Court No. - 9 Case :- WRIT TAX No.-597 of 2016 Petitioner :- M/S Allahabad Wholesale Central Coop. Store Ltd. Respondent :- Principal Commissioner Of Income Tax Allahabad And Another Counsel for Petitioner :- Amitabh Agarwal,Nidhi Singh Counsel for Respondent :- S.C.,Piyush Agrawal Hon'ble Pankaj Mithal,J. Hon'ble Vinod Kumar Misra,J. petitioner is cooperative society and is maintaining its books of accounts on mercantile system of accounting. In assessment year 2009-10 it filed its return on 29.9.2009 showing income to be NIL. case was selected for scrutiny and notice under Section 143(2) was issued on 20.8.2010. Thereafter assessment was completed on 15.12.2011 and no taxable income was found. Thereafter proceedings under Section 263 of Act were initiated and order was passed on 28.3.2014. order of assessing officer was set aside and he was directed to re-decide matter afresh. In pursuance of above order, assessing officer passed order under Section 143(3) on 31.12.2014. He disallowed amount of Rs. 10,34,600/- as part of transportation charges which was said to be paid to one Sri Anand Kumar Agrawal (Transporter). assessment was thus completed adding said amount to income of petitioner. revision filed by petitioner under Section 264 of Act was dismissed vide order dated 15.3.2016. Aggrieved by aforesaid addition of dis-allowance of Rs. 10,34,600/- from income on account of transportation charges, petitioner has preferred this petition challenging assessment order as well as order passed by Principal Commissioner Income Tax under Section 264 of Act. Sri Amitabh Kumar Agarwal, learned counsel for petitioner has raised two points. First is that under notice given under Section 263 only one ground to effect that receipts of petitioner disclosed as Rs. 20,18,523/- do not match with total receipts of Rs. 75,46,235/- as per Schedule-2 of ITR of relevant year, therefore, revisional authority was not empowered to pass any order on any other ground other than that taken in notice. other argument raised by petitioner is in respect of transportation charges of Rs. 10,34,600/- that after making necessary deduction of TDS, same was deposited subsequently on 3.9.2009 and, therefore, in view of amended provisions of section 40(a)(ia) of Act as amended vide Finance Act 2010, aforesaid transportation charges are allowable as deduction from income of petitioner in computing his income out of profit and gains of any business or profession. To counter above submission, Sri Piyush Agarwal, learned counsel for department has argued that Commissioner of Income Tax while passing order under Section 263 of Act had directed assessing officer to decide matter as whole afresh and, therefore, assessing officer has not committed any error of jurisdiction in dealing with claim of transportation charges. In respect to other aspect he has submitted that Section 40 (a)(ia) of Act as introduced by Finance Act 2010, is not retrospective in nature and it cannot be applied to facts and circumstances of present case inasmuch as date of deduction tax at source has not been disclosed and deposit of same has been made subsequent to due date of filing return. order of Principal Commissioner of Income Tax dated 28.3.2014 passed under Section 263 of Act clearly reveals that order of assessing officer was not only set asided but he was also directed to examine whole issue afresh. In view of aforesaid order which attained finality as it was not challenged any further, assessing officer was supposed to pass fresh order of assessment in respect of income of petitioner. Accordingly, all issues were open before him and no jurisdictional error was committed by him in passing assessment order dated 31.12.2014, apart from other things, holding that as petitioner failed to deduct TDS under section 194(c) of Act on transportation charges paid to one transporter, Anand Kumar Agarwal and deposit same, petitioner is not entitle for any deduction in respect of same for purposes of computing taxable income. There is no dispute that TDS on aforesaid transportation charges were deposited by petitioner subsequently on 3.9.2009. return for relevant year was filed by it on 29.9.2009 whereas last date for filing it, was 30.9.2009. In other words, TDS was deposited before filing of return and expiry of last date for filing of return. Section 40 of Act provides for amounts which are not deductible from income in computing income chargeable under head, "Profit and