TaxTMI 
TaxTMI 
2019 (11) TMI 1373
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny is engaged in the business of real estate and filed its return of income electronically on 31.03.2015 declaring total income of Rs. 20,40,420/-. The return of income was selected for scrutiny under CASS and statutory notices were issued to the assessee. During the course of assessment proceedings, the assessee filed explanation, details and documentary evidence as required by the AO which was examined at length. The AO found that the assessee has claimed labour charges of Rs. 32,05,050/-, Architect Fees of Rs. 75000/- and Rs. 3,85,645/- towards expenses under the head commission, which are in the nature of payments made towards contract payment u/s.194C of the Act, professional fees payment u/s.194H of the Act and commission payment u/s.194H of the Act. Finally, the AO found that the assessee has failed to deposit the TDS amount so deducted from the payments made towards expenses on account of labour charges, professional fees and commission to the Central Govt. A/c within the specified time limit, therefore, he disallowed Rs. 39,62,695/- u/s.40(a)(ia) of the Act and passed assessment order u/s.143(3) of the Act vide dated 23.12.2016. 3. Feeling aggrieved from the assessment or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sallowance as against 100% disallowance cannot be granted in favour of the assessee giving effect retrospectively. Accordingly, ld. DR submitted that the order of CIT(A) should be restored. 7. After considering the rival submissions of both the parties and carefully perusing the entire material available on record as well as the case laws cited by the ld. AR of the assessee, we find that the assessee has actually claimed expenses of Rs. 35,46,286/- in the profit and loss account as against the addition made by the AO of Rs. 39,62,695/-, which has been accepted by the CIT(A) at para 3.2 of the appellate order. On perusal of both assessment and appellate order, it is vivid that the total addition made by the AO includes Rs. 4,16,409/- which was not claimed by the assessee as expenditure in its profit and loss account. Therefore, in our considered opinion, the disallowance of Rs. 35,46,286/- upheld by the CIT(A) is to be held as 100% disallowance, which has been claimed by the assessee as expenditure in its profit and loss account. However, as per the amendment brought to the Finance Act, 2014 in Section 40(a)(ia) of the Act w.e.f. 01.04.2015, if 100% disallowance made u/s.40(a)(ia) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntal Representative vehemently opposes this legal plea. He pleads that the said proviso does not carry any retrospective effect. We find no force in Revenue's instant arguments as a coordinate bench of this tribunal in Shri Rajendra Yadav in ITA No.895/JP/2012 decided on 29.01.2016 already concludes the above amendment w.e.f. 01.04.2015 to be retrospective effect being curative in nature. We therefore direct the Assessing Officer to restrict the impugned disallowance to 30% only to be followed by necessary ITA No.767/Kol/2016 Dipak Parui A.Y.2011-12 3 computation as per law. This latter substantive ground is treated as partly accepted in above terms." Further, the Delhi Bench of the Tribunal in the case of Smt. Kanta Yadav (supra) while considering the similar issue has held as under :- "6. We have considered rival submissions and find that issue is covered in favour of the assessee by order of ITAT Jaipur Bench in the case of Shri Rajendra Yadav vs. ITO and Smt. Sonu Khandelwal vs. ITO. In these orders it was held that the disallowance u/s 40(a)(ia) to be restricted to 30% of the addition. In these orders the Tribunal has considered the amended provisions of section 40(a)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....duce the hardship, it is proposed that in case of non-deduction or non-payment of TDS on payments made to residents as specified in section 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the amount of expenditure claimed. The Hon'ble Supreme Court in the case of Allied Motors (P) Ltd. [1997] 224 ITR 677 (SC) has held that amendment was remedial in nature, designed to eliminate unintended consequences which may cause undue hardship to the assessee and which made the provision unworkable or unjust in a specific situation. Finally, after considering various case laws, the Hon'ble Supreme Court held that the purpose of amendment would not serve its object in such a situation unless, it is construed as retrospective after observing as under :- 10. Therefore, in the well-known words of Judge Learned Hand, one cannot make a fortress out of the dictionary; and should remember that statutes have some purpose and object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning. In the case of R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 , this Court said that one should apply the rule of reasonable interpretation. A proviso wh....