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TMI Blog2021 (10) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... cted by Revenue for framing scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act. The assessee is engaged in the business of imparting distance education services and has tie up with Allahabad Agricultural Institute(Deemed University), Allahabad(AAIDU). 3. There are two effective issue raised by assessee in its appeal filed before Income Tax Appellate Tribunal, Allahabad(hereinafter called "the tribunal"). The first issue concerns itself with alleged non disclosure of income from sale of prospectus. The assessee has claimed expenditure of Rs. 29,03,200/- as deduction from its income, claimed to have been incurred on 'Prospectus A/c'. , while income from sale of prospectus was shown at Rs. 5,84,300/- . The AO asked assessee to explain the differential amount. The assessee has claimed that token amount was charged by the Institute(AAIDU) in respect of each new student admitted in the session for building up data base and mapping of data of each student with the course. The assessee explained token amount charged was Rs. 125/- per student registered in August session and Rs. 100/- per student registered for February session. The AO observed that the published cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the sale proceeds are not declared in the books of accounts and have escaped assessment. The onus is on the assessee to prove with cogent material/evidences that stock of prospectus held by it is duly accounted for by it and no income has escaped assessment viz. sold out of books of account. The assessee is not able to discharge its onus and the ld. CIT(A) has already given substantial relief. It is not brought to our notice that Revenue being aggrieved by decision of ld. CIT(A) has filed any appeal or cross objections. In our considered view keeping in view our above discussion and failure by assesse to discharge its primary onus, the assessee is not entitled for any further relief and the appellate order passed by ld. CIT(A) is upheld. The assessee fails in its appeal. We order accordingly. 3.2 The next effective issue concerns itself with disallowance u/s 40(1)(ia) on account of expenditure incurred by the assessee on which admittedly income-tax was deducted at source under Chapter XVII-B by the assessee , which stood deposited late beyond the time prescribed u/s 200(1), but admittedly the same was deposited before the due date of filing of return of income u/s 139(1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt 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 Rs. 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 Rs. 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 total income in terms of the provisions of Section 40(a)(ia) of the IT Act as it stood then. But the same was deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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. v. Dy. CIT [2011] 132 ITD 53/13 taxmann.com 101 (Mum.) 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 the existing provisions of Section 40(a)(ia). In support of this argument, learned senior counsel placed reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 time prescribed under sub-section(1) of section 200 and in accordance with the provisions of oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, after the said amendment in 2008, classified in two categories namely; one; those who have deducted that tax during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to the Assessment Year 2010-11 and subsequent years." 25. The controversy surrounding the above amendment was whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sorb 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) Ltd. case (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 unintended consequences and supply an obvious omission. The proviso ensured reasonable interpretation and retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X
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