INCOME TAX OFFICER Vs. ANIL KUMAR AND COMPANY

JUDGEMENT

(1.) The Revenue has preferred this appeal challenging the order passed by the Tribunal which has confirmed the order of the appellate authority and granted relief to the assessee. The assessee is a firm which carries on the business of cotton. For the assessment year 2005-06, they filed the return of income, declaring the income at Rs. 42,480/-. The assessment was completed under Sec. 143(3) of the Income Tax Act ('the Act' for short) vide order dtd. 17.12.2007, fixing the total income at Rs. 47,09,710/-. The assessing officer invoking the provisions of Sec. 40(a)(ia) of the Act made additions in respect of ginning and pressing charges paid to the authorities on the ground that the tax deducted at source was not credited to Government's account within the stipulated period. Aggrieved by the said assessment order, the assessee preferred an appeal to the Commissioner of Income Tax (Appeals). On the day the appeal was heard, there was an amendment to Sec. 40(a)(ia) of the Act by the Finance Act, 2008 which was given retrospective effect from 1.4.2005. Relying on the said amended provision, the appellate authority held that the disallowance made by the assessing authority is not in accordance with law and therefore, he directed the assessing authority to delete the disallowance of Rs. 41,14,270/- and Rs. 1,80,599/- made by him under Sec. 40(a)(ia) of the Act. Aggrieved by the said order, the Revenue preferred appeal to the Tribunal, contending that the appellate authority failed to see the provision contained in Sec. 194C(1) as per which the assessee was liable to deduct tax at source during every month of payment from April 2004 to February 2004 at the time of credit or actual payment, whichever is earlier.

(2.) The Tribunal after explaining the effect of amendment by Finance Act, 2008, held that the tax deducted during the last month of the previous year, on or before the due date specified in sub-section (1) of Sec. 139, if they are credited within the time specified in sub-section (1) of Sec. 139, disallowance cannot be made. Therefore, it upheld the order by the appellate authority and granted relief to the assessee. Aggrieved by the said order, the present appeal is filed. At the time of admission, this Court has framed the following substantial question of law:

(3.) Learned counsel appearing for the parties fairly submitted that the substantial questions of law requires to be modified and those questions do not arise for consideration.