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Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI C.N. PRASAD, HONBLE & SHRI RAMIT KOCHAR, HONBLE
PER C.N. PRASAD (JM) 1. This appeal is filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)–42 Mumbai dated 17.02.2016 for the Assessment Year 2008-209. The only grievance of the Revenue is in respect of granting relief by deleting the disallowance u/s. 40(a)(ia) of the Act.
2 ITA.NO.3404/MUM/2016 (A.Y.2008-09) M/s. Jatin P Mistry 2. Briefly stated the facts are that, the Assessing Officer while passing order u/s. 143(3) r.w.s. 263 of the Act noticed that assessee deducted TDS between 01.04.2007 and 29.02.2008 on certain payments and such TDS was deposited into Government Treasury after 30.03.2008. Assessee paid amounts to the said parties in the months between August 2007 and February 2008 and therefore Assessing Officer stated that the amount of TDS in respect of parties which was duly deducted by the assessee should have been deposited in Government Treasury between 07.09.2007 to 07.03.2008. Therefore, since the assessee did not deposit TDS before such due date Assessing Officer invoked the provisions u/s. 40(a)(ia) and disallowed the same. In the course of the Assessment Proceedings it was contended by the assessee that the TDS deducted was remitted into the Government account before due date for filing of return and therefore the amendment of section 40(a)(ia) is retrospective and hence no disallowance should be made. However, the Assessing Officer rejected the submissions of the assessee and disallowed the payments on which TDS was deposited into Government account after 31.03.2008.
On appeal Ld.CIT(A) deleted the disallowance following the decision of the Coordinate Bench in assessee’s own case and also the decision of the Hon'ble Delhi High Court in the case of CIT v. Naresh
3 ITA.NO.3404/MUM/2016 (A.Y.2008-09) M/s. Jatin P Mistry Kumar [262 CTR 389] and Coordinate Bench of the Mumbai Tribunal in the case of M/s. Huda Construction v. ITO in ITA.No. 816/Mum/2011 dated 15.04.2015. Ld. Counsel for the assessee placed reliance on the order of the Coordinate Bench in the assessee’s own case for the Assessment Year 2009-10 and submitted that identical issue has been decided in favour of the assessee.
Ld.DR vehemently supported the orders of the Assessing Officer.
We have heard the rival submissions, perused the orders of the authorities below. On a perusal of the order of the lower authorities we find that the issue to be addressed is whether there should be any disallowance u/s.40(a)(ia) on account late remittance of TDS into government account when the assessee deposited such TDS within the due date for filing the return of income or not. Admittedly in this case the assessee deposited the TDS into Government account on 31.05.2008 and 19.09.2008 which are before the due date for filing return for the Assessment Year 2008-09. We find that similar issue arose in assessee’s own case for the Assessment Year 2009-10 and the Coordinate Bench deleted the disallowance observing as under: - “9. We have heard both the parties and perused the orders passed by the lower authorities as well as documents placed on record by both the parties. Before we decide the controversy in question it is necessary to analyse the provisions of section 40(a)(ia) of the Act which is mentioned as under: - 4 ITA.NO.3404/MUM/2016 (A.Y.2008-09) M/s. Jatin P Mistry (ia) any interest, commission or brokerage [rent, royalty] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter-XVII-B and such tax has not been deducted or, after deduction (has not been paid- (A) in a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in subsection (I) of section 139 or (B) in any other case, on or before the last day of the previous year"
Now coming to the facts of the present case, we observed that TDS of Rs. 5,62,170/- was deducted on the labour payment for the period from 1.4.2008 to 28.2.2009. TDS deducted was not paid before 31st March 2009. However, the assessee has remitted the TDS deducted on 29.7.2009 before the due date of filing the return of income i.e. on 30.9.2009. We have also perused the decision of Hon'ble Jurisdictional ITAT Special Bench in the case of Bharati Shipyard (11 ITR 599), wherein it has been clearly held that the amendment to the proviso to section 40(a)(ia) of the Act is only prospective effect and is applicable from A.Y. 2010-011 onwards and it does not have retrospective effect and therefore relying upon the above decision it has to be concluded that the action of the Assessing Officer is to be upheld but Hon'ble Kolkatta High Court has rendered the decision contrary to the above in the case of CIT Vs. M/s. Virgin Creations (ITA No. 302 of 2011 dated 23.11.2011), wherein it was held that the amendment has retrospective effect from 1.4.2005 and therefore considering those facts Hon'ble High Court has dismissed the Department’s appeal by holding that the amendment has retrospective effect from 1.4.2005. The decision rendered by Hon'ble Kolkatta High Court and was later on followed by Mumbai ITAT in the case of Piyush C. Mehta Vs. ACIT. We have carefully gone through the Judgement passed by Hon'ble Kolkatta High Court subsequently followed by Mumbai ITAT and therefore respectfully following the decision of jurisdictional ITAT, Mumbai Bench, we hold that the amendment to section 40(a)(ia) is having retrospective effect w.e.f. 1.4.2005 and therefore any payment of TDS on or before the due date of filing the return of income is sufficient. Therefore, while applying the ratio laid down in Judgment in the present case, we are of the considered opinion that the order of learned CIT(A) does not call for any interference and consequently the appeal filed by the Revenue is dismissed.”
