as retrospective is manifest that the legislature in its wisdom intended to impose a harsh levy. In such a case the judicial or quasi judicial authorities cannot help the situation by grabbing the legislative power in holding such later relaxation as retrospective, when the legislature has itself made it prospective. (7) In para 38 following was noted:- The cases of Allied Motors (P. ) Ltd. (supra) and Alom Extrusions Ltd. (supra) fit into this second category of cases. In Allied Motors ( P.) Ltd. 's case (supra) the amendment was held to be retrospective on the ground that it was impossible to pay sales-tax for the last quarter before the close of the year as the liability to pay would arise only on or after 1st April. As it could never have been the intention of the legislature to require the assessee to do impossible, the amendment mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not apply to present case. Secondly if on the basis of hardship equity amount is allowed as expense in A.Y: 2007-08, then it will render the proviso to section 40(a)(ia) otiose as that proviso permits allowance of such expense only in A. Y: 2008- 09, when such TDS was paid to Govt. Interpretation of statute should not give rise to absurdity should not make a provision redundant as held in case of HP. Vishwerwariah (Kar) 250 ITR 863 and chartered Housing(Kar) 250 ITR 1. (10) In para 44 following is noted that:- It is important to note that the amendment by the Finance Act, 2008 was made with retrospective effect from 1-4-2005. Thus it can be seen that from the assessment year 2005-06 up to assessment year 2009-10, post the retrospective amendment carried out by the Finance Act, 2008, the first category of disallowances included the cases in which tax was deductible and was so deducted during the last month of the previous year but there was failure on the part of the assessee to pay such tax on or before the due date specified in sub-section (1) of section 139; and the second category included cases in which tax was deductible and was so deducted during the first eleven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med to be prospective. This view has been reiterated several times by the Hon'ble Supreme Court including in the case of R. Rajagopal Reddy v. Padmini Chandrasekharan [1995] 124 CTR(SC)311 : (1995) 213 ITR 340(SC). (14) In para 53 54 following is noted:- The learned A.R. emphatically focused on the contention that the expenditure so incurred by the assessee was genuine and by depositing the tax deducted at source a little late, it substantially complied with the provisions of section 40(a)(ia). We are equally unconvinced with the contention of substantial compliance of the provisions on late deposit of tax deducted at source. There can be either compliance or noncompliance of a particular provision. Given the time limit for the deposit of tax deducted at source, if it is deposited by the time prescribed it is a case of compliance of the provision and if it is late deposit even by a single day, it is non-compliance. 15. On the other hand, the ld. Authorized Representative relied on the decision of Kolkata High Court in the case of Virgin Creations, order dated 23.11.2011 and submitted that various Benches of I.T.A.T., Special Bench in the case of Bharti Ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above question, the learned counsel for the Assessee brought to our notice the decision of the ITAT Delhi in the case of Tej International (P) Ltd. v. Dy. CIT (2000) 69 TTJ (Del) 650, wherein it was held that in the hierarchical judicial system that we have in India, the wisdom of the court below has to yield to the higher wisdom of the Court above, and therefore, once an authority higher than this Tribunal has expressed its esteemed views on an issue, normally, the decision of the higher judicial authority is to be followed. The Bench has further held that the fact that the judgment of the higher judicial forum is from a non-jurisdictional High court does not really alter this position, as laid down by the Hon'ble Bombay High Court in the case of CIT v. 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 Section 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 relevant to and from AY 05-06 can be made to the Government on or before the due date for filing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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