M.A. FABRICS,THANE vs. ITO WD 1(2), KALYAN

Rival contentions have been heard and record perused. During the course of scrutiny assessment the AO asked for disallowing payment made for job charges amounting to Rs.26,65,480/-. In response to the same, the assessee submitted the copies of certificates issued by the AO u/s.194C(4) in favour of job workers for lower deduction of tax. After considering assessee’s contention the AO rejected the disallowance of Rs.17,56,817/- in respect of job workers, who had furnished certificate 2 u/s.194C to the effect that tax is to be deducted at 0.25% of the amount exceeding Rs.5 lakhs.

By the impugned order, the CIT(A) confirmed the action of AO, against which assessee is in further appeal before us.

It was contended by ld. AR that all the job works duly included their payment made by assessee in their trading account and had also filed their return. Thus there is no loss of revenue. Our attention was also invited to the assessment framed in the case of job workers duly incorporating the income received by the assessee. It was inter alia contended by assessee that in view of the insertion of second proviso to Section 40(a)(ia) by the Finance Act 2012, and in view of the fact that the recipients of the interest have already included the income embedded in these payments in their tax returns filed under section 139, disallowance under section 40(a)(ia) could not be invoked in this case. It was also contended that even though this proviso is stated to be effective 1 st April 2013, since the amendment in “declaratory and curative in nature, and, therefore, it should be given retrospective effect from 1st April, 2005, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004”.

We have considered rival contentions and carefully gone through the orders of authorities below and found that similar issue has been decided by Agra Bench of the Tribunal in case of Rajeev Kumar Agarwal, ITA No.337/Agra/2013, order dated 29-5-2013, wherein in similar circumstances matter was restored back to the file of AO. Keeping in view