9911796707
TMI Blog2012 (4) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of charges paid to Clearing Corporation of India Ltd. (CCIL) without deduction TDS u/s. 40(a)(ia)". 2. An adjournment application has been moved but the same was not pressed. Therefore, the same is rejected. 3. Ground no.1: After hearing both the parties, we find that during the assessment proceedings the AO noticed that the assessee has made a provision for gratuity and debited the same to Income & Expenditure Fund. The assessee was asked to explain why the provision should not be disallowed in view of sec. 40A(7). In response, the following reply was given : "The corporation contributes to the approved gratuity fund of Reserve Bank of India by way of contractual obligation in respect of its employees all of whom are on deputa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The liability is to make payment to RBI & not to the employees directly. Since the Corporation does not have any staff on its roll & the liability is to pay RBI, therefore the said provision does not fall within the ambit of section 43B which was also well settled by CIT(A) in earlier years 1989-90, 90- 91,......2005-06 etc and passed in favour of appellant. The Departmental appeals before ITAT for A.Y. 2001-02 & 2004- 05 have been also dismissed." However, the AO did not agree with the submission and observed that reimbursement to RBI does not in any way change the character of provision for gratuity. Accordingly, the provision was disallowed. 4. The ld. CIT(A), on appeal, deleted the addition following the order of his predecessor in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely covered in favour of the Revenue by the decision of Hon'ble Bombay High Court in the case of CIT v. Kotak Securities Ltd. vide ITA No.3111/M/2009 wherein it has been clearly held that transaction charges paid constitute fee for technical services u/s.194J. 11. On the other hand, the ld. counsel of the assessee made two-fold submissions. Firstly, he argued that the Hon'ble Bombay High Court itself observed in para 31 of the decision in the case of CIT vs. Kotak Securities (supra) that since both the parties for a decade proceeded on the footing that sec. 194J was not applicable, then fault cannot be found for not deducting tax and accordingly it was held that in that case tax was not deductible and accordingly there was no justificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red under the Act, and and if the assessee has also failed to pay such tax, then such person would be treated as assessee in default. The word "and" is very important because it clearly shows that if the other person has made the payment, then such person cannot be called as assessee in default. For understanding this, one has to look at the Heydon's principle which was held to be applicable to Indian Laws by the Apex Court in the case of Bengal Immunity Company Ltd. vs. State of Bihar reported in AIR (1955) SC 661 and was held to be applicable even to the tax laws in the case of CIT vs. Sodra Devi (32 ITR 615). The ld. counsel of the assessee has invited our attention to the explanatory memorandum explaining the provisions of the Finance B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... got the tax. Therefore, these principles need to be applied even for interpreting sec. 40(a)(ia). 12. In the rejoinder, the ld. DR submitted that the decisions in the case of Hindustan Coca Cola (supra) and Mahindra & Mahindra (supra) were rendered u/s. 201 and the same cannot be made applicable for interpreting sec. 40(a)(ia) because in that case the whole purpose of introduction of sec. 40(a)(ia) will get defeated. 13. We have considered the rival submissions and relevant material on record carefully. First of all, we will consider the second part of the submission i.e. since the person to whom the payment was made has already offered the same for taxation, hence provisions of sec.40(a)(ia) cannot be invoked. This is not correct. Becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the last 10 years, therefore, provisions of sec.40[a][ia] could not be invoked. It was contended that in the last many years in the case before us also no tax was held to be deductible, therefore, assessee and department proceeded on the footing that no tax was deductible. However, on query by the Bench Ld. Counsel of the assessee admitted that in A.Y 2006-07 disallowance u/s.40[a][ia] was made for the first time but that year was not available by the time assessment for A.Y 2007-08 was completed. However, this defense is not available in A.Y 2008-09 because by that time revenue has already invoked the provisions of sec.40[a][ia] and this fact was known to the assessee. Therefore, in our opinion, in view of para-31 of the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