5 ITA.NO.3404/MUM/2016 (A.Y.2008-09) M/s. Jatin P Mistry 6. We also find that the Hon'ble Jurisdictional High Court in the case of CIT-II v. Shraddha & S S Kale in ITA.No. 1712 of 2014 dated 27.03.2017 decided the similar issue in favour of the assessee holding that amendment to section 40(a)(ia) by Finance Act, 2010 w.e.f. 01.04.2010 is retrospective. While holding so Hon'ble High Court observed as under: - “2. Revenue urges the following question of law for our consideration: “Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in holding that amendment to Section 40(a)(ia) of the Act by the Finance Act, 2010 was retrospective in operation without appreciating that the law to be applied should be the one which is applicable to the relevant year?” 3 The impugned order dated 16th January, 2014 of the Tribunal upheld the order dated 31st August, 2012 of the Commissioner of Income Tax (Appeals) [CIT(A)]to the effect that the amendment to Section 40(a) (ia) of the Act which was introduced by Finance Act, 2010, is retrospective in nature. This was by following the order dated 21st June, 2012 of its Coordinate Bench in ITO v/s. Mata Tulsomal Premchand (Pune Bench) and the decision of the Calcutta High Court in CIT v/s. Virgin Creations (Income Tax Appeal No. 302 of 2011 dated 23rd November, 2011). Thus, holding that any amount of tax deducted at source should be deposited with the state exchequer on/ or before the due date of filing of return of income, as prescribed under Section 139(1) of the Act, to ensure that the claim of expenditure is not disallowed.
4 We find that besides the decision of the Calcutta High Court in Virgin Creations(supra), the Delhi High Court in CIT v/s. Naresh Kumar [2013] 39 Taxmann.com 182, the Gujarat High Court in CIT v/s. Omprakash R. Chaudhary (2015) 57 Taxmann.38 and the Karnataka High Court in CIT v/s. Sri Scropio Engineering Ltd., 388 ITR 266 have held that the amendment to Section 40(a)(ia) of the Act by Finance Act, 2010 w.e.f. 1st April, 2010, is retrospective. This particularly, in view of the fact that the Courts have taken a view that the provision being a machinery provision, retrospective effect being given to it, is appropriate.
6 ITA.NO.3404/MUM/2016 (A.Y.2008-09) M/s. Jatin P Mistry 5 Mr. Charanjeet Chanderpal, learned Counsel for the Appellant Revenue is not able to point out any reason as to why the views of Calcutta, Gujarat, Delhi and Karnataka High Courts should be departed from. In the above view, as the various High Courts have already taken a view on this very issue and in the absence of any reasons to take a different view, we see no reason to discard the same. Thus, the amendment to Section 40 (a)(ia) of the Act by Finance Act, 2010 is retrospective with effect from 1st April, 2005 as held by various High Courts.”
Respectfully following the said decision of the Hon'ble Jurisdictional High Court, we uphold the order of the Ld.CIT(A) and reject the ground of the Revenue.
In the result, appeal of the Revenue is dismissed
Order pronounced in the open court on the 13th April, 2018.