TaxTMI 
TaxTMI 
2015 (2) TMI 982
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the Assessing Officer, as per the provisions of section 40(a)(ia) of the Act as applicable for the assessment year 2009-10, tax deducted at source ought to have been remitted to the credit of the Government on or before the seventh day of the succeeding month i.e., March 7, 2009. Since the assessee deposited the amount only on April 11, 2009 the Assessing Officer disallowed the claim of the assessee for deduction invoking the provisions of section 40(a)(ia) of the Act. 4. Similarly, another sum of Rs. 45,444 which was tax deducted at source for January, 2009 had been deposited by the assessee to the credit of the Government only on April 19, 2009. The Assessing Officer, invoking the provisions of section 40(a)(ia), was of the view that since the payment had not been made on or before the due date, the claim of deduction made by the assessee had to be disallowed. 5. The gross amount relatable to the aforesaid taxes deducted at source and not paid to the credit of Government was a sum of Rs. 4,41,204. This sum was disallowed by the Assessing Officer and added to the total income of the assessee. 6. On appeal, the Commissioner of Income-tax (Appeals) deleted the addition made b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eing resident, for carrying out any work (including supply of labour for carrying out any work), 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 during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200 : Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Explanation.-For the purposes of this sub-clause,- (i) "commission or brokerage" shall have the same meaning as in clause (i) of the Explanation to section 194H ; (ii) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of subsection (1) of section 9 ; (iii) "professional services" shall have the same meaning as in clause (a) of the Explanation to section 194J ; (iv) "work" shall have the same meaning as in Explanation III....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en deducted in any subsequent year, or has been deducted- (A) during the last month of the previous year but paid after the said due date ; or (B) during any other month of the previous year but paid after the end of the said previous year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid ;' 12. The Finance Act, 2008 brought out amendment to section 40(a)(ia) with retrospective effect from April 1, 2005 by relaxing earlier position to some extent. It made two categories of defaults causing disallowance on the basis of the period of the previous year in which tax was deductible. The first category of disallowances included the cases in which tax was deductible and was so deducted during the last month of the previous year but there was failure to pay such tax on or before the due date specified in sub-section (1) of section 139 of the Act. In other words, if any amount on which tax was deductible during last month of the previous year, that is March 2005, but was paid before October 31, 2005, being the due date under section 139(1), the deduc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of the previous year in case of deduction during the first eleven months, as a pre-condition for the grant of deduction in the year of incurring expenditure, has been altered. The hitherto requirement of the assessee deducting tax at source during the first eleven months of the previous year and paying it before the close of the previous year up to 31st March of the previous year as a requirement for grant of deduction in the year of incurring such expenditure, has been eased to extend such time for payment of tax up to due date under section 139(1) of the Act. As per the new amendment, the disallowance will be made if after deducting tax at source, the assessee fails to pay the amount of tax on or before the due date specified in sub-section (1) of section 139 of the Act. The effect of this amendment is that now the assessee deducting tax either in the last month of the previous year or first eleven months of the previous year shall be entitled to deduction of the expenditure in the year of incurring it, if the tax so deducted at source is paid on or before the due date under section 139(1). This is the only difference which has been made by the Finance Act, 2010. &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of tax deducted at the time of making payment in respect of expenditure referred to in section 40(a)(ia) of the Act, if paid to the Government on or before the due date for filing the return of income due date under section 139(1) of the Act should be allowed as a deduction. In other words it was argued that the amendment by the Finance Act, 2010 to the provisions of section 40(a)(ia) has to be held to be retrospective with effect from April 1, 2005. The Income-tax Appellate Tribunal, Kolkata Bench by its order dated December 15, 2010 held as follows : "8. After hearing the rival submissions and on careful perusal of the materials available on record, keeping in view of the fact that though the learned Departmental representative submitted that the decisions of the co-ordinate Benches are not binding and the Kolkata benches may take a different view, since Mumbai Bench after analysing the provisions of section 40(a)(ia) since its inception and various amendments made to the same including the suggestion made by the industry in the form of representation in their pre- budget memorandum to the hon'ble Finance Min....