TMI Blog2019 (1) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... S of two days. This is also not denied and disputed. In these circumstances, the Revenue should have exercised its discretion and accepted the order of the Tribunal given the peculiar facts of the present case for every infraction of provision, when there is substantive compliance, need not be made a subject matter of challenge before the High Court. At best the disallowance of expenditure under Section 40(1)(a) in this year would have been allowed in the next assessment year. In view of the aforesaid position, as the issue is already covered against the Revenue by decision of this Court in Ansal Landmark Township (P) Limited [2015 (9) TMI 79 - DELHI HIGH COURT], no substantial question of law arises for consideration. - Income Tax No. 603/2018 - - - Dated:- 17-1-2019 - MR. SANJIV KHANNA AND MR. CHANDER SHEKHAR JJ. Appellant Through: Mr. Ashok K. Manchanda, Sr. Standing Counsel. Respondent Through: Nemo. SANJIV KHANNA, J.: Present appeal by the Revenue under Section 260A of the Income Tax Act, 1961 ( Act , for short) assails the order dated 16th November, 2017 passed by the Income Tax Appellate Tribunal ( Tribunal , for short) in the case of Bhanot Construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In this connection, reliance was placed before the Ld. CIT(A) on the decision of Hon ble ITAT in Rajeev Kumar Agarwal vs. ACIT ITA No.337/Agra/2013 dated 29.05.2014. Now, as in the facts of this case it has already been confirmed through the A.O. of the recipient of payment i.e. M/s Arch Infra Projects Nirman Private Ltd. that they have accounted for the receipts from the assessee for ₹ 17,00,20,000/- in their return of income for A.Y. 2011-12, which have been filed on 30.09.2011 and on which taxes have been paid, as per the copy of acknowledgment. Further, even the assessee has filed the certificate as required under the first proviso to section 201. Considering all the above discussion in totality the addition made for ₹ 17,00,20,000/- was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) and reject the ground raised by the Revenue. 4. We find that the aforesaid reasoning is correct and in accord with the ratio and decision in Commissioner of Income Tax-XIII versus Naresh Kumar, (2014) 362 ITR 256 (Del.) holding that insertion of the words- has not been paid on or before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tep in the said direction and this aspect has to be kept in mind when we examine and consider whether the amendment should be given retrospective effect or not. 15. Question whether the amendment is retrospective or prospective is vexed and rigid rule can be applied universally. Various rules of interpretation have developed in order to determine whether or not, an amendment is retrospective or prospective. Fiscal statutes imposing liabilities are governed by normal presumption that they are not retrospective. The cardinal rule is that the law to be applied, is that which is in force on the first day of the assessment year, unless otherwise mandated expressly or provided by necessary implication. The aforesaid dictum is based upon the principle that a new provision creating a liability or an obligation, affecting or taking away vested rights or attaching new disability is presumed to be prospective. However, it is accepted that Legislatures have plenary power to make retrospective amendments, subject to Constitutional restrictions. 16. Based upon the aforesaid broad dictum, Judges and jurists have drawn distinction between procedural and substantive provisions. Substantiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment being curative in nature should be applied retrospectively i.e., from the date of insertion of the provisions of Section 40(a)(ia) or to be applicable from the date of enforcement. 26) TDS results in collection of tax and the deductor discharges dual responsibility of collection of tax and its deposition to the government. Strict compliance of Section 40(a)(ia) may be justified keeping in view the legislative object and purpose behind the provision but a provision of such nature, the purpose of which is to ensure tax compliance and not to punish the tax payer, should not be allowed to be converted into an iron rod provision which metes out stern punishment and results in malevolent results, disproportionate to the offending act and aim of the legislation. Legislature can and do experiment and intervene from time to time when they feel and notice that the existing provision is causing and creating unintended and excessive hardships to citizens and subject or have resulted in great inconvenience and uncomfortable results. Obedience to law is mandatory and has to be enforced but the magnitude of punishment must not be disproportionate by what is required and necessary. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter reluctance by the Assessing Officer before the Commissioner of Income Tax (Appeals). 7. Second proviso to Section 40(a)(ia) of the Act introduced by Finance Act, 2012 reads as under:- Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of Section 201, then, 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. 8. Contention of the Revenue is that the second proviso to Section 40(a)(ia) of the Act has been made applicable with effect from 1st April, 2013 and is not retrospective. Aforesaid proviso was examined and interpreted by the Delhi High Court in decision dated 26th August, 2015, ITA Nos.160-161/2015, Commissioner of Income Tax-1 versus Ansal Land Mark Township (P) Limited and it was held as under:- 11. The first proviso to Section 210 (1) of the Act has been inserted to benefit the Assessee. It also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, but, so far as the legal framework is concerned, this provision is not for the purpose of penalizing for the tax deduction at source lapses. There are separate penal provisions to that effect. Deincentivizing a lapse and 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany(supra). 10. There is additional factum, which must be noticed and was referred to by the Commissioner of Income Tax(Appeals) in his order. Last date for filing of return for the Assessment Year 2011-12 was 30th September, 2011, which was Friday and a bank holiday. Banks were also closed on 1st and 2nd October being Saturday and Sunday. 2nd October was also a national holiday. On 3rd October, 2010 respondent-assessee had deposited tax at source amounting to ₹ 34,00,400/- deductible on ₹ 17,00,20,000/-. Respondent-assessee had also paid interest for the delay in deposit of TDS of two days. This is also not denied and disputed. In these circumstances, the Revenue should have exercised its discretion and accepted the order of the Tribunal given the peculiar facts of the present case for every infraction of provision, when there is substantive compliance, need not be made a subject matter of challenge before the High Court. At best the disallowance of expenditure under Section 40(1)(a) in this year would have been allowed in the next assessment year. 11. In view of the aforesaid position, as the issue is already covered against the Revenue by decision of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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