TaxTMI 
TaxTMI 
2015 (3) TMI 770
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....om the audit report u/s.44AB that the auditors have reported in Column No.27(b)(ii) that 2% tax deductible on Rs. 58,81,847/- has not been deducted at all. Hence, the said amount qualifies for disallowance u/s.40(a)(ia) of the I.T. Act., However, the assessee has not added back the said amount of Rs. 58,81,847/- in the computation of income. The Assessing Officer, therefore, asked the assessee to explain the same and furnish the details of payment on which the tax has not been deducted including the address of the persons to whom the labour charges are paid. The assessee furnished such details. 3.1 However, the Assessing Officer was not satisfied with the explanation given by the assessee. He noted that the assessee has failed to deduct the tax as per provisions of section 194C of the I.T. Act, 1961 deductible on Rs. 58,81,847/- being the labour charges paid. Applying the provisions of section 40(a)(ia) the Assessing Officer disallowed an amount of Rs. 58,81,847/- on which tax has not been deducted and added the same to the total income of the assessee. 4. In appeal the Ld.CIT(A) following the decision of the Special Bench of the Tribunal in the case of Merilyn Shipping and Tran....
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....dment is retrospective in nature on the reasoning that it is clarificatory in nature. It was introduced to eliminate unintended consequences. He submitted that the second proviso in section 40(a)(ia) was inserted by the Finance Act, 2012 w.e.f. 01-04-2013 wherein it is stated that the disallowance u/s.40(a)(ia) of the Act need not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the I.T. Act. He submitted that the aforesaid proviso which was made effective from 01-04-2013 should be applied retrospectively since it has been introduced to eliminate unintended consequences which may cause undue hardship to tax payers. 6.2 Referring to the decision of the Cochin Bench of the Tribunal in the case of Antony D. Mundackal Vs. The ACIT vide ITA No.38/Coch/2013 order dated 29-11-2013 for A.Y. 2009-10 he submitted that the Tribunal after thoroughly considering the issue has restored the matter to the file of the Assessing Officer with certain directions. He submitted that since the assessee is arguing this aspect for the first time before the Tribunal which has not been raised before the lower authorities, therefore, he has no ob....
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....of the Tribunal in the case of Antony D. Mundackal (Supra) relied on by Ld. Counsel for the assessee, had an occasion to decide an issue in the light of the above argument and has restored the issue to the file of the Assessing Officer with certain directions. The relevant observation of the Tribunal at Para 7 of the order read as under: "7. We have heard the rival contentions and carefully perused the record. According to the assessee, there is no written contract between him and the persons doing polishing works. Accordingly, the assessee has contended before us that the provisions of sec. 194C shall not apply to the polishing charges. However, we notice that the assessing officer has given a clear finding that essential ingredients of a contract are very much available in the polishing works entrusted by the assessee. Further we notice that the CBDT, vide circular No.433 dated 25-09-1985 (1986)(157 ITR St. 27) has clarified that the provisions of sec. 194C are wide enough to cover oral contracts also. A contract is normally reduced in writing in order to make clear the terms and condition....
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.... contended that the provisions of sec. 40(a)(ia) shall apply only to amount payable and not to the amount paid. However, the Hon'ble Gujarat High Court in the case of CIT Vs. Sikandar Khan N Tunvar (357 ITR 312) and the Hon'ble Calcutta High Court in the case of CIT Vs. Crescent Export Syndicate (ITAT 20 of 2013) have held that the decision rendered by the Special Bench in the case of Meryline Shipping & Transports is not a good law. The Ld A.R, however, placed reliance on the decision of Hon'ble Allahabad High Court in the case of Vector Shipping Services (357 ITR 642). On a careful perusal of the decision given by Hon'ble Allahabad High Court, we notice that the High Court has decided the issue referred to it on a different footing and has made a passing comment about the decision rendered by the Special Bench. Thus, the ratio of the said decision is different from that rendered in the case of Meryline Shipping and Transports by the Special bench. Hence, we are inclined to reject the contentions of the assessee on this point also. 7.3 The assessee placed reliance on the decision of Hon'b....