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2016 (4) TMI 1419 - AT - Income TaxAddition u/s 40(a)(ia) - Whether provision of section 40(a)(ia) would apply on both “paid” and “payable”? - CIT-A restricting addition relying on the judgment of Merlyn Shipping Agency Pvt. Ltd. [2012 (3) TMI 402 - ITAT VISAKHAPATNAM] wherein, it is held disallowance under section 40(a)(ia) can be made on payable amount” - HELD THAT:- We find that the CIT(A) has given part relief following the ratio laid down by the Special Bench decision in the case of Merlyn Shipping Transport Private Limited (supra). The contrary view has been taken by the Hon’ble Calcutta High Court in the case of Crescent Exports [2013 (5) TMI 510 - CALCUTTA HIGH COURT] disapproving the decision of the Special Bench and held that, provision of section 40(a)(ia) would apply on both “paid” and “payable”. The decision of Allahabad High Court in the case of Vector Shipping Services Pvt. Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] is not a ratio approving the decision of Special Bench and this has been elaborately dealt by the Tribunal in the case of M/s Pratibhuti Viniyog Ltd. [2014 (11) TMI 8 - ITAT MUMBAI]. Now, Hon’ble P&H High court also in the case of PMS Diesel [2015 (5) TMI 617 - PUNJAB & HARYANA HIGH COURT] have reinforced the aforesaid view taken by the Tribunal by concurring with the decision of Hon’ble Calcutta High Court and explaining the decision of the Hon’ble Allahabad High Court in the case of Vector Shipping Services Pvt. Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] and specifically held that the decision of Special Bench in the case of M/s. Merilyn Shipping & Transports is not a correct decision. Accordingly, the order of the CIT(A) is reversed. TDS u/s 194C - As payment made by the assessee towards freight was within the statutory limits of attracting TDS provision and in support, assessee has disclosed and filed the details of payments, party-wise and month-wise payments; secondly, the assessee has also filed the copy of vehicle registration certificate, PAN card of the parties to substantiate the contention raised before the AO, who has held that, no details were filed - the assessee has also filed Form 15-I and 15-J to show that, the income of the transporters were below taxable limits. CIT(A) without any proper reason and analysis has dismissed the assessee’s contention. In the interest of justice, we are of the opinion that, the issue of disallowance under section 40(a)(ia) should be examined afresh on merits and after examining the details furnished by the assessee with regard to the claim that the individual payment did not exceed ₹ 50,000/- to a single party during the year and also the Form 15-I and 15-J submitted in support of various transporters to whom the assessee has paid freight charges. Accordingly, the matter is remanded back to the file of the AO who shall examine the issue on merits
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