CIT vs. M/s Virgin Creations (Calcutta High Court)

DATE: (Date of pronouncement)
DATE: March 6, 2012 (Date of publication)

Click here to download the judgement (virgin_creations_40_a_i_TDS_retrospective.pdf)

S. 40(a)(ia) TDS amendment to give extended time for payment is retrospective

The assessee deducted tax at source from paid charges between the period 1.4.2005 & 28.4.2006 though it paid the TDS in July and August 2006. The TDS was deposited after the end of the FY though before the due date of filing of the return of income. The AO invoked s. 40(a)(ia) and held that as the TDS had not been paid on or before the last day of the previous year, the deduction was not admissible. The Tribunal allowed the assessee’s claim. On appeal by the department, the High Court had to consider whether the amendment to s. 40(a)(ia) by the FA 2010 w.e.f. 1.4.2010 to provide that the TDS has to be paid on or before the due date for filing the ROI was prospective or retrospective. HELD by the High Court dismissing the department’s appeal:

In Allied Motors 224 ITR 677 & Alom Extrusions 319 ITR 306, the Supreme Court held that the amendments to the aforesaid provision (s. 43B) have retrospective application. Also, in R.B. Jodha Mal Kuthiala 82 ITR 570 (SC), the Supreme Court held that a provision which was inserted the remedy to make a provision workable requires to be treated with retrospective operation so that reasonable deduction can be given to the section as well. In view of the authoritative pronouncement of the Supreme Court, this court cannot decide otherwise. Hence the appeal is dismissed.

Note: See the contrary view in Bharati Shipyard 132 ITD 53 (Mum)(SB). For the law on whether the Special Bench prevails over a non-jurisdictional High Court see Article

6 comments on “CIT vs. M/s Virgin Creations (Calcutta High Court)
  1. P Ray says:

    Thank God; a voice of sanity at last !

  2. P Ray says:

    sorry…….. simplicity…… last

  3. B.N.Agrawal says:

    Really a landmark judgement.

  4. B.N.Agrawal says:

    This judgement is binding throughout India despite ITAT Spl. Bench judgement in Bharati Shipyard

  5. s.srinivasan says:

    dear Sir
    Is this reported and if so can i have the citation
    thanks in advance

  6. K.K.BANERJEE says:


Leave a Reply

Your email address will not be published. Required fields are marked *