|DATE:||(Date of pronouncement)|
|DATE:||April 17, 2012 (Date of publication)|
|Click here to download the judgement (piyush_mehta_40aia_TDS.pdf)|
S. 40(a)(ia): Amendment by FA 2010 w.e.f 1.4.2010 is retrospective
For AY 2005-06, the AO made a disallowance of expenditure incurred by the assessee on the ground that the assessee had made the TDS payments u/s 194C after the end of the year. Before the Tribunal, the assessee claimed that as the TDS had been paid before the due date of filing the ROI, no disallowance could be made as per s. 40(a)(ia) amended by the FA 2010 w.e.f. 1.4.2010. The assessee relied on Virgin Creations and claimed that it had to be followed in preference to the contrary ruling of the Special Bench in Bharati Shipyard Ltd 132 ITD 53 (Mum). HELD by the Tribunal:
In Bharati Shipyard Ltd the Special Bench held that the amendment to s. 40(a)(ia) by the FA 2010 w.e.f. 1.4.2010 could not be held to be retrospective from AY 2005-2006 on the ground that the amendment was not remedial and curative in nature. However, the Kolkata Bench had taken a contrary view in Virgin Creations vs. ITO and held that amendment by the FA 2010 was retrospective w.e.f. 1.4.2005. The view of the Kolkata Bench has been approved by the Calcutta High Court in CIT vs. Virgin Creations. The question as to whether a verdict of the Special Bench should be followed or that of a non-jurisdictional High Court should be followed is answered in Tej International (P) Ltd 69 TTJ (Del) 650 wherein it was held that in the hierarchical judicial system that we have in India, the wisdom of the court below has to yield to the higher wisdom of the Court above, and therefore, once an authority higher than this Tribunal has expressed its esteemed views on a an issue, normally, the decision of the higher judicial authority is to be followed. It was also held that the fact that the judgment of the higher judicial forum is from a non-jurisdictional High court does not alter this position. Consequently, Virgin Creations is followed and it is held that the amendment to s. 40(a)(ia) is retrospective from 1.4.2005 and any payment of TDS on or before the due date for filing the ROI is sufficient.
The reported controversy on the views turning on the judicial principles, mainly on the country’s hierarchical judicial system – to be precise, as to whether a verdict of the Special Bench should be followed or that of a non-jurisdictional High Court should be followed ,- brings to surface yet another crucial angle.
The point of dispute herein pertained to, whether or not a particular amendment of an enactment (herein, s 40 (a)(ia)) was retrospective in nature. Thus, it essentially involves a point for interpretation.
Strictly construing / following the rules /principles of jurisprudence, it appears to be commonly accepted, the power to ‘interpret’ any provision of law, – that is one on which two views are reasonably possible,- is vested and can be exercised only by a court (not by the Tribunal). That is, as opposed to, and distinct from, simply applying any provision, – on which question of reading or interpreting it differently does not at all arise, -to the facts of a case.
Viewed From this angle as well, in one’s conviction, the Mumbai Tribunal’s ruling may be regarded to be supported by a sound reasoning and logic.
what will be the fate of the tribunal decisions , if there is another High court decision in favor of the revenue?.
or can it be taken that it is final and the department has not knocked the doors of the supreme court
There is a series of court decisions in which the point of specific doubt/ related doubts may be found to have been sufficiently clarified; for citations, refer the citations given in Kanga and Palkhivala’s Book (Ch. I Preliminary), under title heads >40. Binding force of a High Court Judgment and 41. Uniformity of Construction.
In one’s view, should any of those more or less well settled propositions of law (on the concept of ‘Precedents’), as applicable to any case on hand, been canvassed and successfully argued, and strictly construed and followed by the Tribunal Benches and High Courts, then possibility of any such piquant situation as posed would have proved a non-starter.