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. Therefore, respectfully following the decision of the coordinate Benches (supra), we allow the ground Nos. 1 to 3 of the assessee's appeal.' 17. As against the aforesaid decision the Revenue preferred appeal before the hon'ble Calcutta High Court. The hon'ble Calcutta High Court in I. T. A. No. 302 of 2011 GA 3200 of 2011 decided on November 23, 2011 held as follows : "We have heard Mr. Nizamuddin and gone through the impugned judgment and order. We have also examined the point formulated for which the present appeal is sought to be admitted. It is argued by Mr. Nizamuddin that this court needs to take decision as to whether section 40(a)(ia) is having retrospective operation or not. The learned Tribunal on fact found that the assessee had deducted tax at source from the paid charges between the period April 1, 2005 and April 28, 2006 and the same were paid by the assessee in July and August 2006, i.e., well before the due date of filing of the return of income for the year under consideration. This factual position was und....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the court above, and therefore, once an authority higher than this Tribunal has expressed its esteemed views on an issue, normally, the decision of the higher judicial authority is to be followed. The Bench has further held that the fact that the judg ment of the higher judicial forum is from a non-jurisdictional High court does not really alter this position, as laid down by the hon'ble Bombay High Court in the case of CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589 (Bom). 20. In view of the above, we hold following the decision of the hon'ble Calcutta High Court, that Amendment to the provisions of section 40(a)(ia) of the Act, by the Finance Act, 2010 is retrospective from April 1, 2005. Consequently, any payment of tax deducted at source during the previous years relevant to and from the assessment year 2005-06 can be made to the Government on or before the due date for filing return of income under section 139(1) of the Act. If payments are made as aforesaid, then no deduction under section 40(a)(ia) of the Act can be made. Admittedly in the present case, the assessee had deposited the tax deducted at ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aw materials. Due to heavy fluctuation in the foreign exchange rate, the assessee had to remit excess cost in terms of Indian rupee towards such imports. Thus, such heavy cost incurred by the assessee had resulted in loss in its business and in order to contain the loss the assessee had made/raised debit notes to its customers being the importers of the products, for increasing the sale price and such excess consideration requested to be paid by the importer which was reflected through debit note issued to them was considered in its accounts as sale consideration receivable. Such sale consideration receivable, in accordance with the assessee's unilateral claim, was offered for taxation in the year 2006-07. It was pointed out that copies of the accounts related to the assessment year 2006-07 wherein the income was offered was also submitted. However, the foreign customer/ importers did not acknowledge the additional consideration claimed by the assessee and having found after persuasion that the amount was not receivable and not expected to be realised in the relevant previous year to the assessment year 2009-10, the assessee had to write off the amount of Rs. 1,45,96,224 and re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bad debts pertaining to foreign party could not be disallowed merely for want of Reserve Bank of India approval. In the instant case also, the income arising on account of the exports was admitted by the appellant in the assessment year 2006-07 and all the conditions as required under section 36(1)(vii) read with section 36(2) of the Act are fulfilled. Respectfully following the said decision, the Assessing Officer is directed to allow the deduction of bad debts written off by the appellant during the period under consideration." 14. Before us, the learned Departmental representative pointed out that in the grounds of appeal, the Department has taken an objection that the decision rendered by the Mumbai Bench of the Tribunal in the case of Sabra Impex Ltd. has not attained finality. Without prejudice to the above submission, it was also submitted by him that the disallowance made by the Assessing Officer can be sustained by invoking Explanation to section 37(1) of the Act. 15. Learned counsel for the assessee, besides relying on the order of the Commissioner of Income-tax (Appeals), also filed a copy of the decision of the Income-tax Appellate Tribunal, Bangalore Bench rendered i....