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Income Tax Officer, Ward 38(2), Room No. 234A, 2nd floor, CR Bldg., IP Estate, New Delhi vs. Sh. Naresh Kumar Through Legal Heir Sh. Naveen Kumar, 9307, Gaushala Marg, Kishan Ganj Delhi 110 006
May, 22nd 2012
                                                                ITA NO. 1300/Del/2012

                         DELHI BENCH "E", NEW DELHI
                            I.T.A. No. 1300/Del/2012

                                   A.Y. : 2008-09
Income Tax Officer,                       vs. Sh. Naresh Kumar
Ward 38(2), Room No. 234A,                    Through Legal Heir Sh. Naveen
2nd floor, CR Bldg., IP Estate,               Kumar,
New Delhi                                     9307, Gaushala Marg,
                                              Kishan Ganj
                                              Delhi ­ 110 006
                                              (PAN/GIR NO. :AALPK0199D)
(Appellant )                                  (Respondent )

            Assessee by                   :   Sh. J.C. Aggarwal, CA
           Department by                  :   Sh. R.S. Negi, Sr. D.R.

      This appeal by the Revenue is directed against the order of the

Ld. Commissioner of Income Tax (Appeals)-XXVIII, New Delhi                   dated

05.1.2012 pertaining to assessment year 2008-09.

2.    The grounds raised read as under:-

                   "1.   The Ld. Commissioner of Income Tax (Appeals)

                         grossly erred in deleting the addition of `

                         52,10,873/- made by the Assessing Officer u/s.

                         40(a)(ia) on account of late deposit of TDS made

                                                         ITA NO. 1300/Del/2012

                       *by   the   assessee    with   respect    to    rent,

                       commission and maintenance           expenses not

                       appreciating fact    that the amendment brought

                       in the Income Tax Act u/s. 40(a)(ia) was only

                       effective from 01.4.2010 and not retrospective in


                2.     The appellant craves to add, amend or modify

                       the ground of appeal at any time."

3.    In this case Assessing Officer noted that as per column 27(b) of

the Audit Report the following TDS has been deposited late.

                     Amount of        Tax   Due date for     Details    of
                     Deducted / collected   remittance to    payment;
                     at source (in `)       Government       Date/ (in `)
                     2,869/-                7/8/2007         23/9/2008
                     8,180/-                7/9/2007         23/9/2008
                     3,881/-                7/10/2007        23/9/2008
                     5,446/-                7/11/2007        23/9/2008
                     1,678/-                7/12/2007        23/9/2008
                     5,853/-                7/1/2008         23/9/2008
                     12,239/-               7/2/2008         23/9/2008
                     13,526/-               7/3/2008         23/9/2008

3.1        Assessing Officer further held that since the assessee was

required to deduct TDS @ 1.03% the amount on which TDS has been

deducted late comes to `     5210873/-. Assessing Officer held that in

                                                             ITA NO. 1300/Del/2012

view of the provisions of section 40a(ia), an addition of ` 5210873/-

would be made while computing the income of the assessee.

4.   Before the Ld. Commissioner of Income Tax (Appeals) it was

submitted that the Assessing Officer          has erred on the facts and

circumstances of the case in invoking the provisions of section

40(a)(ia).      It was further submitted that the only question that could

arise in the instant case is whether the TDS deducted during the

financial year 2007-08 which was deposited on 23.9.2008 i.e. before

the date of filing of return of income for A.Y. 2008-09 relevant to F.Y.

2007-08 attracted the provisions of section 40A(ia) so that the amount

on which tax was deducted could be held to be not deductible under

that section.      Assessee further referred to the provisions of section

40A(ia)as under:-

                   "(ia) any interest.......... or amounts      payable to a

                   contractor or sub-contractor, being resident,..............

                   on which tax is deductible at source under Chapter

                   XVII-B and such tax has not been deducted or, after

                   deduction, has not been paid on or before the due

                   date specified in sub section (1) of section 139.

                                                           ITA NO. 1300/Del/2012

4.1   Referring to the above, assessee submitted that the aforesaid

section is attracted in either of the following situations:-

           a)    If the TDS is deductible but has not been deducted.

           b)    If the TDS has been deducted but has not been paid
                 before 30.9.2008.

4.2   It was submitted neither of the situations is attracted in the case

of the assessee.       The deductible tax has been deducted and the

deducted tax has been deposited before 30.9.2008.

4.3   Assessee further placed reliance on the following case laws:-

           a)    Calcutta High Court in the C.I.T., Kol-XI, Kol vs. Virgin

                 Creations (ITA No. 302 of 2011, GA 32000/2011).

           b)    ITAT, Mumbai `B' Bench in Bansal Parivahan (India)

                 Pvt. Ltd. vs. ITO (2011) 137 TT (Mumbai) 319 : (2011)

                 43 SOT 619: (2011) 53 DTR 40 : (2011) 9 ITR 565.

           c)    ITAT, Ahmedabad `A' Bench in Dynamic Builders vs.

