The Income Tax Appellate Tribunal (ITAT) has held that the amendment to Section 40(a)(ia) of the Income Tax Act 1961 by Finance Act 2014 would not have the retrospective effect.
The assessee Purulia Central Co-Op. Bank Ltd in this appeal has filed appeal on the grounds that rejecting application under section 154 on the ground that no apparent mistake in records was error. The Finance Bill No. (2) 2014 reduced the disallowance of expenditure where no TDS had been deducted to 30% instead of 100% and effective from assessment year 2015-16.
M. Goenka, appearing on behalf of the appellant submitted that, the amendment was made in Finance Act, 2010 and in Finance Act, 2012 to address the hardship caused by sec.40(a)(ca) and all the amendments had stated the prospective applicability.
He further contended that the courts while interpreting those amendments had held that they were remedial, having retrospective effect. He argued in support of the Calcutta High Court decision in the case of CIT vs. Virgin Creation which held that the amendment made to sec.40(a)(a) by Finance Act, 2010 of allowing benefit of payment made before the due date of filing return was retrospective in operation.
Similarly, the Delhi High decision in the case of the Commissioner of Income Tax XIII vs Naresh held that amendment made by the Finance Act 2010 is remedial and will have retrospective application.
Ranu Biswas, appeared on behalf of the Respondent.
The Bench referred to the decision of the Hon’ble Supreme Court in the case of “Shree Choudhary Transport Company vs. Income Tax Officer”, wherein, the Hon’ble Supreme Court held that the amendment made by the Finance (No.2) Act, 2014, could not be stretched anterior to the date of its substitution so as to reach the assessment year 2005-06.
That the amendment by the Finance Act, 2014 was specifically made applicable w.e.f. 01/04/2015 and clearly represented the will of the legislature so as to what was to be deducted or what percentage of deduction was not to be allowed for a particular eventuality, for assessment year 2015-16.
Following the decision of the Hon’ble Supreme Court in the case of “Shree Choudhary Transport Company” the Division Bench of Sanjay Garg (Judicial Member) and Manish Borad (Accountant Member) dismissed the appeal filed by the assessee.
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