Income Tax Appellate Tribunal - Cuttack
Vivek Agarwal, Jharsuguda vs Ito, Jharsuguda on 20 January, 2020
आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक
IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK
BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM
आयकर अपीऱ सं./ITA No.85/CTK/2015
(नििाारण वषा / Assessment Year : 2010-2011)
Vivek Agarwal, Vs. ITO, Ward-1, Jharsuguda
Marwari Pada,
Jharsuguda
स्थायी लेखा सं ./ PAN No. : AGHPA 3341 D
(अऩीलाथी /Appellant) .. (प्रत्यथी / Respondent)
ननधाारिती की ओर से /Assessee by : Shri Binod Agarwal, Advocate
िाजस्व की ओर से /Revenue by : Shri Subhendu Dutta, DR
सुनवाई की तािीख / Date of Hearing : 19/11/2019
घोषणा की तािीख/Date of Pronouncement : 20/01/2020
आदे श / O R D E R
Per L.P.Sahu, AM:
This is an appeal filed by the assessee against the order of CIT(A), Cuttack, dated 28.11.2014 for assessment year 2010-2011, on the following grounds :-
1. For that the learned Commissioner of Income Tax (Appeals) is wholly unjustified to confirm the addition made by Assessing Officer u/s. 40(i)(ia) amounting to Rs. 14,44,064/- u/s. 194C and Rs(78,668/-) u/s. 194A which is against the spirit of law, is illegal, arbitrary and bad in law and should be deleted in the facts and circumstances of the case.
2. For that learned Commissioner of Income Tax (Appeals) is not correct to confirm addition of Rs.2,80,126/- alleging undisclosed gross receipt from SEPCO which is wholly incorrect, is because of non-appreciation of facts and evidence and therefore unwarranted, unreasonable and unsustainable and should be deleted in the facts and circumstances of the case.
3. For that confirmation of addition of Rs.3,42,000/- being small hand loans taken from friends and relatives is the result of 2 ITA No.85/CTK/2015 erroneous presumption without any material and evidence and should be deleted in the facts and circumstances of the case.
4. For that other grounds if any shall be urged at the time of hearing.
2. Brief facts of the case are that the assessee carries business of transportation and contract work and filed his return of income for A.Y.2010-2011 on 27.03.2011 showing total income at Rs.11,09,650/-.
Upon issuance of statutory notices by the AO, the assessment in this case was completed making various additions.
3. Feeling aggrieved from the assessment order, the assessee preferred appeal before the CIT(A) and the CIT(A) partly allowed the appeal of the assessee.
4. Feeling further aggrieved from the order of the CIT(A), the assessee is in appeal before the Income Tax Appellate Tribunal.
5. This case was originally decided by this Bench of the Tribunal vide order dated 28.04.2017 in which the ground No.1 was allowed in favour of the assessee and ground Nos.2 & 3 were dismissed.
Thereafter the Revenue filed Miscellaneous Application bearing M.A.No.38/CTK/2017 on 25.10.2017 stating therein that the Tribunal has wrongly decided ground No.1 in favour of the assessee after considering the decision of Hon'ble Allahabad High Court in the case of VIT Vs. Victor Shipping Pvt. Ltd. (2013) ITR 642. Later on it was noticed that the Hon'ble Supreme Court has decided this issue in favour of the Revenue in the case of Palam Gas Service Vs. CIT (2014) 47 3 ITA No.85/CTK/2015 taxmann.com 310 (Himachal Pradesh) and, therefore, the Revenue has challenged for recalling the order of Tribunal dated 28.04.2017.
Thereafter the Tribunal vide order dated 08.11.2019 has recalled the order dated 28.04.2017.
6. During the course of hearing, ld. AR submitted that the amendment in the Section 40(a)(ia) by the Finance (No.2) Act, 2014 w.e.f.01.04.2015 prescribing such disallowance to be restricted to 30% only. This amendment is being curative in nature, therefore, effect of this amendment would be applied retrospectively. In support of his contentions, ld. AR relied on the following decisions :-
i) Dipak Parui Vs. JCIT, ITA No.767/Kol/2016, order dated 20.08.2018;
ii) Sri Rajendra Yadav Vs. ITO, ITA No.895/JP/2012, order dated 29.01.2016; and
iii) Tripura State Electricity Corporation Ltd. Vs. DCIT, ITA No.30/Gau/2015, order dated 18.10.2019.
7. On the other hand, ld.DR supported the order of lower authorities and submitted that if once in the Finance Act it is clearly mentioned that this amendment will take effect from 01.04.2015, therefore, it is not retrospective effect and the case of the assessee is for assessment year 2010-2011, therefore, the assessee will not get benefit of this amended provisions.
8. After hearing both the sides and perusing the entire material on record and the orders of authorities below along with the case laws 4 ITA No.85/CTK/2015 cited by the ld. AR of the assessee, we find that the AO made addition u/s.40(a)(ia) of the Act for non-deduction of TDS, to which the CIT(A) has confirmed the action of AO. However, as per the amendment brought to the Finance Act, 2014 in Section 40(a)(ia) of the Act w.e.f.
