THE COMMISSIONER OF INCOME TAX vs. M/S. MANMANDIR ENTERPRISES

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ITA/405/2012HC KarnatakaKAHC01051681201229 June 2020Bench: ALOK ARADHE,M.NAGAPRASANNA5 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal was correct in holding that the amendment to Section 40(a)(ia) is retrospective. The High Court followed Supreme Court and its own previous decisions, answering the substantial question of law in favour of the assessee.

What were the facts?

The assessee, a partnership firm, had expenses disallowed under Section 40(a)(ia) for non-deduction of TDS. The Assessing Officer and CIT(A) upheld the disallowance. The ITAT, however, allowed the expenditure as TDS was deposited before the due date for filing the return, deeming the amendment to Section 40(a)(ia) retrospective.

What were the issues?

Whether the amendment to Section 40(a)(ia) of the Income Tax Act, allowing expenditure if TDS is deposited before the due date of filing the return, is retrospective in nature.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 143(1),Section 143(3),Section 154,Section 260-A

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 29TH DAY OF JUNE 2020

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

THE HON’BLE MR. JUSTICE M.NAGAPRASANNA

I.T.A. NO.405 OF 2012 BETWEEN:

1.

THE COMMISSIONER OF INCOME TAX C R BUILDING, QUEENS ROAD BANGALORE.

2 . THE INCOME TAX OFFICER WARD - 5(1), C R BUILDING QUEENS ROAD, BANGALORE. ... APPELLANTS (BY SRI. K.V. ARAVIND, ADV.,)

AND:

M/S. MANMANDIR ENTERPRISES NO. 36 & 7, 2ND FLOOR SVS COMPLEX PILLAPPA LANE, NAGARATHPET CROSS BANGALORE-560002. ... RESPONDENT (RESPONDENT SERVED) - - -

THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961, ARISING OUT OF ORDER DATED 4/7/2012 PASSED IN ITA NO.963/BANG/2011, FOR THE ASSESSMENT YEAR 2005-06, PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO: (I) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN.

(II) ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT, BANGALORE IN ITA NO.963/BANG/201 DATED 4/7/2012 AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-5(1), BANGALORE.

THIS ITA COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee. The subject matter of the appeal pertains to the Assessment year 2006-07. The appeal was admitted by a bench of this Court vide order dated 06.06.2012 on the following substantial question of law:

“Whether the tribunal was correct in interpreting that the amendment brought in section 40(a)(ia) w.e.f. 01-04-2010 is retrospective in nature although it was not expressly provided in the Act that this amendment to allow the payments on which TDS was deposited before the due date for

filing the return, was retrospective in nature?.”

2.

Facts leading to filing of the appeal briefly stated are that assessee is a partnership firm which is engaged in the business of textiles. The assessee filed the return declaring total income of Rs.1,13,729/- for Assessment year 2005-06. The return was processed under Section 143(1) of the Act and case was selected for scrutiny and an order was passed under Section 143(3) of the Act, by which total income was assessed at Rs.1,42,550/- making an addition of Rs.28,815/- towards inadmissible expenses. Subsequently, the assessing officer invoked Section 154 of the Act and made an addition of Rs.6,46,690/- by an order dated 14.09.2007, on account of disallowance under Section 40(a)(ia) of the Act. Being aggrieved, the assessee filed an appeal. The Commissioner of Income Tax (Appeals) by an order dated 14.09.2011 upheld the order passed by the assessing officer and dismissed the appeal.

Being aggrieved, the revenue approached the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal' for short) by filing an appeal. The tribunal by order dated 04.07.2012 held that expenditure is allowable as TDS was deposited by the assessee before filing of the return and amendment brought in Section 40(a)(ia) is to provide for depositing the deducted amount before due date of filing of the return and the aforesaid provision is retrospective in nature. Being aggrieved, the revenue is in appeal before us. 3. We have heard the learned counsel for the revenue at length. We find that the issued involved in this appeal is no longer res integra and has been answered in favour of the assessee by the decision of the Supreme Court in COMMISSIONER OF INCOME TAX, KOLKATTA VS. CALCUTTA EXPORT COMPANY, (2018) 404 ITR 654 (SC). The aforesaid decision has also been followed by this court in COMMISSIONER OF INCOME TAX, MANGALORE VS. SANTOSH KUMAR

SHETTY, (2014) 227 TAXMAN 170 (KARNATAKA). In view of aforesaid enunciation of law, the substantial question of law framed by this court is answered against the revenue and in favour of the assessee. In the result, we do not find any merit in this case, the same fails and is hereby dismissed.

Sd/- JUDGE

Sd/- JUDGE ss

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