TaxTMI 
TaxTMI 
2018 (10) TMI 179
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....es by accepting an additional evidence produced by the assessee which was never furnished before the AO although ample opportunities were provided to the assessee in the interest of natural justice and AO was justified in making disallowance u/s 40(a)(ia) of the I.T. Act, as the assessee has without any reasonable cause failed to furnish details and the evidence of TDS deducted". 3. Briefly stated facts as culled out from the records are that the assessee is a individual doing the business of trading of pharmaceutical products under the proprietary-ship of M/s. AFD Pharmasia. Assessment u/s 143(3) of the Act was completed on 24.12.2010 assessing income at Rs. 29,85,590/-. Case was reopened u/s 147 of the Act owing to non deposit of TDS. Necessary information called by issuing notices u/s 142(1) of the Act. Reassessment was completed after disallowance of Rs. 89,08,758/- u/s 40(a)(ib) for non furnishing the details with regard to deduction and deposit of tax on commission and consultancy charges. 4. Aggrieved assessee filed an appeal before Ld.CIT(A) and succeeded as the Ld. CIT(A) appreciated the fact that the assessee has paid the tax deducted at source on 30.09.2008 i.e. on....
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....a during the year. TDS of Rs. 3010/- deducted on 31-03-2008 and paid on 30-09-2008. TDS deducted at the rate of 2.28% instead of 10.3%. Tax of Rs.l,82,174/- is deducted on commission of Rs. 84,82,177/-. The tax is deducted at the rate of 2.14% instead of 10.3%. The entire tax was deducted a March 31st and deposited in September 30th 2008." 7.3 From the above it is thus evident that on record it was already certified by the auditors that TDS on both commission and consultancy charge was deducted on 31-03-2008 and paid 30-09- 2008 i.e. before the due date of filing of return. However, Auditors noted that the rate at which as lower and hence there was short deduction. Appellant has during appeal proceedings argued that no disallowance u/s 40(a)(ia) of The Act was called for in view of the amended provisions of section 40 (a)(ia) by the Finance Act, 2010 which has been held to be remedial/curative in nature and hence has retrospective application as held in several judicial pronouncements and further no disallowance can be made on account of short deduction for which proposition appellant placed reliance on the decision in the case of DCIT-11 (2) vs. Chandabhoy & Jassobhoy [20....
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....l he was made to suffer by way of a disallowance of freight charges for which he was otherwise eligible for deduction giving rise to a huge demand as per the provisions of section 40(a)(ia) which was never the legislative intention behind enacting the said provisions. The provisions of section 40(a)(ia) as stood prior to the amendments made by the Finance Act 2010 thus were resulting into unintended consequences and causing grave and genuine hardships to the assessees who had substantially complied with the relevant TDS provisions by deducting the tax at source and by paying the same to the credit of the Government before the due date of filing of their returns u/s 139(1). In order to remedy this position and to remove the hardships which was being caused to the assessee belonging to such category, amendments have been made in the provisions of section 40(a)(ia) by the Finance Act 2010. The said amendments, in our opinion, thus are clearly remedial! curative in nature as held by Hon'ble Supreme Court in the case of Allied Motors Pvt. Ltd. (supra) and Alom Extrusions Ltd. (supra) and the same therefore would apply retrospectively w.e.f 1st April, 2005. In the case of R.B. Jodha ....
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....#39;ble Kolkata High Court in the case of Virgin Creations amendment brought in by the Finance Act,2010, were retrospective from 1.4.2005. In the case of Piyush C.Mehta, I.T.A.T., Mumbai Bench. in I.T. A. No.1231/Mum/2009 vide order dated 11 th April, 2012, held as under:- "17. It can be seen from the above decision. of the Hon'ble Calcutta High Court that Amendment to the provisions of Sec.40(a)(ia) of the Act, by the Finance Act,2010 as aforesaid was held to be retrospective from 1.4.2005. If the amendment is considered as retrospective from 1.4.2005, the effect will be that payments of TDS to the credit of the Government on or before the last date for filing return of income u/s. 139(1) of the Act for the relevant A Y have to be allowed as deduction. Admittedly, in the case of the Assessee payments were so made before the said due date and in terms of the decision. of the Hon'ble Calcutta High Court no disallowance could be made by the AO u/s. 40(a)(ia) of the Act. 18. The question now is as to whether to follow the decision of the Hon'ble Special bench which has taken the view that Amendment by the FinanceAct,2010 to the provisions of Sec. 40(a)(ia....
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.... month of March 2008 only and hence the due date for depositing the same was otherwise also up to the due date for filing of return. Similar is the position in respect of the TDS on C&F Commission of Rs.l,43,736/-- which also pertains to the month of March 2008 and hence was due to be deposited on or before the due date for filing of return and the same was done by the appellant. It was only the TDS of Rs. 38,438/- on C&FI Commission which was deducted up to 28-02-2008 that was covered by the amended provisions. 7.7 As regards the other contention of the appellant that there can be no disallowance u/s 40(a)(ia) if there is a short deduction also the jurisdictional ITAT has endorsed the view taken by the ITAT Mumbai in the case relied on by the appellant. The relevant para(s) of the observations made by the ITAT Indore in the case of DCIT (Central), Indore Vs M/s Silver Realities Infrastructure Private Limited, Indore in ITA No. 609jIndj2013 for the A.Y.2008-09 vide order dated 03-08- 2016 are reproduced below: The assessee's case finds support from the following pronouncement: 1. Disallowance u/ s 40(a)(ia) shall not be made merely because TDS has been deducte....
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....nce company and if the reinsurance companies have reduced the premium directly from the premium payable by the insured, such a deduction will not attract provisions of s. 194D-General Insurance Corporation of India vs. Asstt. CIT (2009) 125 TTJ (Mumbai) 779: (2009) 29 DTR (Mumbai)(Trib) 505 : (2009) 28 SOT 453 (Mumbai) followed 5. DCIT-l1(2) Vs. Chandabhoy & Jassobhoy(17 TAXMANN.COM 158, Mumbai Bench) Business Expenditure-Disallowance under s. 40(a)(ia)Payment made to consultants engaged by Chartered Accountants' firm-AO held payment made to consultants engaged by Chartered Accountants' firm are in nature of fees for professional services and accordingly provisions of s. 194J would attract and since assessee has not deducted the tax, disallowed amounts claimed of Rs. 26,75,535/- u/s. 40(a)(ia) Commissioner of Income Tax (Appeals) deleted addition made by AO-Held, assessee has employed about 18 consultants with whom it entered into agreements for a period of two years-They were paid fixed amounts without any share in the profit-These consultants are prohibited from any private assignments and worked full time with the assessee firm-There was deduction of tax u/s 192....