2022 (4) TMI 1067

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....ing grounds before us: 1. In the facts and circumstances of the case the Commissioner of Income Tax(Appeals) Panaji Goa erred in confirming the action of the Assessing officer of disallowing the construction expenses of Rs. 29,00,838/- u/s. 40(a)(ia) of I.T. Act on the ground that no taxes were deducted at source from contractual payments related to said expenses despite the fact that the partnership firm M/s. Buildtech Real Estate Developers (BRED) which received the said payments (i) had furnished its return of income for the year u/s. 139(ii) had taken into account aforesaid payment in the computation of income in such return and (iii) had paid tax due on the income declared by it in the said return. 2. The Commissioner of Income Tax....

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....onstruction expenses of Rs. 29,00,838/- that were payable by the assessee to M/s. Buildtech Real Estate Developers [in short "M/s. BRED"] on 31.03.2012. As is discernible from the orders of the lower authorities, the assessee had credited contract charges of Rs. 2,23,49,460/- to M/s. BRED i.e., a firm in which it was one of the partner. Although, the assessee was obligated to deduct tax at source on the entire amount of Rs. 2,23,49,460/- (supra), but, it had deducted the same only on the amount of Rs. 1,94,48,622/- that was actually paid to the aforementioned concern, viz. M/s. BRED during the year under consideration. In sum and substance, the assessee had failed to deduct tax at source on the amount of Rs. 29,00,838/- (supra) that was sho....

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....the same would not come to the rescue of the assessee for the year under consideration i.e., A.Y. 2012-13. Backed by his aforesaid conviction the A.O. disallowed under Section 40(a)(ia) the assessee's claim for deduction of construction expenses of Rs. 29,00,838/-. 3. On appeal, the CIT(A) concurred with the view taken by the A.O. that as the "2nd proviso" to section 40(a)(ia) of the Act was applicable prospectively i.e., w.e.f. 01.04.2013, therefore, no infirmity did emerge from his order and the disallowance was rightly made by him. 4. The assessee being aggrieved by the order of the CIT(A) has carried the matter in appeal before us. 5. After having given a thoughtful consideration to the issue in hand, we are unable to persuade ou....

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.... have a retrospective effect from 01.04.2005 i.e., the date of insertion of Section 40(a)(ia) of the Act. Apart from that, it was observed by the Hon'ble High Court that the Hon'ble Apex Court had way back in the case of Hindustan Coca Cola Beverage P. Ltd. vs. CIT, 293 ITR 226 (SC) even in absence of the "2nd proviso" to Section 40(a)(ia) of the Act, had held, that where a payee had already paid the tax, then, in such circumstances, the payer/deductor can only be asked to pay the interest qua the delay in depositing of the tax. Backed by the aforesaid position of law, we are of the considered view, that now when in the present case before us, the payee, viz. M/s. BRED had duly included the aforementioned amount of Rs. 29,00,838/- (....