M/S. SIDDI VINAYAK SAREES,KOLKATA vs. ITO, WARD - 45(3), KOLKATA

The main grievance of the assessee in this appeal is against the action of Ld. CIT(A) in confirming the action of the AO in disallowing a sum of Rs.8,96,450/- u/s. 40(a)(ia) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).

At the outset itself, the Ld. Counsel for the assessee drew our attention to ground no.2 of this appeal, which is as under:

According to Ld. AR, 30% of the disallowance may be sustained in view of the amendment brought in by Finance Act No. 2 w.e.f. 01.04.2015 to section 40(a)(ia) of the Act which has been held to be curative in nature and hence, retrospective by the Coordinate bench of this Tribunal, Chandigarh Bench in the case of DCIT Vs. Punjab Infrastructure & Development Board Ltd., dated 30.09.2015. The Ld. DR objected to the relief prayed by the assessee, and according to him, the amendment is only w.e.f. 01.04.2015 and can be only prospective and, therefore, the disallowance should be sustained.

Having heard the rival submissions and gone through the facts and circumstances of the case it is noted that pursuant to the Tribunal’s direction the AO after examining the veracity of the vouchers submitted by the assessee against the payments made to various persons found out that payments have been made without deducting TDS and has found that there is no credence of the vouchers produced by the assessee so, he disallowed the expenditure claimed to the tune of Rs.8,96,450/- by invoking section 40(a)(ia) of the Act. On appeal, the Ld. CIT(A) confirmed the order of the AO. Before us, the Ld. AR taking note of the amendment brought in by the Finance Act No. 2 w.e.f. 01.04.2015 to sec. 40(a)(ia) of the Act prayed that 30% of the disallowance may be sustained and thus partial relief may be granted to the assessee. It has been brought to my notice that the ITAT Chandigarh Bench has held in the case of Punjab Infrastructure & Development Board Ltd. (supra) that though the aforesaid amendment has been brought w.e.f. 01.04.2015 it is curative in nature and so retrospective in operation and so following the ratio laid by the coordinate Bench of this Tribunal, I am inclined to allow the said prayer of the Ld. AR of the assessee, therefore, I restrict the disallowance to 30% of Rs. 8,96,450/-. The AO is directed to give relief in accordance to law as per the aforesaid direction.

The last ground is general in nature and therefore, no adjudication is required and, hence, the same is dismissed.

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