01.04.2015, if 100% disallowance made u/s.40(a)(ia) of the Act, that would be restricted to 30% only and the proviso inserted in the Act to be a curative one having retrospective effect and the assessee is entitled the benefit of 30% disallowance as against 100% disallowance made by the AO. This issue has already been decided by this Bench of the Tribunal in case of Om Sri Nilamadhab Builders Pvt. Ltd, in ITA No.296/CTK/2018, order dated 26.11.2019, wherein the Tribunal has held that if a statute is curative of the previous law, retrospective operation is generally intended. The relevant observations of the Tribunal are as under :-
"8. From the above observations of the different benches of the Tribunal, we find that the 100% disallowance made u/s.40(a)(ia) of the Act has been directed to be restricted to the extent of 30% only giving retrospective effect. Ld. DR before us submitted that there is no mention in the amendment that the same shall be applied retrospectively, however, in our considered opinion, if a statute is curative of the previous law, retrospective operation is generally intended. The Hon'ble Supreme Court in the case of CIT vs. Calcutta Export Company, [2018] 93 taxmann.com 51 (SC), while deciding the issue as to whether amendment made by Finance Act, 2010, to provisions of section 40(a)(ia) is curative in nature and it should be given retrospective operation from date of insertion of said provision i.e. with effect from assessment year 2005-06, has held as under :-
"The purpose for bringing said amendment is to ensure tax compliance. The fact that the intention of the legislature was not to punish the assessee is further reflected from a bare reading of the provisions of section 40(a)(ia). It only results in shifting of 5 ITA No.85/CTK/2015 the year in which the expenditure can be claimed as deduction. In a case where the tax deducted at source was duly deposited with the Government within the prescribed time, the said amount can be claimed as a deduction from the income in the previous year in which the TDS was deducted. However, when the amount deducted in the form of TDS was deposited with the Government after the expiry of period allowed for such deposit then the deductions can be claimed for such deposited TDS amount only in the previous year in which such payment was made to the government. [Para 16]"
9. On careful perusal of the amendment brought to the Section 40(a)(ia) of the Act by the Finance Act, 2014 w.e.f. 01.04.2015, it is clear that the intent of legislature to reduce the hardship, it is proposed that in case of non-deduction or non-payment of TDS on payments made to residents as specified in section 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the amount of expenditure claimed. The Hon'ble Supreme Court in the case of Allied Motors (P) Ltd. [1997] 224 ITR 677 (SC) has held that amendment was remedial in nature, designed to eliminate unintended consequences which may cause undue hardship to the assessee and which made the provision unworkable or unjust in a specific situation. Finally, after considering various case laws, the Hon'ble Supreme Court held that the purpose of amendment would not serve its object in such a situation unless, it is construed as retrospective after observing as under :-
10. Therefore, in the well-known words of Judge Learned Hand, one cannot make a fortress out of the dictionary; and should remember that statutes have some purpose and object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning. In the case of R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 , this Court said that one should apply the rule of reasonable interpretation. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole.
11. This view has been accepted by a number of High Courts. In the case of CIT v. Chandulal Venichand [1994] 209 ITR 7/ 73 Taxman 349 , the Gujarat High Court has held that the first proviso to section 43B is retrospective and sales-tax for the last quarter paid before the filing of the return for the assessment year is deductible. This decision deals with the assessment year 1984-85. The Calcutta High Court in the case of CIT v. Sri Jagannath Steel Corpn. [1991] 191 ITR 676 , has taken a similar view holding that the statutory liability for sales-tax actually discharged after the expiry of the accounting year in compliance with the relevant statute is entitled to deduction under section 6 ITA No.85/CTK/2015 43B. The High Court has held the amendment to be clarificatory and, therefore, retrospective. The Gujarat High Court in the above case held the amendment to be curative and explanatory and hence retrospective. The Patna High Court has also held the amendment inserting the first proviso to be explanatory in the case of Jamshedpur Motor Accessories Stores v. Union of India [1991] 189 ITR 70/ 54 Taxman 521. It has held the amendment inserting first proviso to be retrospective. The special leave petition from this decision of the Patna High Court was dismissed. The view of the Delhi High Court, therefore, that the first proviso to section 43B will be available only prospectively does not appear to be correct. As observed by G.P. Singh in his Principles of Statutory Interpretation, Fourth edn., page 291, "It is well-settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended". In fact the amendment would not serve its object in such a situation unless it is construed as retrospective. The view, therefore, taken by the Delhi High Court cannot be sustained.
10. Respectfully following the above decisions of the Tribunal as well as Hon'ble Supreme Court, we direct the AO to restrict the 100% disallowance confirmed by the CIT(A) to the extent of 30% only taking into account the actual claim of the assessee in its profit and loss account. We order accordingly. Thus, the sole ground of appeal of the assessee is partly allowed.
9. Respectfully following the above observations of the Tribunal and considering the case laws cited by the ld. AR as noted above, we direct the AO to restrict the disallowance to 30% made u/s.40(a)(ia) of the Act on account of non-deduction of TDS. Accordingly, ground No.1 of appeal of the assessee is partly allowed.
10. In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 20/01/2020.
Sd/- Sd/-
(C.M.GARG) (L.P.SAHU)
न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER
कटक Cuttack; ददनांक Dated 20/01/2020
Prakash Kumar Mishra, Sr.P.S.
7
ITA No.85/CTK/2015
आदे श की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to :
1. अऩीलाथी / The Appellant-
Vivek Agarwal, Marwari Pada, Jharsuguda
2. प्रत्यथी / The Respondent-
ITO, Ward-1, Jharsuguda
3. आयकि आयुक्त(अऩील) / The CIT(A),
4. आयकि आयुक्त / CIT
5. ववभागीय प्रनतननधध, आयकि अऩीलीय अधधकिण, कटक / DR, ITAT, Cuttack
6. गार्ा पाईल / Guard file.
सत्यावऩत प्रनत //True Copy// आदे शािस ु ार/ BY ORDER, (Senior Private Secretary) ITAT Cuttack Bench, Cuttack