AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (6) TMI 1354
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....from 01.04.2013 only and it is not applicable for A.Y. 2010-11. 4. The CIT(A)-II, Coimbatore should have taken note of the fact that the assessee was liable to deduct tax at source in respect of the payments made as business promotion expenses and having failed to do so, the expenditure was liable to be disallowed u/s. 40(a)(ia). The decision in the case of M/s. Hindustan Coco Cola Beverages does not squarely apply to the facts and law of the case and can be distinguished on facts and law. 5. The CIT(A)-II, Coimbatore should have taken note of the fact that if the contention of the assessee that the taxes has already been paid by M/s. KPR Mills Ltd on the sum paid by the assessee is accepted, the provisions of TDS will be redundant which is not the intention of the legislature and law. The Board circular No. 275/201/95-IT dated 29.01.1997 quoted specifically pertains to the provisions of sec 201(1A) and has no bearing on the larger question whether tax is liable to be deducted or not. 6. For these and other grounds that may be adduced at the time of hearing, the order of the learned CIT(A)-II, Coimbatore may be cancelled and that of Assessing Officer restored." 2. Brief fa....
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.... one did not provide service to another and there was no sharing of losses as per MOA. And the transactions cannot be inferred beyond the specific terms of the agreement between the parties by the Assessing Officer. It was further submitted before the ld. CIT(A) that such type of payment was neither fee for professional service as prescribed under section 194J or payment to contractor under section 194C, or payment towards rent/lease under section 1941 or technical fee/ royalty under section 194J nor it was covered as brokerage or commission under section 194H of the Act and therefore, no tax was required to be deducted from such payment. It was further submitted before the ld. CIT(A) that even if the provisions of section 40(a) (ia) of the Act are found applicable, the Assessing Officer ought to have appreciated that the Business promotion expenses paid of Rs.. 7,13,98,602/- by the assessee have been duly subjected to tax in the hands of payee and there is no loss of tax to revenue. The payee to whom the payment is made i.e., KPR Mill Limited has accounted this amount in his profit and loss account and assessed to tax. KPR Mill Limited has already accounted the amount of Rs..7,13,....
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....ax at source on such payments. In this present case it is observed that deductee has included the payment in its total income and has also filed the return of income. In effect the Department has not suffered any revenue loss and in the circumstances the amendment though procedural in nature, made effective from a subsequent date should also be taken to be applicable to the year under consideration. Therefore the appeal of the assessee is allowed." 5. On being aggrieved, the Revenue is in appeal before the Tribunal and the ld. DR has mainly argued that the second proviso to section 40(a)(ia) of the Act takes effect from 01.04.2013 only and it is not applicable for the assessment year 2010-11 and therefore, the said proviso shall not come to the rescue of the assessee and pleaded that the order of the ld. CIT(A) should be reversed and that of the Assessing Officer is restored. 6. On the other hand, by relying on the decision of the Chennai Benches of the Tribunal in the case of Star Investments Pt. Ltd. v. ACIT in ITA Nos. 20 & 231/Mds/2015 dated 21.06.2016 and Ansal Landmark Township Pvt. Ltd. 279 CTR 384 (Del) the ld. Counsel for the assessee has strongly supported the orde....
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....t read with second proviso thereto. In the remand report, the Assessing Officer has objected that the second proviso is only operative from 01.04.2013 and would not cover for the assessment year 2010-11. 6.3 It is an admitted fact that the assessee has failed to deduct and remit TDS towards interest paid to M/s. United Breweries Ltd., a resident, for the assessment year 2010-11. In the next step, it has to be seen whether the assessee is not deemed to be an assessee in default under the proviso to section 201(1) of the Act. During the course of appellate proceedings, the assessee has furnished all the evidence to the effect that it has complied with all the conditions as laid down in the first proviso to section 201(1) of the Act and after verification of the particulars, the ld. CIT(A) has observed that the assessee has satisfied all the conditions laid down in the first proviso to section 201(1) of the Act and there is no dispute on this account and the assessee has to be treated as assessee not deemed to be in default. The deductee i.e., M/s. United Breweries ltd. have filed their return of income on 30.09.2010, it has to be deemed that the assessee remitted the TDS as o....
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.... thereto, went much beyond the obvious intentions of the lawmakers and created undue hardships even in cases in which the assessee's tax withholding lapses did not result in any loss to the exchequer. Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced. In view of these discussions, as also for the detailed reasons set out earlier, we cannot subscribe to the view that it could have been an "intended consequence" to punish the assessees for non deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax. That will be going much beyond the obvious intention of the section. Accordingly, we hold that the insertion of second proviso to Section 40(a)(ia) is....