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TMI Blog2012 (9) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the transfer of the pending case on the ground that in the return of income for A.Y. 2009-10 address of Mandsaur was given (when in this year also address of Mandsaur was given) was illegal and without jurisdiction. (d). The CIT(A) erred in not holding that due to lack of jurisdiction the assessment order passed by the ITO Mandsaur is vitiated and is as such nullity. 2. (a). Alternatively on the facts and in the circumstances of the case learned CIT(A) failed to appreciate that lease money on vehicles does not amount to 'rent' within the meaning of S. 1941 of the IT Act and as such S. 40(a)(ia) of the IT Act is not applicable. (b). The CIT(A) failed to consider that the amendment of definition of "rent" in the explanation to S. 1941 w.e.f. 13.07.06 is enforceable from A.Y. 2008-09 (financial year 2007- 08) and as such S. 1941 is not applicable. (c). The CIT(A) on the basis of his own finding made a mistake in calculation and allowed deduction of Rs. 15,23,000/- only instead of Rs. 16,13,000/-. (d). Alternatively on the facts and circumstances of the case learned CIT(A) failed to hold that the amount of Rs. 6,30,100/- of lease money remained to be paid and was payable only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order, the learned Commissioner of Income Tax (Appeals) also agreed with the Assessing Officer that the provisions of section 194-I are applicable in respect of the lease rent paid on hiring of vehicles and in default thereof, the disallowance need to be made as per the provisions of section 40(a)(ia) of the Act. Accordingly, the learned Commissioner of Income Tax (Appeals) allowed relief on the amount of Rs. 15,23,000/- as the payment for some of the vehicles was below Rs.1,20,000/- in an year on which no TDS was required to be made. The Learned Commissioner of Income Tax (Appeals) confirmed the disallowance of Rs. 50,01,100/- after having the following observations :- "4.3.1 The perusal of the aforesaid sections as applicable for a different period shows that the word "plant" was included in the explanation (defining the meaning of rent) to section 1941 w.e.f 13.07.2006; the definition of plant given in section 43(3) is applicable in respect of computation of business income from section 28 to 41 and includes "vehicles"; section 40(a)(ia), which provides for disallowance of the expenses on account of breach of TDS provisions as contained in Chapter XVIIB (includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring of lorries/vehicles by observing that the word "plant" referred to in section 194-I relates to factory and does not include vehicles. As the assessee has not deducted TDS as per provisions of section 194-I, the Assessing Officer disallowed the expenses claimed in this regard. During the course of hearing, the ld. Authorized Representative has also 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 issue of disallowance of deduction for non deduction/ short deduction of TDS u/s 40(a)(ia) of the Act has been examined by the Special Bench of the Tribunal in the case of Merilyn Shipping and Transports, 146 TTJ 1. 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 betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Chapter XVII-B is implemented without any default. The sub-section speaks of the amount "payable" on which the tax is not deducted and therefore it should apply only if any amount is "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 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the words "amount credited or paid" to "payable". Hence, the provisions of s. 40(a)(ia) are applicable only to the amounts of expenditure which are payable as on 31st March of every year and it cannot be invoked to disallow the expenditure which had been actually paid during the previous year without deduction of TDS. (Paras 10 & 12) " 10. Respectfully following the above decision of the I.T.A.T. Special Bench, we restore the matter back to the file of the Assessing Officer with a direction to recompute the amount of disallowance with reference to the amount which remained payable at the end of the year. However, no disallowance 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. We direct accordingly. 11. In the result, ground taken by the assessee for disallowance u/s 40(a)(ia) of the Act is allowed in part for statistical purposes in terms indicated hereinabove. 12. In the ground, the assessee has alleged some calculation mistake by the learned Commissioner of Income Tax (Appeals) while working out the disallowance of lease money. It was submitted that the learned Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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