gains of any business or profession". Sub section (a) provides that any amount inter alia paid for carrying out any work on which tax is deductible at source and has not been deducted or after deduction has not been paid during previous year or in subsequent year before expiry of time prescribed under sub section (1) of Section 200 of Act shall not be deductible from income. time prescribed under sub section 1 of Section 200 is time for filing of TDS return which happened to be 31.3.2009/31.5.2009. petitioner deposited TDS on 3.9.2009 which is admittedly after expiry of due date for filing TDS return. Therefore, benefit of sub section (ia) as introduced with effect from 1.4.2005 vide Finance Act, 2004 as it stood at relevant time was not admissible to petitioner. submission of Sri Amitabh Agarwal, learned counsel for petitioner is that aforesaid subsection was subsequently amended by Finance Act, 2010 with effect from 1.4.2010 and it provided as under:- "In Section 40 of Income Tax Act, in clause (a), in sub-clause (ia) (a) for portion beginning within words "has not been paid,-" and ending with words "the last day of previous year", words, brackets and figures "has not been paid on or before due date specified in subsection (1) of Section 139" shall be substituted; (b) for proviso, following proviso shall be substituted, namely:- Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during previous year but paid after due date specified in sub-section (1) of Section 139, such sum shall be allowed as deduction in computing income of previous year in which such tax has been paid." aforesaid amendment allowed benefit of deduction of aforesaid amount provided TDS is deducted and deposited before date specified in sub section (1) of section 139 meaning thereby last date for filing of return of relevant assessment year i.e. 30.9.2009. In case, aforesaid amendment is held to be applicable, then as petitioner had deposited TDS on 3.9.2009, deduction would be permissible to him in law. Now question which arises for consideration is whether amended provision of Section 40 (a)(ia) is prospective or retrospective in nature so as to permit benefit of it to petitioner. Finance Act, 2010 only provides that aforesaid provision is applicable with effect from 1.4.2010. Nonetheless Division Bench of Calcutta High Court vide judgement and order dated 23rd November, 2011 passed in Commissioner of Income Tax Vs. Virgin Creations held that amendment to Section 40(a)(ia) is retrospective in nature and benefit therein would be admissible even to cases of period prior to aforesaid amendment. said view was taken by Calcutta High Court on basis of three Judges decision of Supreme Court in case Alied Motors Pvt. Ltd. Vs. Commissioner of Income Tax, Delhi reported in [AIR 1997 SC 1367] and one another decision of Supreme Court in case of Commissioner of Income Tax Vs. Altom Extrusions Ltd. reported in [2010 (1) SCC 489]. division bench of Gujarat High Court also took similar view vide judgement and order dated 22.11.2013 and held that Section 40(a)(ia) of Act is applicable even for amount for which TDS has been deducted before Ist March, 2005 holding amendment brought with effect from 1st April, 2010 as retrospective in nature. In view of above decisions to which no contrary decision has been filed except for stating that both decisions are subject matter of appeal before Supreme Court, we are of opinion that amendment brought about in Section 40(a)(ia) is not only has limited retrospectivity but complete retrospectivity and would be applicable to assessment year 2009-10 also to which instant case belongs. In view of above, as petitioner has deposited tax deducted at source on 3.9.2009 before expiry of last date for filing of return under Section 139(i) of Act i.e. 30.9.2009, he is entitle to benefit of above provision and transportation charges of Rs. 10,34,600/- are allowable as deduction from income for purposes of computing income chargeable to tax under head, "Profits and gains of business or profession" from income. Accordingly, impugned order dated 15.3.2016 (Annexure-5) and Assessment Order dated 31.12.2014 are quashed in so for they disallow transportation charges to be deducted from income of petitioner for computing its taxable income. writ petition is allowed with no order as to costs. Order Date :- 12.5.2017 AS Allahabad Wholesale Central Coop. Store Ltd. v. Principal Commissioner of Income-tax Allahabad And Another