WARNER MULTIMEDIA LIMITED,KOLKATA vs. ITO, WARD-8(2), KOLKATA

For that the observations and contentions of the Ld. CIT(A), NFAC while passing order u/s. 250 of the I.T. Act, 1961 by not giving your appellant the chance of being heard on the grounds which are not correct.

For that the appellant craves leave to adduce, modify and or alter the grounds at or before hearing.”

At the outset, the ld. Counsel for the assessee referring to the decision of the Co-ordinate Bench at Rajkot in the case of Punabhai G. Pardava vs. ITO in ITA No. 219/RJT/2018, order dt. 08/06/2022, stated that in this decision, the amendment brought in by the Finance Act (No. 2) 2014 effective from 01/04/2015 made in the provisions of Section 40(a)(ia) of the Act have been held to be clarificatory in nature and, therefore, applicable retrospectively as it removes hardships caused to the assessee. Therefore, in place of 100% disallowance of expenditure, the disallowance u/s 40(a)(ia) of the Act was limited to the extent of 30% of such expenditure. It was further submitted that decision of the Tribunal in the case of Punabhai G. Pardava (supra) may please be applied on the disallowance made in the case of the assessee u/s 40(a)(ia) of the Act @ Rs.2,85,500/-.

Per contra the ld. D/R vehemently argued supporting the order of the lower authorities.

We have heard rival submissions and perused the record placed before us. The assessee is a Limited Company and assessment for the Assessment Year 2006- 07 was completed u/s 143(3) of the Act on 26/12/2008 assessing the loss at Rs.4,78,634/-. The assessee got part relief by the ld. CIT(A) but then the assessee approached the Tribunal which vide its order dt. 28/02/2019 in ITA No. 564/Kol/2018, remanded the matter back to the file of the Assessing Officer for de- novo adjudication of the issue of disallowance u/s 40(a)(ia) of the Act amounting to Rs.2,85,500/-. Thereafter the ld. Assessing Officer completed the assessment u/s 143(3) r.w.s. 254 of the Act on 25/07/2019 and again made the disallowance u/s 40(a)(ia) of the Act for non-deduction of tax at source on the professional charges paid to three persons, namely, Shiv Prasad Swami – Rs.2,00,000/-, Upadhyay & Upadhyay – Rs.42,500/- & Sunil Bhattacharya-Rs.43,000/-. Again the assessee challenged the issue before the ld. CIT(A) but the appeal was dismissed ex-parte.

Before us, the ld. Counsel for the assessee has referred to the decision of the Co-ordinate Bench at Rajkot in the case of Punabhai G. Pardava (supra), wherein also similar issue came for adjudication and the Tribunal relying on various decision including the decision of ITAT Ahmedabad Bench in the case of Amruta Quarry Works vs. ITO in IT Appeal 1481 (Ahd.) of 2013, dated 19.7.2016 and decision of the Mumbai Bench of the Tribunal in the case of Neena Kual vs. Asstt. CIT [IT Appeal No. 1386 (Mum) of 2017, dated 21.05.2019] held that the amendment brought in by Finance Act No. 2 of 2014 restricting the disallowance u/s 40(a)(ia) of the Act to the tune of 30% of the expenses was made effective from 01/04/2015. But thereafter, clause 14.3. of the explanatory memorandum to Finance Bill 14 was said to be brought to effect to remove hardships faced by the assessee and thus, the said amendment was held to be clarificatory in nature and applicable retrospectively. Since the ld. D/R failed to bring any binding decision in its favour and the decision relied upon by the assessee is squarely applicable on the issue involved in the instant appeal, we are inclined to hold that 100% disallowance of Rs.2,85,500/- made u/s 40(a)(ia) of the Act be restricted to 30% i.e., Rs.85,650/-. Thus the assessee gets relief of Rs.1,99,850/-. Ground Nos. 1 & 2 raised by the assessee are partly allowed.

Ground No. 3 is general in nature.

In the result, appeal of the assessee is partly allowed.

""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील / The CIT(A)- ( ) 5. िवभागीय "ितिनिध अिधकरण अपीलीय आयकर कोलकाता/DR,ITAT, Kolkata, , , 6. गाड" फाईल /Guard file.