×Latest Case Laws on Income Tax by various High Courts of India
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17-01-2019, BHANOT CONSTRUCTION, Section 260A, 40(a)(ia), HIGH COURT OF DELHI
Present appeal by the Revenue under Section 260A of the Income Tax Act, 1961 („Act‟, for short) assails the order dated 16th November, 2017 passed by the Income Tax Appellate Tribunal („Tribunal‟, for short) in the case of Bhanot Construction and Housing Limited („respondent-assessee‟, for short).
2. The appeal relates to Assessment Year 2011-12. During the year, respondent-assessee was engaged in business of civil construction, real estate, sale-purchase and infrastructure development. The issue raised pertains to disallowance under Section 40(a)(ia) of the Act for failure to deposit tax deducted at source of Rs. 34,00,400/- on or before due date of filing of the income tax return. Accordingly expenditure of Rs.17,00,20,000/- paid by the respondent-assessee to M/s Arch Infrastructure Projects Nirman Private Limited was disallowed and declared income was enhanced from Rs.1,35,11,330/- to Rs.18,35,31,330/- vide assessment order dated 7th March, 2014.
3. The addition was deleted by Commissioner of Income Tax (Appeals), which deletion has been affirmed by the Tribunal. The reasoning given by the Tribunal in the impugned order while dismissing the appeal of the Revenue reads as under:-
“We have heard the Ld. DR and perused the relevant records, especially the impugned order. We find that TDS deducted by the assessee for Rs.34,00,400/- on account of payment of Rs.17,00,20,000/- to M/s Arch Infra Projects Nirman Private Ltd. was deposited in the government account on 03.10.2011, which in case of the assessee was beyond the due date of filing of Return of Income for A.Y. 2011-12, but then the rigor of the Act for disallowance of payment in such cases as mandated u/s. 40(a)(ia) have been softened in terms of first proviso to section 201 of the I.T. Act (with effect from 01.07.2012) read with second proviso to section 40(a)(ia) (with effect from 01.04.2013). We further note that these amendments are strictly speaking not relatable to assessment year 2011-12, to which the case of the assessee pertains, but then considering the fact that it is a beneficial legislation, the above provisions should in the interest of justice be considered as being declarative and curative in nature and consequently be treated as having retrospective effect from 01.04.2005 which is the date from which sub clause (ia) of section 40(a) was inserted by Finance act, 2004. In fact by treating the above legislation as declaratory and therefore retrospective, it is
the intention of the legislature which is being furthered and that the same would not run counter to the spirit of the enactment. In this connection, reliance was placed before the Ld. CIT(A) on the decision of Hon‟ble ITAT in Rajeev Kumar Agarwal vs. ACIT ITA No.337/Agra/2013 dated 29.05.2014. Now, as in the facts of this case it has already been confirmed through the A.O. of the recipient of payment i.e. M/s Arch Infra Projects Nirman Private Ltd. that they have accounted for the receipts from the assessee for Rs.17,00,20,000/- in their return of income for A.Y. 2011-12, which have been filed on 30.09.2011 and on which taxes have been paid, as per the copy of acknowledgment. Further, even the assessee has filed the certificate as required under the first proviso to section 201.Considering all the above discussion in totality the addition made for Rs.17,00,20,000/- was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) and reject the ground raised by the Revenue.”
4. We find that the aforesaid reasoning is correct and in accord with the ratio and decision in Commissioner of Income Tax-XIII versus Naresh Kumar, (2014) 362 ITR 256 (Del.) holding that insertion of the words- “ has not been paid on or before the due date specified in subsection (1) to Section 139” to Section 40(a)(ia) vide Finance Act, 2010 with effect from 1st April, 2010 should be given retrospective effect for varied reasons, including the grounds mentioned in paragraphs 14, 15, 16 and 17, which read:-
“14. Provisions relating to deduction of tax at source are important as this ensures that tax so deducted gets deposited with the Government and non-taxpayers/filers can be identified. The deductee do not suffer and are not deprived of credit of deduction made from their income. Section 40(a)(ia) is a provision incorporated with the said objective and purpose in mind. It is not basically a penal provision as when the TDS is deposited, the amount on