                 ITO (ITA No. 1625/Ahd./2008)

           d)    ITAT, Ahmedabad `A' Bench in Aavkar Developers vs.

                 ITO (ITA No. 3165 / Ahd./ 2009).

                                                         ITA NO. 1300/Del/2012

           e)   ITAT, Mumbai `G' Bench in Golden Stables Life Centre

                Pvt. Ltd. vs. C.I.T. (ITA No. 5145/Mum/2009) reported

                at 2010-TIOL-596-ITAT-Mum.

4.4   It was submitted in all the above cases, it has been held that

provision inserted by Finance Act, 2010 is retrospective in nature.       Ld.

Commissioner of Income Tax (Appeals) considered the              above, he

referred to the decision of ITAT, Mumbai `B' Bench in Bansal Parivahan

(India) Pvt. Ltd. vs. ITO (2011) 9 ITR 565 and held as under:-

                ".....The provisions of s. 40(a)(ia) as stood prior to the

                amendments made by the Finance Act, 2010 thus

                were resulting into unintended consequences and

                causing grave and genuine hardships to the assessee

                who had substantially complied with the relevant TDS

                provisions by deducting the tax at source and by

                paying the same to the credit of the Government

                before the due date of filing of their returns under s.

                139(1).     In order to remedy this position and to

                remove the hardships which was being caused to the

                assessee's belonging to such category, amendments

                have been made in the provisions of s. 40(a)(ia) by the

                Finance Act, 2010.      The said amendments, in our

                                           ITA NO. 1300/Del/2012

opinion, thus are clearly remedial / curative in nature

as held by Hon'ble Supreme Court in the case of Allied

Motors (P) Ltd. (supra)       and Alom Extrusions Ltd.

(supra)   and   the    same    therefore     would        apply

retrospectively w.e.f. 1st April, 2005.     In the case of

R.B. Jodha Mal Kuthiala vs. C.I.T. (1971) 82 ITR 570

(Supreme Court), it was held by the Hon'ble Supreme

Court that a proviso which is inserted to remedy

intended consequences and to make the provisions

workable, requires to be treated as retrospective in

operation so that a reasonable interpretation can be

given to the section as a whole. In the present case,

the amount of TDS from the freight charges during the

period 1st April, 2005 to 28th Feb, 2006 was paid by the

assessee in the months of July and August, 2006 i.e.,

well before the due date of filing of its return of

income for the year under consideration. This being

the   undisputed       position,   we     hold     that     the

disallowance made by the Assessing Officer                 and

confirmed by the Ld. Commissioner of Income Tax

(Appeals) on account of freight charges by invoking

                                                           ITA NO. 1300/Del/2012

                  the provisions of s. 40(a)(ia) is not sustainable as per

                  the amendments made in the said provisions by the

                  Finance Act, 2010 which, being remedial /curative in

                  nature have retrospective application.          Accordingly,

                  we delete the said disallowance and allow ground no.

                  2 of this appeal."

4.5   Ld. Commissioner of Income Tax (Appeals) further referred the

decision   of   the   Hon'ble   Calcutta   High   Court   in    the   case   of

Commissioner of Income Tax, Kol vs. Virgin Creations (ITA No. 302 of

2011, GA 32000/2011) where it was held that the amendment in

section 40(a)(ia) is remedial /curative in nature and has retrospective

effect.    In view of these decisions and the facts of the case, the

disallowance made by the Assessing Officer u/s. 40(a)(ia) to the tune

of ` 52,10,873/- was deleted.

5.    Against the above order the Revenue is in appeal before us.

6.    We have heard the rival contentions in light             of the material

produced and precedent relied upon. We find that the only grievance

of the Revenue is that the amendment brought in the Income Tax Act

u/s. 40(a(ia) was only effective from 1.4.2010 and not retrospective in

nature.    However, we find that in a catena of case laws as mentioned,

                                                           ITA NO. 1300/Del/2012

it has been held that the amendment in section 40(a)(ia) is remedial

and curative in nature     and has retrospective effect.       In this case,

admittedly, the TDS deducted was deposited before the date of the

filing of the return and under such situation,     there cannot be any

disallowance u/s. 40(a)(ia).   Thus we find that Ld. Commissioner of

Income Tax (Appeals) has taken a correct view in the matter, which

does not need any interference on our part. Accordingly, we uphold

the same.

7.    In the result, the appeal filed by the Revenue stands dismissed.

      Order pronounced in the open court on 21/5/2012, upon
conclusion of hearing.

                Sd/-                                     Sd/-

   [A.D. JAIN]                                     [SHAMIM YAHYA]
JUDICIAL MEMBER                                  ACCOUNTANT MEMBER

Date 21/5/2012
Copy forwarded to: -
1.    Appellant 2.       Respondent         3.     CIT   4.      CIT (A)
5.    DR, ITAT

                             TRUE COPY
                                                   By Order,

                                                    Assistant Registrar,
                                                    ITAT, Delhi Benches

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