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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the revenue. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner (Appeals) –44, Mumbai and arises out of order u/s 143(3) of the Income Tax Act, 1961 (the ‘Act’.
The grounds of appeal filed by the revenue read as under:
i. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition on account of payment of Rs. 71,17,450/- on which TDS was not deducted as required u/s 40(a)(ia) of the Income Tax Act, 1961. ii. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that the second proviso to Section 40(a)(ia) has been inserted by the Finance Act, 2012, w.e.f. 01.04.2013. iii. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not following the decision of Hon’ble ITAT Special Bench in the case of Bharti Shipyard vs. DCIT wherein the Hon’ble ITAT has held that proviso to Section 40(a)(ia) was inserted vide Finance Act 2010 w.e.f. 01.04.2010 and not retrospective effect from 01.04.2005. iv. The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the Assessing Officer be restored.
The assessee – firm filed its return of income for the A.Y. 2010- 11 on 28.09.2010 declaring total income at Rs. 12,38,730/-. During the course of assessment proceedings, the Assessing Officer (AO) noticed that the assessee had incurred expenses of Rs. 71,17,450/- on which no TDS has been made. The details are (i) printing charges of Rs. 69,63,579/-, (ii) transportation charges of Rs. 1,40,933/- and (iii) brokerage / commission paid of Rs.12,938/-. Since there was a violation of the provisions of Chapter XVIIB and the assessee was unable to give any credible explanation, the AO disallowed the entire expenses of Rs. 71,17,450/-.
Aggrieved by the order of the AO, the assessee filed an appeal before the learned CIT(A). Since the documents submitted by the assessee during the course of appeal had not been seen by the AO, the learned CIT(A) remanded back the matter to the AO on 24.06.2014 for verification. The learned CIT(A) received the remand report from the AO on 31.10.2014. The learned CIT(A) then observed that necessary tax has been paid by the deductees and therefore, as already verified by the AO, there is no loss caused to the exchequer. The learned CIT(A) observed that the amendment to section 40(a)(ia) in terms of the insertion of the proviso would be applicable to the assessee also. Therefore, the learned CIT(A) allowed the appeal filed by the assessee.
Before us, the learned DR submits that the second proviso to section 40(a)(ia) has been inserted by the Finance Act, 2012 w.e.f. 01.04.2013. He supported the order of the AO.
The learned counsel of the assessee files a paper book stating that the second proviso to section 40(a)(ia) applies retrospectively. Reliance was placed by him on the decision in the case of (i) CIT vs. Ansal Land Mark Township P. Ltd. (2015) 377 ITR 635(Del.) (ii) Pr. CIT vs. Tirupati Construction (GA No. 2146 of 2016 (iii) Rajeev Kumar Agarwal vs. Addl. CIT (2014) 165 TTJ (Agra) 228 (iv) R.K.P. Company vs. ITO (ITA No. 106/RPR/2016)(ITAT- Raipur) (v) Mahesh Kr. Narula vs. JCIT (ITA No. 1094/Kol/2016)(ITAT- Kolkata) (f) DCIT vs. Jagjit Singh Sayal (ITA No. 2274/Mum/2014)(ITAT- Mumbai).
The learned counsel also states that section 40(a)(ia) as amended by Finance Act, 2010 applies retrospectively. Reliance was placed by him on the decision in CIT vs. Harish Chand Ahuja (2015) 280 CTR (Raj.) 403, CIT vs. Naresh Kumar (2013) 262 CTR (Del.) 389, CIT vs. Santosh Kumar Shetty (2014) 89 CCH 199 (Kar HC), CIT vs. B.M.S. Projects P. Ltd. (2014) 361 ITR 195(Guj.).
We have heard the rival submissions and perused the relevant material on record. We begin with the decisions relied on during the course of hearing before us. In the case of Ansal Land Mark Township P. Ltd., the following issue was urged by the revenue pertaining to the retrospectivity of the second proviso to section 40(a)(ia) of the Act which reads as under:
“Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of Section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso.” The Hon'ble High Court agreed with the reasoning of ITAT Agra Bench in the case of Rajiv Kumar Agarwal vs. ACIT (ITA No. 337/Agra/2013) holding that the second proviso to section 40(a)(ia) was declaratory and curative in nature and should be given retrospective effect from 01.04.2005.
In M/s. Tirupati Construction (supra), the Hon'ble Calcutta High Court held as under:
“We deem it fit and appropriate, to set aside the issue to the file of the Ld. A.O. to decide the impugned issue u/s 40(a)(ia) in the light of applicability of second proviso to section 40(a)(ia) as mentioned herein above and in the light of said decision of the Hon'ble Delhi High Court in the case of Ansal Land Mark Township (P) Ltd. (supra). The assessee is at liberty to adduce fresh evidences, if any, to substantiate its contentions. Needless to mention that the assessee be given reasonable opportunity of being heard. Accordingly, the grounds raised by the assessee in this regard are allowed for statistical purposes.” 7.1. We find similar conclusion has been arrived at by the Tribunal in the orders cited here-in-above.
In view of the above, we uphold the order of the learned CIT(A) and dismiss the appeal filed by the revenue.
Order pronounced in the open Court on 19/04/2017