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IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI
, ,
BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM
./MA No. 294/Mum/2014
(Arising out of ITA No. 6884/Mum/2011)
( / Assessment Years: 2008-09)
ITO-18(2)(4) Reform Creations
Room No. 109, Piramal Chambers, 1/7, Krishna Krupa,
/
Lalbaug Parel, Mumbai-400 012 Gokhale Road (North),
Vs. Dadar (W), Mumbai-400 028
. / . /PAN/GIR No. AAIFR 8186 N
(Applicant) : (Respondent)
Applicant by : Shri R. N. D'souza
Respondent by : None
/ : 21.11.2014
Date of Hearing
/
: 05.01.2015
Date of Pronouncement
/ O R D E R
Per Sanjay Arora, A. M.:
This is a Miscellaneous Petition by the Revenue arising out of the Order by the
Tribunal dated 21.02.2014 in the captioned appeal.
2. None appeared for and on behalf of the assessee-respondent when the instant
appeal was called out for hearing. This, despite due service of notice of hearing, which
had been specifically adjourned by the tribunal so as to extend opportunity to the assessee
to be heard in the matter. Under the circumstances it was only consider it fit and proper to
2
MA No. 294/Mum/2014 & ITA No. 6884/Mum/2011
ITO vs. Reform Creations (A.Y. 2008-09)
proceed with the hearing and adjudicate the issues arising on merits, after hearing the
party before us.
3. It would be relevant to recount the background facts of the case. The assessee, in
the business of civil construction as a works contractor, made labour payments in the sum
of Rs.64,59,515/- during the relevant year. Though tax, at Rs.1,44,824/-, was deducted
thereon, the same was paid only on 29.05.2008, i.e., after the end of the relevant previous
year, being the financial year 2007-08, albeit prior to the date of the filing of return for
the relevant year as allowed u/s.139(1) of the Act. The same stood disallowed by the
Assessing Officer (A.O.) u/s.40(a)(ia) of the Act, which, as it stood at the relevant time,
required the payment of TDS before the last date of the previous year, except where the
tax was deductible during the last month of the previous year, for which an extended
date, i.e., up to the time prescribed u/s.139(1), was allowed. The assessee found favour in
appeal on the basis that the payment of TDS had been made before the due date of filing
of the return u/s.139(1) and, further, confirmed by the tribunal on the same basis, with
reference to the amendment to section 40(a)(ia) by Finance Act, 2008 w.r.e.f. 01/4/2005.
The Revenue has now moved an application that the substitution of the proviso by
Finance Act, 2008 does not assist the assessee's case at all, which is in fact covered by
the amendment by Finance Act, 2010, which though is only effective from 01.04.2010.
The issue had been specifically brought forth vide grounds 2 & 3 of the Revenue's
appeal. In fact, the payments to the labour have been made throughout the year, so that
the extended date per the amended (i.e., by Finance Act, 2008) section 40(a)(ia), i.e., by
the due date of the filing of the return, which is applicable to the payments made during
the last month of the previous year, is also not possible to be ascertained. The appeal may
be recalled for being adjudicated afresh in accordance with law.
4. We have heard the party, and perused the material on record.
We shall begin by reproducing the operative part of the impugned order, so as to
understand the basis of the tribunal's decision:
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MA No. 294/Mum/2014 & ITA No. 6884/Mum/2011
ITO vs. Reform Creations (A.Y. 2008-09)
`4. At the outset, it is pertinent to mention that it is not disputed that the
assessee has paid the TDS on 29.05.2008 which is before the due date of
filing the return. In this connection, it is relevant to state that the
amendment made in the provision of section 40(a)(ia) vide Finance Act
2008 provides that w.e.f. A.Y. 2005-06, in case of expenses on which tax
deductible at source is deducted, the expenditure would be allowable if tax
has been paid before the due date of filing of return of income u/s 139(1) of
the Act. Since, the Ld. CIT(A) has correctly relied on the said provision for
allowing the claim of the assessee, we do not find any justifiable reason to
interfere with the said decision and thus the same is upheld.'
The tribunal confirmed the deletion of the disallowance u/s.40(a)(ia) following the
amendment to the provision per Finance Act, 2008, effective 01.04.2005, so that it was
applicable for the current year. The same provides for deduction for payments where the
tax deducted at source thereon is deposited by the last day of the relevant previous year.
