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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI C.N. PRASAD & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the assessee. The relevant assessment year is 2007-08. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-44, Mumbai [in short ‘CIT(A)’] and arises out of the assessment completed u/s 143(3) r.w.s. 147 of the Income Tax Act 1961, (the ‘Act’).
The revised grounds of appeal
filed by the assessee read as under:
1. The Ld. CIT(A) erred in confirming the addition of Rs.97,06,307/- on the ground that tax which was deducted at source was paid entirely to the government on 11th April 2018 which is before the due date of filing of Ashok Mistry return i.e. on 31.07.2007 which made the appellant eligible for deduction. Hence the addition may be deleted.
2. The Ld. CIT(A) failed to appreciate that the said amendment by Finance Act, 2010, to provisions of section 40(a)(ia) is curative in nature and it should be given retrospective operation from date of insertion of said provision, as also upheld by the Supreme Court in the case of CIT v. Calcutta Export Company [2018] 404 ITR 654 (SC). Hence the addition may be deleted.
3. In a nutshell, the facts are that the assessee filed his return of income for the assessment year (AY) 2007-08 on 12.10.2007 declaring total income of Rs.35,97,400/-. In the reassessment proceedings, the Assessing Officer (AO) observed that labour charges payment of Rs.97,06,307/- was made on which tax was deducted at source but the same was not deposited before 31.03.2007. The AO, relying on the decision of the Special Bench of the Tribunal in the case of M/s Bharati Shipyard Ltd. v. DCIT (ITA No. 2402/Mum/2009) disallowed the labour charges payment of Rs.97,06,307 u/s 40(a)(ia) of the Act.
4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We find that the Ld. CIT(A) has observed that the only issue in dispute is whether the amended provision of section 40(a)(ia) would be applicable to the case of the assessee or not. Relying on the order of the Tribunal in the case of Bharati Shipyard Ltd. (supra), the Ld. CIT(A) held that the provisions of law as it stood for AY 2007-08 require the assessee to deduct tax at source against payments made towards labour charges and to deposit the same before 31.03.2007 for Ashok Mistry April 2006 to February 2007. Thus the Ld. CIT(A) confirmed the disallowance of Rs.97,06,307/- made by the AO.
5. Before us, the Ld. counsel of the assessee submits that TDS on labour charges expenses was paid on 01.04.2007, before the return was filed on 12.10.2007. It is further submitted by him that as per the judgment of the Hon’ble Supreme Court in CIT v. Calcutta Export Company (2018) 93 taxmann.com 51 (SC), the appeal may be allowed in favour of the assessee. On the other hand, the Ld. DR supports the order passed by the Ld. CIT(A).
We have heard the rival submissions and perused the relevant materials on record. There is no dispute that TDS on labour charges expenses was paid on 01.04.2007 and the return of income was filed by the assessee on 12.10.2007. In the case of Calcutta Export Company (supra), the Hon’ble Supreme Court held that amendment made by Finance Act, 2010 to provision of section 40(a)(ia) is curative in nature and it should be given retrospective operation from the date of insertion of the said provision i.e. w.e.f. assessment year 2005-06. Since in the instant case the assessee has filed the return of income within the due date prescribed u/s 139 of the Act, he is entitled to claim the benefit of amendment made by the Finance Act, 2010 to the provisions of section 40(a)(ia) of the Act.