KONARK AQUATICS & EXPORT (P) LTD,BHUBANESWAR vs. ACIT, CIRCLE-2(1), BHUBANESWAR,

O R D E R

Per Bench : This is an appeal filed by the assessee against the order of the ld. CIT(A)-II, Bhubaneswar, dated 25.10.2012, passed in I.T.Appeal No.0148/09-10 for the assessment year 2007-2008. 2. This appeal had originally been disposed off by the coordinate Bench of this Tribunal vide order dated 28.04.2017. The same came to be recalled on a miscellaneous application filed by the revenue in MA No.33/CTK/2017, in respect of the grounds No.5 & 6 of the assessee’s appeal which was been allowed by following the decision of Hon’ble Allahabad High Court in the case of Victor Shipping Pvt. Ltd., reported in 357 ITR 642(All). Subsequent to the reversal of the said decision by the Hon’ble Supreme Court in the case of Palam Gas Service, reported in 394 ITR 300 (SC), the order of the Tribunal dated 28.04.2017 came to be 2 recalled for readjudication of grounds No.5 & 6 of the assessee’ s appeal. Consequently, only grounds No.5 & 6 of the assesse’s appeal is being adjudicated in this order. 3. It was submitted by the ld. AR that the main issue is the disallowance of the ocean freight, survey expenses, testing charges and legal charges in respect of which TDS has not been deducted. It was submitted that as TDS had not been deducted, the AO had invoked the provisions of Section 40(a)(ia) of the Act to bring to tax 100% of the said disallowance as the income of the assessee. It was the submission that the issue is now squarely covered by the decision of the coordinate bench of the Tribunal in the case of Om Sri Nilamadhab Builders (P) Ltd., in order dated 14.11.2022, wherein it has been held that the disallowance is to be restricted to 30% as against 100% made by the AO and as confirmed by the ld. CIT(A). 4. In reply, ld. Sr. DR submitted that in view of the decision of the Hon’ble Supreme Court in the case of Shree Choudhary Transport Company (2020) 426 ITR 289 (SC), the disallowance had rightly been made at 100% by the AO and confirmed by the ld. CIT(A). It was submitted that the order of the ld. CIT(A) on this issue is liable to be upheld. 5. We have considered the rival submissions. In the case of Om Sri Nilamadhab Builders (P) Ltd., referred to supra, the coordinate bench of the Tribunal vide order dated 14.11.2022 in paras 6 & 7, restricted the 3 disallowance to 30% as against 100%. The relevant observations of the Tribunal as under :- 6. We have heard the rival submissions. In respect of the amendments which have brought into by the various Finance Act, wherein the amendment is brought in to remove the hardship caused to the assessee, the same is clarificatory in nature. This principle is as per the decision of the Hon’ble Supreme Court in the case of Vatika Township (P.) Ltd. [2014] 49 taxmann.com 249 (SC). A perusal of the amendment by the Finance (No.2) Act, 2014 made to the provision of Section 40(a)(ia) of the Act clearly shows that the amendment has been brought to remove hardship caused to the assessee. It must be understood that the disallowance of 100%, by the said amendment was restricted to 30%, thus, clearly the amendment was brought in to remove the hardship caused to the assessee. In these circumstances, respectfully following the decision of the various coordinate benches of the Tribunal on this issue, referred to supra, as also the principle laid down by the Larger Bench of the Hon’ble Supreme Court (Constituted by the Five Hon’ble Judge s) in the case of Vatika Township (P.) Ltd. [2014] 49 taxmann.com 249 (SC), the AO is directed to restrict the disallowance u/s.40(a)(ia) of the Act to 30%.