ACIT 25(1), MUMBAI vs. CHANDRIAH B KALAL, MUMBAI

The present appeal filed by the Revenue against the order of CIT(A)-35, Mumbai dated 10.06.2014 for Assessment Year (AY) 2007-08. The Revenue has raised the following ground of appeal: I "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs.59,93,334/- made u/s. 40a(ia) of the Act on account of non deposit of TDS within the time specified under the Act." II "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in not considering the decision of Special Bench of Mumbai ITAT in the case of Bharati Shipyards Ltd in favour of revenue by holding that the amendment brought out by the Finance Act, 2010 to section 40(a)(ia) with effect from 1-4-2010, is not remedial and curative in nature and is therefore not retrospective. " III "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deciding the issue relying on the decision of the Apex Court in the case of Allied Motors (P) Ltd pertaining to provision u/s. 43B of the Act."

Brief facts of the case are that the assessee is engaged in the business of Civil Construction and Contract Work, filed his return of income on 29.10.2007 declaring total income of Rs. 35,17,930/-. The assessment was completed u/s 143(3) of the Act on 29.12.2009. The assessment was re- opened vide notice u/s 148 dated 07.03.2013 after recording the reasons. After re-opening, the assessee was served with notice u/s 143(2)/142(1) dated 12.08.2013, wherein assessee was asked to submit the detailed payment made for Transport, Labour and Professional Fees, the details of TDS deducted along with the date of deposit. The assessee submitted its reply dated 06.12.2013. Along with reply the assessee submitted the details of TDS and the details of deposit in Government Treasury. The Assessing Officer (AO) observed that although the TDS deducted, though deposited in Government Treasury but beyond the due date. The assessee was again asked to explain as to why these payments to the Contractor for Labour Charges, Transport Charges should not be disallowed u/s 40(a)(ia) of the Act. The assessee again submitted its reply dated 10.12.2013 and explained that vide Finance Act, 2010, wherein the time limit for payment of TDS, for all transaction covered in section 40(a)(ia) is allowed to deposit up to due date of filing of return and further contended that further amendment to section 40(a)(ia) brought in Finance Act, 2012 which is also retrospective and the default of assessee (delay deposit of TDS) is not hit by the provisions of section 40(a)(ia). The contention of assessee was not accepted and AO disallowed a sum of Rs. 59,93,334/- u/s 40(a)(ia) of the Act. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The CIT(A) hearing the contention of assessee and deleted the entire addition on the basis of decision of Calcutta High Court in case of CIT vs. Virgin Creation holding that amendment in section 40(a)(ia) is Shri Chandriah B. Kalal retrospective in nature. Aggrieved by the order of CIT(A), Revenue has filed the present appeal before us 3. None appeared on behalf of assessee when matter came up for hearing on 20.06.2016. None appeared despite repeated calls on behalf of the assessee. We left no option except to hear the DR for Revenue and to proceed further. Ld. DR for Revenue relied upon the order of AO and prayed that order of AO be restored and that CIT(A) may be reversed and relied upon the decision of Kerala High Court [2015] 63 taxmann.com 99.The decision referred by DR for Revenue is not applicable as the Hon’ble Apex Court held that the proviso inserted by Finance Act is retrospective in nature.

We have considered the contentions of DR for Revenue and perused the order of authorities below. As per our opinion, the mute question for our consideration is, if second proviso attach with section 40(a) (ia) introduced w.e.f. 01.04.2013 is applicable retrospective or prospective effect. First proviso attached with section 40(ia) was inserted by Finance Act, 2010 w.e.f. 01.04.2010. Further, second proviso attached with section 40(a)(ia) was inserted by Finance Act, 2012 w.e.f. 01.04.2013. The Hon’ble Apex Court in case of Allied Motors (P) Ltd. and Alom Extrusions Ltd. held that proviso inserted in Finance Act, 2010 would apply retrospective w.e.f 2005.Thus, keeping in view the applicability of proviso attached with section 40(ia) which was held retrospective by the Hon’ble Apex Court and the same was correctly appreciated by CIT (A) in the impugned order. Thus, we do not find any illegality or infirmity in the order passed by CIT(A). In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on this 22nd June, 2016. (RAJENDRA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated 22/06/2016 S.K.PS आदेशक"""त"ल"पअ"े"षत/Copy of the Order forwarded to :