Pramod Kumar, A.M:— This appeal filed by the Revenue is against the order dated 01.08.2011 of ld. Commissioner of Income-tax (Appeals)-XX, Kolkata for the assessment year 2005-2006 on the following grounds:—
(1) Ld. CIT(A.) has erred on law and fact by not accepting the plan and clear meaning of the amendment made in section 40(a)(ia) by the Finance Act, 2010 which clearly states that the amendment has the retrospective effect from the assessment year 2010-2011 and cannot be held to be retrospective from assessment year 2005-2006.
(2) Ld. CIT(A.) has erred on law and fact by extending the meaning of amendment made in section 40(a)(ia) and not accepting the plain meaning of this section. Section 40(a)(ia) is a prohibitory section which enforce the assessee to deduct the TDS and remit in government account within the time limit prescribed by this section.
2. Brief facts of the case are that the assessment was completed under section 143(3) on 28.12.2007 on a total income of Rs. 4,18,17,910/-. A notice under section 154 was served on the assesee on the ground that TDS against commission payment had not been paid within the year or within the extended period. The Assessing Officer disallowed Rs. 40,82,089/- as commission payment in view of the provision of section 40(a)(ia) of the Act. In appeal, ld. CIT(Appeals) deleted the disallowance made by the Assessing Officer by relying on the ratio laid down by the ITAT, ‘A’ Bench, Kolkata in ITA No. 267.Kol./2009 for the assessment year 2005-2006 in the case of Virgin Creations, Kolkata vide order dated 15.12.2010
3. We have heard both the sides and perused the material available on record. The issue has already been decided by the ITAT, ‘A’ Bench, Kolkata dated 15.12.2010 in the case of Virgin Creations v. ITO, Ward 32(4), Kolkata in ITA No. 267.Kol/2009, wherein it has been held that the amendment made in section 40(a)(ia) by the Finance Act, 2010 is remedial and curative in nature, and has retrospective application. The facts in this case are not disputed in as much as the tax deducted during the year was paid to the credit of the Central Government before the due date for filing of the return under section 139(1). The Hon'ble jurisdictional High Court decided the issue on 23.11.2011 in ITAT No. 302 of 2011 (G.A No. 3200/2011) in the case of CIT, Kolkata-XI, Kolkata v. Virgin Creations in favour of assessee by following the decision of the Hon'ble Supreme Court in the case of R.B Jodha Mal Kuthiala reported in 82 ITR 570, wherein the Hon'ble Supreme Court held that “the provision, which has inserted the remedy to make the provision workable, requires to be treated with retrospective operation so that reasonable deduction can be given to the section as well”. Both parties agreed to it.
3.1 By respectfully following the judgment of the Hon'ble jurisdictional High Court in the case of virgin creations (supra), we dismiss the grounds of appeal taken by the Revenue.
4. In the result, the appeal filed by the Revenue is dismissed.