Https://Hcservices.ecourts.gov.in/Hcservices v. Cit, New Delhi (2000) 245 Itr 3, Cit Vs. Amritbanaspati (2002) 255 Itr 117 And Cit Vs. Alomenterprises Ltd. (2009) 319 Itr 306

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 25.03.2021 THE HON'BLE MR. JUSTICE M.DURAISWAMYAND THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI Commissioner of Income Tax,Coimbatore.... Appellantv. M/s. Hi Bright Property (India) P. Ltd.,331, 4th Street Extn.,Gandhipuram,Coimbatore - 641 012. ... Respondent Appeal preferred under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal,Madras, "B" Bench, dated 03.12.2013 in I.T.A.No.1636/Mds/2013for the Assessment Year 2008-2009 filed against the order of theCommissioner of Income Tax (Appeals)-I, Coimbatore dated06.05.2013 in Appeal No.74/12-13 preferred against theAssessment order dated 05/08/2010 passed by the DeputyCommissioner of Income Tax Company Circle 1 (3), Coimbatore inPAN NO. AABCH77118 for the Assessment Year 2008-2009. For Respondent : Mr. R. Sivaraman Challenging the order passed in I.T.A.No.1636/Mds/2013 inrespect of the Assessment Year 2008-2009. on the file of theIncome Tax Appellate Tribunal, Chennai,"B" Bench, (forbrevity, the Tribunal), the Revenue has filed the above appeal. 2. The above appeal was admitted on the followingsubstantial questions of law: https://hcservices.ecourts.gov.in/hcservices/ “ (i) Whether on the facts and circumstancesof the case, the Tribunal was right indeleting the disallowance made by the AssessingOfficer under section 40(a)(ia)? (ii) Whether on the facts and circumstancesof the case, the Tribunal was right in holdingthat the amendment n made to section 40(a)(ia) byFinance Act, 2010 would apply retrospectively,though the amendment is made with effect from1.4.2010?" 3. Mr. R. Sivaraman, learned counsel appearing for therespondent-assessee submitted that the questions of lawinvolved in the present appeal has already been decided by thethe Hon'ble Supreme Court in the Judgment reported in (2018)93 taxmann.com 51 (SC) [Commissioner of Income Tax, Kolkata v.Calcutta Export Company] wherein the Hon'ble Supreme Courtheld as follows: " ........... 28. The purpose of the amendmentmade by the Finance Act, 2010 is to solve the anomaliesthat the insertion of section 40(a)(ia) was causing tothe bona fide tax payer. The amendment, even if notgiven operation retrospectively, may not materially beof consequence to the Revenue when the tax rates arestable and uniform or in cases of big assessees havingsubstantial turnover and equally huge expenses andnecessary cushion to absorb the effect. However,marginal and medium taxpayers, who work at low grossproduct rate and when expenditure which becomes subjectmatter of an order under Section 40(a)(ia) issubstantial, can suffer severe adverse consequences ifthe amendment made in 2010 is not given retrospectiveoperation i.e., from the date of substitution of theprovision. Transferring or shifting expenses to asubsequent year, in such cases, will not wipe off theadverse effect and the financial stress. Such could notbe the intention of the legislature. Hence, theamendment made by the Finance Act, 2010 being curativein nature required to be given retrospective operationi.e., from the date of insertion of the said provision. 29. Further, in Allied Motors (P) Limited (supra),this Court while dealing with a similar question withregard to the retrospective effect of the amendment madein section 43-B of the Income Tax Act,1961 has held thatthe new proviso to Section 43B should be givenretrospective effect from the inception on the groundthat the proviso was added to remedy unintended consequences and supply an obvious omission. The provisoensured reasonable interpretation and retrospectiveeffect would serve the object behind the enactment. Theaforesaid view has consistently been followed by thisCourt in the following cases, viz., Whirlpool of IndiaLtd., vs. CIT, New Delhi (2000) 245 ITR 3, CIT vs. AmritBanaspati (2002) 255 ITR 117 and CIT vs. AlomEnterprises Ltd. (2009) 319 ITR 306. 29. Further, in Allied Motors (P) Limited (supra),this Court while dealing with a similar question withregard to the retrospective effect of the amendment madein section 43-B of the Income Tax Act,1961 has held thatthe new proviso to Section 43B should be givenretrospective effect from the inception on the groundthat the proviso was added to remedy unintended consequences and supply an obvious omission. The provisoensured reasonable interpretation and retrospectiveeffect would serve the object behind the enactment. Theaforesaid view has consistently been followed by thisCourt in the following cases, viz., Whirlpool of IndiaLtd., vs. CIT, New Delhi (2000) 245 ITR 3, CIT vs. AmritBanaspati (2002) 255 ITR 117 and CIT vs. AlomEnterprises Ltd. (2009) 319 ITR 306. 30. Hence, in light of the forgoing discussion andthe binding effect of the judgment given in AlliedMoters (supra), we are of the view that the amendedprovision of Sec 40(a)(ia) of the IT Act should beinterpreted liberally and equitable and appliesretrospectively from the date when Section 40(a)(ia) wasinserted i.e., with effect from the Assessment Year2005-2006 so that an assessee should not sufferunintended and deleterious consequences beyond what theobject and purpose of the provision mandates. As thedevelopments with regard to the Section recorded aboveshows that the amendment was curative in nature, itshould be given retrospective operation as if theamended provision existed even at the time of itsinsertion. Since the assessee has filed its returns on01.08.2005 i.e., in accordance with the due date underthe provisions of Section 139 IT Act, hence, is allowedto claim the benefit of the amendment made by FinanceAct, 2010 to the provisions of Section 40(a)(ia) of theIT Act. ...." 4. On a reading of the above Judgment, it is clear thatthe amendment made by the Finance Act, 2010 was curative innature and it should be given retrospective operation as if theamended provision existed even at the time of its insertion.Since the assessee has filed its return of income on17.10.2009, as per the ratio laid down by the Hon'ble ApexCourt, the assessee should be allowed to claim the benefit ofthe amendment made in the Finance Act to the provisionsof Section 40(a)(ia) of the Income Tax Act. 5. The learned Senior Standing Counsel appearing for theappellant has not produced any contra judgment in support of theRevenue. 6 . In these circumstances, we are of the considered viewthat the ratio laid down by the Hon'ble Supreme Court in the https://hcservices.ecourts.gov.in/hcservices/ Judgment reported in (2018) 93 taxmann.com 51 (SC) [citedsupra] squarely applies to the facts and circumstances of thepresent case. 7. Following the ratio laid down in the Judgments reportedin (2018) 93 taxmann.com 51 (SC) [cited supra], thequestions of law are decided against the Revenue and infavour of the respondent-assessee. The Tax Case Appeal isliable to be dismissed. Accordingly, the same is dismissed. Nocosts. Sd/- Assistant Registrar(CS IV) //True Copy// Sub Assistant RegistrarRj To1.The Income Tax Appellate Tribunal, Chennai, ''B'' Bench2.The Commissioner of Income Tax Appeals-I Coimbatore.3.The Commissioner of Income Tax, Coimbatore.4.The Deputy Commissioner of Income Tax, Company Circle 1 (3), Coimbatore. +1cc to M/s.T.R.Senthil Kumar, Advocate Sr.19767 T.C.A.No. 207 of 2014 gmi[co]srg 03/05/2021