OM SRI NILAMADHAB BUILDERS PVT. LTD.,BHUBANESWAR vs. ITO, WARD-1(3), BHUBANESWAR

This appeal had originally been disposed off by the coordinate Bench of this Tribunal vide order dated 26.11.2019, wherein it was held that the amendment to Section 40(a)(ia) of the Act by the Finance Act (No.2) Act, 2014 was retrospective in operation and the disallowance on account of the non-deduction of TDS was liable to be restricted to 30% as against 100 made by the AO and confirmed by the ld. CIT(A).

The revenue had filed a miscellaneous application bearing M.A.No.06/CTK/2020, wherein the decision of the Hon’ble Supreme Court in the case of Shree Choudhary Transport Company (2020) 426 ITR 289 (SC) had been referred to. In view of the interpretation made in respect of Shree Choudhary Transport Company, referred to supra, the order of the Tribunal had been recalled on the ground that there appeared to be a mistake apparent from the record. The appeal is now come up for hearing before us.

Ld. AR on behalf of the assessee has categorically brought to our attention that in para 19.6 of the decision of the Hon’ble Supreme Court in the case of Shree Choudhary Transport Company (supra), nowhere mentions that the Hon’ble Supreme Court has treated the amendment made to Section 40(a)(ia) of the Act by the Finance (No.2) Act, 2014 was not retrospective in operation. It was the submission that a perusal of the said paragraph categorically showed that the Hon’ble Supreme Court had in that case rejected as baseless, rather preposterous the attempt on the part of the assessee therein to seek some succour in the amendment of Section 40(a)(ia) of the Act by the Finance (No.2) Act, 2014. It was the submission that the coordinate benches of the Tribunal in the cases of Muradul Haque, [2020] 117 taxmann.com 251 (Delhi-Trib.), Smt. Sonu Khandelwal, dated 13.05.2016, Singonahalli Chikkarevanna Gangadharaiah [2020] 116 taxmann.com 230 (Bang- Trib), Tripura State Electricity Corporation Ltd., ITA No.30-32/Gau/2015, dated 18.10.2019 as also in the case of Smt. Kanta Yadav, ITA No.6312/Del/2016, dated 12.05.2017, have categorically held that the amendment to Section 40(a)(ia) of the Act by the Finance (No.2) Act, 2014 was retrospective in operation. It was the submission that the disallowance is liable to be restricted to 30%.

In reply, the ld. DR vehemently supported the orders of the ld. AO and ld. CIT(A). It was the submission that the decision of the Hon’ble Supreme Court in the case of Shree Choudhary Transport Company, referred to supra, though did not directly hold that the amendment brought by the Finance (No.2) Act, 2014 into the Section 40(a)(ia) of the Act, was not retrospective, however, the interpretation is to be given to hold the same as not retrospective.

We have heard the rival submissions. In respect of the amendments which have brought into by the various Finance Act, wherein the amendment is brought in to remove the hardship caused to the assessee, the same is clarificatory in nature. This principle is as per the decision of the Hon’ble Supreme Court in the case of Vatika Township (P.) Ltd. [2014] 49 taxmann.com 249 (SC). A perusal of the amendment by the Finance (No.2) Act, 2014 made to the provision of Section 40(a)(ia) of the Act clearly shows that the amendment has been brought to remove hardship caused to the assessee. It must be understood that the disallowance of 100%, by the said amendment was restricted to 30%, thus, clearly the amendment was brought in to remove the hardship caused to the assessee. In these circumstances, respectfully following the decision of the various coordinate benches of the Tribunal on this issue, referred to supra, as also the principle laid down by the Larger Bench of the Hon’ble Supreme Court (Constituted by the Five Hon’ble Judges) in