Tribunal rules in favor of assessee: Amendments cannot retroactively apply

The Tribunal held that the amended provisions of section 194C(6) could not be retroactively applied to the assessment year 2011-12. Therefore, the addition made by the Assessing Officer under section 40(a)(ia) was not sustainable. The appeal of the assessee was allowed, and the disputed amount of Rs. 5,00,000 was directed to be deleted.

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Issues:
Appeal against addition u/s.40(a)(ia) - Application of amended provisions of Section 194C(6) of the Income Tax Act, 1961.

Analysis:
The appeal was filed against the addition of Rs. 5,00,000 made under section 40(a)(ia) of the Income Tax Act. The assessee contended that the non-deduction of TDS while making deposits to transporter providers, which led to the addition, should not be upheld as the amended provisions of section 194C(6) were not applicable retrospectively. The Assessing Officer (AO) had disallowed the amount due to non-deduction of TDS, but the assessee argued that the amended provision was effective from 1.6.2015, which was after the relevant financial year 2010-2011. The Departmental Representative (DR) supported the AO's decision, stating that the amendment was in effect at the time of assessment. However, it was noted that the amendment was applicable from 1.6.2015, which did not cover the assessment year 2011-12.

The Judicial Member highlighted that the amendment to section 194C(6) was introduced by the Finance Act, 2015, making it effective from 1.6.2015. The amendment specified conditions under which TDS was required, disentitling the assessee from the benefit of the provision. It was emphasized that the legislature intended to provide relaxation only in specific cases. The Judicial Member opined that the amended provision could not be applied retrospectively to the assessment year 2011-12, as it fell within the financial year 2015-16. Consequently, the AO was directed to delete the addition of Rs. 5,00,000, and the appeal of the assessee was allowed.

In conclusion, the Tribunal held that the amended provisions of section 194C(6) could not be retroactively applied to the assessment year 2011-12, as they came into effect from 1.6.2015. Therefore, the addition made by the AO under section 40(a)(ia) was not sustainable, and the appeal of the assessee was allowed, directing the deletion of the disputed amount.

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