INCOME TAX OFFICER, WARD-3, AKOLA vs. M/S RAMDEVBABA CHARITABLE SOCIETY, AKOLA

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ITA 394/NAG/2017Status: DisposedITAT Nagpur09 June 2022AY 2011-124 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the second proviso to Section 40(a)(ia) has retrospective effect from April 1, 2005. Therefore, the disallowance made by the Assessing Officer was not sustainable.

What were the facts?

The Revenue appealed against the deletion of additions made under Section 40(a)(ia) for AY 2011-12 and 2012-13. The additions pertained to disallowance of expenses where TDS was not deducted or paid on time.

What were the issues?

Whether the second proviso to Section 40(a)(ia) of the Income Tax Act, 1961, has retrospective effect.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia)

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Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR

Before: SHRI VIKRAM SINGH YADAV & SHRI YOGESH KUMAR U.S

For Appellant: Shri K.P Dewani, Advocate
For Respondent: Shri Rajeev Benjwal, CIT

Date of Hearing – 09.06.2022 Date of Order – 09 .06.2022

O R D E R PER SHRI VIKRAM SINGH YADAV, A.M.

These are two appeals filed by the Revenue directed against the respective orders of the Learned Commissioner of Income Tax(Appeals)- 1, Nagpur, dated 22.09.2017 for Assessment Years 2011–12 & 2012–13 respectively, wherein the following findings of the ld.CIT(A) are under challenged before us. “6.0 The ratio laid down by the Hon'ble Delhi High Court in case of Ansal Land Mark Township(supra) is found squarely applicable to the facts in the case of the appellant. On similar facts and by relying on same decision of Hon'ble Delhi High Court, jurisdictional Hon'ble ITAT, Nagpur Bench, Nagpur in order dtd.07.10.2016 passed in case of Shri Mahesh Chaturbhuj Bhattad Vs. ITO, Khamgaon in ITA

2 Ramdevbaba charitable Society

No.368/Nag/2014 has also held that the said amendment to second proviso to section 40(a)(ia) has retrospective effect from April-1, 2005, being the date from which sub–clause(ia) of section 40(a) was inserted by the Finance (No.2) Act, 2004. 7.0 Respectfully following the jurisdictional pronouncements and keeping in view that the facts of the appellant's case are squarely applicable to these decisions, impugned addition made u/s 40(a)(ia) at Rs.1,47,19,608/- for AY 2011-12 & of Rs.7,76,79,005/-for AY 2012-13 is not found sustainable and, accordingly deleted. 7.1 Having said this, amount of Rs.99,75,000/- deducted by the AO for AY 2012-13 for allowing this sub-contractual payments pertaining to AY 2011-12 on which TDS been paid in AY 2012-13, while assessing appellant's income at Rs.6,79,36,450/- needs to be withdrawn by the AO while giving effect to this appeal order.” :•

2.

During the course of hearing, the ld. DR is heard, who has relied on the findings of the Assessing Officer and submitted that the ld.CIT(A) has erred in holding that second proviso to section 40(a)(ia) of the Act has to be given retrospective effect from 01.04.2005, though the legislature has given effect to the same from 01.04.2013.

3.

Per contra, the ld. AR submitted that the matter is squarely covered by the decision of Jurisdictional High court in case of PCIT v/s Perfect Circle India Pvt.Ltd. in of 2016, dated 07.01.2019, where the Hon’ble High court was placed to held as under:– “2. It is not necessary to record background facts since the question of law raised by the Revenue is whether the second proviso to Section 40(a)(ia) of the Income Tax Act, 1961 (“the Act” for short) would have retrospective effect. We may notice that the said proviso was inserted w.e.f 1.4.2013 and in essence, it provides that where an assessee fails to deduct whole or any part of the tax at source but is not deemed to be an assessee in default under the first proviso to Section 201(1), then for the purpose of clause 40(a)(ia), 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 payee. The Revenue would content that the benefit of this proviso would be available to the assessee only prospectively

3 Ramdevbaba charitable Society w.e.f. 1.4.2013. Various Courts, however, have seen this proviso as beneficial to the assessee and curative in nature. The leading judgment on this point was of the Division Bench of Delhi Court in the case of CIT Vs. Ansal Land Mark Township P Ltd [2015] 377 ITR 635 (Delhi). The Court held that Section 40(a)(ia) is not a penalty and insertion of second proviso is declaratory and curative in nature and would have retrospective effect form 1.4.2005 i.e the date from the main proviso 40(a)(ia) itself was inserted. Several High Courts have adopted the same lines. We may also note that the Supreme Court in the case of Hindustan Coca Cola Beverages P Ltd Vs. CIT [2007] 293 ITR 226 (SC) even in absence of second proviso to Section 40(a)(ia) had noticed that the payee had already paid the tax. Under such circumstances, the Court held that the payer / deductor can at best be asked to pay the interest on delay in depositing tax.”

4.

After hearing both the parties and perusing the material available on record. We find that the issue is no more res integra and respectfully following the decision of Hon’ble Jurisdictional High court in the decision referred (supra), both the appeals filed by the Revenue are dismissed.

5.

In the result, both the appeals filed by the Revenue are dismissed. Order pronounced in the open Court on 09 .06.2022

Sd/– Sd/– YOGESH KUMAR U.S VIKRAM SINGH YADAV JUDICIAL MEMBER ACCOUNTANT MEMBER

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