TMI Blog2012 (8) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is to be made with respect to the amount, which have already been paid and did not remain outstanding at the end of the year - in favour of assessee for statistical purposes. - I.T.A.No. 293/Ind/2011 - - - Dated:- 19-6-2012 - SHRI JOGINDER SINGH, AND SHRI R.C.SHARMA, JJ. Appellant by : Shri Anil Kamal Garg, CA Respondent by : Shri Arun Dewan, Sr. DR O R D E R PER R. C. SHARMA, A.M. This is an appeal filed by the assessee against the order of CIT(A) dated 08.08.2011 for the assessment year 2007-08. 2. Following grounds have been taken by the assessee :- Under the facts and in the circumstances of the case, the ld. CIT(A)-II in 1. The Hon'ble CIT II sustaining total income at Rs. 38,69,627/- as against declared by your appellant at Rs. 30,04,470/- which is bad in law excessive.. 2. The Hon'ble CIT(A) II sustaining Rs. 8,25,200/- on account of non-deduction of TDS as per Section 40a(ia) read with Section 194H of Income-tax Act, 1961, though the same is not applicable in the case of appellant. 3. Rival contentions have been heard and records perused. Facts in brief are that the assessee is engaged in supply of road safety equipments, road ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of payments made by the appellant to MPLUN without probing into the facts and attending circumstances. Both the authorities below reached to the conclusion that the payments made by the appellant to MPL UN were in the nature of commission whereas the fact remained that it was no so and these were in the nature of kind of service charges in consideration of services rendered by the MPLUN to the Government of Madhya Pradesh. He further submitted that there was no principal-agent relationship, subsisted between the assessee and MPLUN Agent, hence payment cannot be regarded as towards commission or brokerage. By relying on the decision of the I.T.A.T. Special Bench in the case of Merliyn Shipping and Transport, 146 TTJ 1, the ld. Authorized Representative submitted that the case of the appellant does not fall within the ambit of the provisions of s. 40a(ia) of the Act. It is submitted that section 40a(ia) envisages a position in which certain payments in the nature of interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services or contract payments, are payable by an assessee, on which tax is deductible at source has not been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR Shri Arun Dewan relied on the finding recorded b to and the conclusion drawn by the ld.CIT(A). 6. We have considered the rival submissions and have gone through the orders of the authorities below and found from record that the disallowance was made in respect of payment made without deduction of tax by invoking the provisions of Section 40a(ia). The ld. Authorized Representative has placed on record, the decision of I.T.A.T. Special Bench in the case of Merilyn Shipping and Transports, 146 TTJ 1, wherein it was held that provisions of sub clause (ia) of Section 40(a) speaks of amount payable on which tax is to be deducted. Thus, sub.cl(ia) is applicable only if any amount is payable at the year end and not in respect of amount of expenditure already paid during the year. The precise observation of the Bench was as under :- The provision of s. 40(a)(ia) was introduced in order to ensure compliance of TDS but assigned the term "payable" in the provision of s. 40(a)(ia). On a comparison between the proposed and enacted provisions, the only conclusion which can be reached is that legislature consciously replaced the words "amount credited" or "paid" with the word "payable" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "payable': but if the amount is already paid the provisions of this section should not apply. The crucial word is "payable". If one looks into the TOS provisions from ss. 194A to 194K, it will be apparent that as per the language of those sections, tax is to be deducted at the time the amount is paid at the time when the amount is credited, i.e. when the liability is admitted and it becomes payable. Therefore wherever the payment is covered by aforesaid sections whether paid or credited, tax has to be deducted. Secs. 194L and 194LA may also be looked into which say that tax has to be deducted only at the time of payment. The language in these sections therefore shows that the legislature has used different language in different sections. It is trite law that each and every word of the section has its own meaning and while drafting s. 40(a)(ia) the legislature was conscious of the fact that there may be a case Where the amount is paid and there may be a case where the amount is payable and has used appropriate words so that the language may be clear and clear meaning may be given. One may look into the language contained in Finance Bill, 2004 wherein this provision was introduced. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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