The exception is for payments made during the last month of the previous year, for which
the extended time, i.e., up to the due date of the filing the return of income u/.s 139(1), is
provided. In-as-much as the date of the impugned payments is not borne out by the
record, nor clarified in the impugned order, it could not be said as to which part of the
payment is covered by the exception per the amended section 40(a)(ia) (i.e., by Finance
Act, 2008). To this extent, there is clearly a mistake apparent from the record in the
tribunal's order. Further, the position of law as stated by the tribunal vide para 4 of its
impugned order, is in fact the provision as it stands after the amendment by Finance Act,
2010, so that the reference to Finance Act, 2008 is clearly incorrect. The impugned order
would therefore be required to be rectified by passing an amended order. We,
accordingly, recall the impugned order for fresh adjudication.
5. In the result, the Revenue's miscellaneous application is allowed.
4
MA No. 294/Mum/2014 & ITA No. 6884/Mum/2011
ITO vs. Reform Creations (A.Y. 2008-09)
Order u/s.254(1) of the Act
(in ITA No. 6884/Mum/2011)
( / Assessment Years: 2008-09)
6. The Bench, communicating the decision by the tribunal, at this stage required the
ld. Departmental Representative (DR) to canvass the Revenue's case, i.e., in its appeal,
on merits, which was even otherwise apparent from the contents of its miscellaneous
application. He would plead the same with reference to the provision as amended by
Finance Act, 2008, so that only the payments made during the last month of the relevant
previous year would stand excepted by the proviso as applicable. Reference to
amendment by Finance Act, 2010 is inapposite inasmuch as it is inapplicable, being
operative A.Y. 2010-11 onwards.
7. We have heard the party, and perused the material on record. The amendment by
Finance Act, 2010 allows an extended period of time for deposit of TDS, i.e., up to the
due date of the filing the return u/s.139(1) of the Act, irrespective of the date of the
payment on which the tax is deductible during the year. The said amendment has been
held by the series of decisions by the hon'ble courts to be retrospective, viz. CIT vs.
Rajinder Kumar [2014] 362 ITR 241 (Del); CIT vs. Naresh Kumar [2013] 362 CTR 256
(Del); CIT vs. Omprakash & Others (in Tax Appeal No. 412/2013 (Guj); CIT vs. Tej
Organisation Pvt. Ltd. (in Tax Appeal No. 1040/2013 dated 28.11.2013/copy on record);
CIT vs. Virgin Creation (in ITA No. 302 of 2011 (Cal)). The hon'ble high courts have
answered the precise question that arises in the instant case, i.e., whether the amendment
to section 40(a)(ia) by Finance Act, 2010, w.e.f. 01.04.2010 is retrospective or not,
replying the same in the affirmative. The decision by the tribunal in the case of Bharti
Shipyard Ltd. vs. Dy. CIT (in ITA No. 2404/Mum/2009 dated 12.09.2011) relied upon the
Revenue, would therefore be to no moment. In view of the same, the tax deducted at
source during the relevant previous year having been deposited admittedly on
29.05.2008, i.e., before the due date prescribed u/s. 139(1), no disallowance is called for.
Further, in-as-much as section 40(a)(ia) only provides for a timing difference, so that the
A.O. was in any case obliged to allow deduction for the impugned sum in assessment for
5
MA No. 294/Mum/2014 & ITA No. 6884/Mum/2011
ITO vs. Reform Creations (A.Y. 2008-09)
A.Y. 2009-10, the same, where so, shall obtain no longer in consequence to our order,
which shall be read along and in conjunction with the impugned order, of which it shall
form a part. We decide accordingly.
8. In the result, the Revenue's appeal is dismissed.
Order pronounced in the open court on January 5, 2014
Sd/- Sd/-
(Amit Shukla) (Sanjay Arora)
/ Judicial Member / Accountant Member
Mumbai; Dated : 05.01.2015
. ../Roshani, Sr. PS
/Copy of the Order forwarded to :
1. / The Applicant
2. / The Respondent
3. () / The CIT(A)
4. / CIT - concerned
5. , , / DR, ITAT, Mumbai
6. / Guard File
/ BY ORDER,
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai
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