TaxTMI 
TaxTMI 
TaxTMI 
2013 (11) TMI 412
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....ellaneous Petition No.76/12, reads as under:- "We have heard the rival submissions and perused the materials on record. It is true that the assessee in support of his ground 2(i) and 3 had relied on the judgment of the Hon'ble High Court of Calcutta in the case of CIT v Virgin Creations and the order of the Tribunal in the case of ACIT v M K Gurumurthy (2012) 22 Taxman.com.72 (Bang.). The non-consideration of ground no.2(i) and 3 is a mistake apparent from record warranting rectification under section 254(2) of the Act. Hence, we recall our order dated 3/8.2012 and post the case for hearing on 18/02/2013. Since the parties are informed in the open court about the date of hearing, no fresh notice need be issued. It is ordered accordingly". 3. We shall now proceed to dispose off the ground no.2(1) and ground no.3, chronologically as under:- Ground No.2(i): The learned CIT(A) and Addl. CIT erred in holding that the extended period of limitation for payment of tax deducted at source (before the due date for filing of return) was not retrospectively applicable to assessment year 2009-2010 as the amendment made by finance Act 2010 to Section 40(a)(ia) was not....
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....(a)(ia) has been inserted by Finance Act,2005. It was thus contended that the amendment is remedial, curative in nature and has retrospective/clarificatory effect. The Assessing Officer, however, rejected the assessee's contentions by giving the following reasons:- i) The tax deducted at source in January and February, 2009, which should have been remitted by the appellant on or before 31/3/2009, came within the mischief of the proviso B to section 40(a)(ia) and, hence, the entire payments representing expenditure of Rs.7,18,96,190/- is disallowable. Expenditure relating to payments made in March 2009 from which tax had been deducted on or before 31/3/2009 but paid before the due date for filing the return of income in terms of section 139(1) of the Act would not come within the mischief of section 40(a)(ia). ii) The amendment to section 40(a)(ia) is not retrospective in as much as the amendment is silent on that aspect. iii) The Special Bench of the Hon'ble ITAT, Mumbai had, in the case of M/s Bharati Shipyard Ltd. v DCIT (ITA No.2404/Mum/2009 dated 9/9/2011), held that the amendment had no retrospective operation from 1/4/2005. 3.1.2 For....
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....TAT-MUM-SB, where it was held as follows:- "56. In view of the foregoing reasons we are satisfied that the amendment carried out by the Finance Act, 2010 with retrospective effect from assessment year 2010-2011 cannot be held to be retrospective from assessment year 2005- 06". (i) The claim is, therefore, rejected." 3.5 The learned AR submitted that the issue in question is squarely covered by the judgement of the Hon'ble High Court of Calcutta in the case of CIT v Virgin Creations in IT Appeal No.302 of 2011, dated 23.11.2011) (para 10) and the recent order of the Bangalore Bench of the Tribunal in the case of ACIT v M K Gurumurthy reported in (2012) 22 taxmann.com 72. 3.5.1 The learned DR present was duly heard. 3.6 We have heard the rival submissions and perused the materials on record. The Hon'ble High Court of Calcutta in the case cited supra had held that the amendment brought out by the Finance Act, 2010 was remedial and curative in nature and it has got retrospective application. The amendment brought out by Finance Act, 2010 wef 1/4/2010 to section 40(a)(ia) read as follows:- "Amounts not deductible &nbs....
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....ses and the Memorandum Explaining the Provisions of the Finance Bill does not particularly indicate any relaxation in the provision retrospectively from asst. yr. 2005-06 by providing that the expenditure on which due tax was deducted upto February, 2005 but paid before the due date specified in s. 139(1) shall not suffer any disallowance in the asst. yr. 2005-06." 14. However, the Hon'ble Calcutta High Court has taken a different view in the case of CIT v. Virgin Creations (supra) and the issue stands decided against the revenue. Therefore considering the precedent in the judicial hierarchy, we are bound to follow the decision of the Hon'ble Calcutta High Court because it is the only judgment of any High Court which is brought to our notice. 15. Similar view has been taken in the Third Member decision in the case of Kanel Oil & Export Inds. Ltd. v. JCIT [2009] 121 ITD 596 (Ahd) (TM) wherein it has been held as under:- "In the instant case, question that came up for consideration was as to whether the order of the Special Bench upholding the levy of interest in the light of sub-section (4) of section 115JA should be ....
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....ed into written contract with large companies and such contracts were not amenable to sub-contracting; he merely took trucks on hire and the truck owners were not sub-contractors and did not do any 'work' as contemplated under section 194C of the Income-tax Act, 1961; hence, the section did not apply to the payments made to them; the deduction of tax at source was however made out of abundant caution; mere deduction did not render it "deductible". 4.1 The learned CIT(A) rejected the above ground of the assessee by giving the following reasoning:- "a) Such services as rendered cannot be conducted without the basic responsibility of the truckers. All requirements of a work contract exist. b) Even if the appellant were to be only hiring a truck, without placing major responsibilities on the truckers, section 194C applies as is clearly brought out in the section. In fact, sub-section (6), which has been introduced with effect from 1/4/2009, reads as under:- (6) No deduction shall be made from any sub credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the cour....
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....uting the contract on behalf of its principal. For fulfilling its transportation commitment, the assessee besides using its own tankers was also hiring the tankers from outside parties as and when required. In such a case of hiring from outside, the responsibility of successful completion of transportation work rested upon the appellant. From the record or the findings of the authorities below nowhere it is borne out that there was any kind of written or oral contract with the principals by such outside tank owners that they will share the risk and responsibility with the appellant. It is not in dispute that the department's case is that in the present case provisions of section 194C(1) are applicable and not section 194C(2). Once it is held that it is a case of section 194C(1), then it would be seen that this section applies to any payment made to a person for carrying out any work in pursuance of a contract between the contractor and the person making the payment. If the condition of 'carrying out any work in pursuance of a contract' is not fulfilled then the provisions of this section will not be applicable at all. In instant case, the contract for carrying out the....