Commissioner Of Income Tax, Faridabad v. M/S Foremost International Pvt. Ltd

ITA No.179 of 2014 1 IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. ITA No.179 of 2014 Date of Decision: 7.10.2014 Commissioner of Income Tax, Faridabad ..Appellant versus M/s Foremost International Pvt. Ltd. ..Respondent CORAM:HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BBLE MR. JUSTICE AMIT RAWALPresent:Mr. Tejinder K.Joshi, Advocate, for the appellant.Rajive Bhalla, J. The revenue challenges order dated 23.8.2013 passed bythe Income Tax Appellate Tribunal, Delhi Bench `B', New Delhi(hereinafter referred to as the “ITAT”). Counsel for the revenue submits that the amendment toSection 40(a)(ia) introduced by Finance Act, 2010, (hereinafterreferred to as the “Act”) with effect from 1.4.2010, is not applicable tothe present case as the dispute, in hand, pertains to assessmentyear 2005-06. The impugned order is without jurisdiction and may,therefore, be set aside. We have heard counsel for the revenue, perused theimpugned order as well as the substantial questions of law framed. The assessee is engaged in the business of export ofready made garments etc. During assessment proceedings, theassessee was asked to explain why TDS, deducted was depositedafter 31.5.2005. The Assessing Officer, being dissatisfied with theexplanation, held that in view of late deposit of TDS, the ITA No.179 of 2014 2 corresponding expenditure is not allowable as a deduction andadded this amount to the income of the Company. Aggrieved by this order, the assessee filed an appeal.The Commissioner of Income Tax (Appeals), vide order dated26.11.2008, allowed deduction of Rs.25,13,125/- and Rs.51,060/-pertaining to contractor's payment and professional expensescorresponding to TDS paid before the due date but disallowedRs.1,09,48,366/- and Rs.18,000/- in respect of contractor's paymentand professional expenses made after the due date. The assesseefiled an appeal before the ITAT which was allowed by holding asfollows:- “2.5 We have heard both the parties and consideredthe material on record as well as case law cited by rivalsides and find that similar issue arose before the Hon'bleCalcutta High Court in the case of CIT Vs. VirginCreations (supra) in which it has been held that ifpayment of TDS is made before the due date of filing ofthe return as envisaged U/s 139(1), addition could not bemade. Since the payment of balance amount of TDS hasbeen made in the month of June, 2005, which is muchbefore the due date for filing of the return as envisagedU/s 139(1), therefore, addition U/s 40(a)(ia) could not bemade. So following the precedent relied upon by thelearned AR of the assessee, we accept the appeal of theassessee and direct to delete the impugned additionmade by the Assessing Officer and to the extent ITA No.179 of 2014 3 confirmed by the learned CIT(A). 3. As a result, the appeal of the assessee getsaccepted.” A perusal of the order passed by the ITAT reveals that while granting relief to the assessee, reliance was placed upona ruling of the Calcutta High Court, with which we are in completeagreement and even otherwise, a judgment of the Delhi High Courtin Commissioner of Income tax versus Naresh Kumar, (2014) 362ITR 0256 has answered the question posed against the revenue byholding that amendment in Section 40(a)(ai) of the Act isretrospective.Counsel for the revenue is unable to distinguish theaforesaid judgments or refer to any legal provision or principle thatwould enable us to differ with the opinion recorded in theaforementioned judgment or the order recorded by the ITAT. Theassessee having deposited TDS before the date of filing of thereturn, the Assessing Officer erred in disallowing expenditure. TheIncome Tax Appellate Tribunal has, in our considered opinion, rightlyrectified this error.