TMI Blog2020 (8) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... f AO in both years with the direction that the assessee should bring on record the required evidences including the CA certificate for both years and the AO should consider those documents - Appeals of the assessee are allowed for statistical purposes. - ITA Nos. 302, 303/Bang/2019 - - - Dated:- 14-8-2020 - Shri A. K. Garodia, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shri. Mallaha Rao, Advocate For the Revenue : Shri. Manjeet Singh, Addl. CIT (DR)(ITAT), Bengaluru ORDER PER A.K. GARODIA, ACCOUNTANT MEMBER Both these appeals are filed by the assessee and these are directed against a combined order of learned CIT(A)-2, Bengaluru, dated 20.11.2018, for Assessment Year 2005-06 and 2006 07. Both these appeals were heard together and are being disposed of by way of this common order for the sake of convenience. The grounds raised by the assessee are as under: ITA No.302/Bang/2019 1. On fact of the circumstances of the case, order of the learned Commissioner of Income Tax (Appeals) dated 20/11/2018, for the AY-2005-06 is not maintainable in law. 2. On fact of the circumstances of the case, the learned Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are liable to be set aside. 4. On fact of the circumstances of the case, the learned Commissioner of Income Tax (Appeals) ought to have appreciated that the judgment relied by the appellant which are squarely applicable in the appellant case and judgment relied by the CIT(A) and fact of the case is difference from of appellant fact of the case, thus the learned CIT(A) ought to have been allowed the appeal in the interest of justice. 5. Without considering the fact and merit of the case the learned CIT(A) confirming the disallowances made by the assessing authority and confirming interest under Section 234(B) 86 234 (C) and the same is upheld by the CIT(A) is excessive, arbitrary and liable to be deleted. 6. For such other grounds that may be urged at the time of hearing and it is prays that kindly may allow the appeal in the interest of justice and equity. 2. In the course of hearing, it was submitted by learned AR of the assessee that it is noted by learned CIT(A) in para 5 of the impugned order that the Tribunal has restored back the issue to the file of AO for a fresh decision in ITA Nos.17 and 18/Bang/2014 dated 05.03.2014 with the direction that the AO shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the Hon ble ITAT that though tax was not deducted at source on the remuneration paid to artistes and the said artistes had offered the receipts to tax and had filed their returns of income. The payments were made during the A.Y.s 2003-04 and 2004-05. In order to consider the assessee's contention, the following conditions have to be satisfied:- The artistes concerned should have filed their returns of income for the relevant assessment years, i.e. A.Ys 2004-05 / 2005-06. Receipts from the films mentioned in the table at Para 1 above should have been offered to tax by the artistes concerned. Tax on the receipts so offered should have been duly paid by the artistes concerned. Furnishing of certificate to the above effect from an accountant in the prescribed form In none of the cases of artistes involved in the films mentioned at Para I above, computation statements, copy of return for the relevant A.Y.s and certificate in the prescribed form have been produced by the assessee for verification. 5. I have considered the above grounds of appeal, statement of facts and written submissions filed by the appellant and also perused the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he legislators object, then the presumption would ripe that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. 5.1 I have carefully considered the submissions made by the appellant and crux of the contention is that the proviso to 40(a)(ia) and to proviso Sec.201 ) of the A::t if conjointly read it can be inferred that disallowance u/s.40(a)(ia) of the Act not warranted when the payer is not deemed to be an assessee in default under the proviso of Sec.201(1) of the Act. Another contention is that the amendment of Sec.40(a)(ia) inserted vide Finance Act, 2014 that in case of non-deduction or non-payment of TDS ors payment to made to residents of the country the disallowance should be limited to 30% of the total amount of expenses claimed, should be applicable retrospectively. Now I proceed in analyzing the proviso provided for Sec.40(a)(ia) and Sec.201(1) of the Act and for the sake of brevity is given as under: Proviso to Sec. 40(a)(ia): Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XV1i-B on any such sum but is not deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pter XVII-B require a person to deduct tax at source at the rates specified therein. The requirement in each of the sections is preceded by the word 'shall'. The provisions are therefore, mandatory, There is nothing in any of the Sections that would warrant reading the word 'shall' as 'may'. The point of time at which the deduction is to be made establishes that the provisions are mandatory. For instance, under Section 194C of the Act, a person responsible for paying the sum is required to deduct tax at the time of credit of such source under various provisions of Chapter XVII-B. This view is supported by the judgments of the Calcutta and Madras High Courts. The purpose of Section 40(a)(ia) is to ensure the recovery of tax. There .is no indication in the said Section that this object was confined to the recovery of tax from a particular type of taxpayer following a certain accounting practice. Therefore, it can be inferred that the question as to whether the obligation arose to withhold taxes at the time of making certain payments under various provisions of Chapter XVI1-B of the Income Tax Act 1961 or not is to be decided before invoking provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of treating the assessee is deemed to be an assessee in default. Therefore, the other submissions that the amendment of Sec.40(a)(ia) vide Finance Act, 2014 that in case of non deduction or non-payment of TDS on payment to made to residents of the country the disallowance should be limited to 30% of the total amount of expenses claimed should be applicable retrospectively, need hot be adjudicated which is treated as dismissed. 5.4Further, keeping in mind the proviso provided u/s.201(1), I proceed in examining the conditions laid down u/s.201(1) whether fulfilled or not by the appellant. It is seen from the submissions made and evidences filed before me that though the confirmation letters from the deductees have been furnished it is inferred that mere furnishing the confirmation letters would not absolve the onus tasted upon the appellant that it has been discharged. Further, the appellant during the appellate proceedings has furnished only the confirmation letters and not established that the deductees have filed the return of income showing the payments received from the appellant and taxes paid thereon and most importantly could not furnish the certificate to this effect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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