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TMI Blog2014 (11) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the amount payable as on the last date of the financial year; the provisions of section 40(a)(ia) could be invoked. In these cases, admittedly, the amount was paid without making any deduction of tax, therefore, according to the ld.representative, no disallowance is called for. The ld.representative placed his reliance on the decision of the Special Bench of this Tribunal in Merilyn Shipping & Transports vs Addl CIT (2012) 70 DTR 81 (Vizag) and submitted that a similar view was taken by the Allahabad High Court in CIT vs M/s Vector Shipping Services (P) Ltd I.T.A No.122 of 2013 judgment dated 09-07-2013. On appeal by the revenue, according to the ld.representative, the Apex Court dismissed the Special Leave Petition and thereby the judgment of the Allahabad High Court was confirmed. 3. We heard Shri M Anil Kumar, the ld.DR also. According to the ld.DR, section 40(a)(ia) is applicable in respect of amounts paid and payable, therefore, the CIT(A) has rightly confirmed the disallowance made by the assessing officer. 4. We have considered the rival submissions on either side and also perused the material available on record. The liability to deduct tax on the payment made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013 judgment dated 09-07-2013 considered this issue. However, without much of discussion, referring to the decision of the Special Bench of this Tribunal at Visakhapatnam in Merilyn Shipping & Transports (supra), the Allahabad High Court upheld the contention of the assessee. The Mumbai Bench of this Tribunal in ACIT vs Rishti Stock & Share Pvt Ltd ITA No.112/Mum/2012 dated 02-08-2013 examined all the three judgments of the High Courts, viz. Gujarat High Court in Sikandarkhan N Tunvar (supra), Calcutta High Court in Crescent Exports Syndicate & Another (supra) and the Allahabad High Court in M/s Vector Shipping Services (P) Ltd (supra) and found that the judgment of the Allahabad High Court in M/s Vector Shipping Services (P) Ltd (supra) is an obiter dicta, therefore, it is not a ratio decidendi. Now it is apparent that there are conflicting judicial opinions amongst the Calcutta High Court and Gujarat High Court on one side and the Allahabad High Court on the other side. Under normal circumstances, when there are conflicting judicial opinions, it is a practice to follow the view which is favourable to the assessee. It is also settled principles of law that when there are conflict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses are disallowed". Having held so was it open to the Tribunal to seek to justify that "this fiction cannot be extended any further and, therefore, cannot be invoked by Assessing Officer to disallow the genuine and reasonable expenditure on the amounts of expenditure already paid"? Does this not amount to deliberately reading something in the law which is not there? We, as such, have no doubt in our mind that the Learned Tribunal realized the meaning and purport of Section 40(a)(ia) correctly when it held that in case of omission to deduct tax even the genuine and admissible expenses are to be disallowed. But they sought to remove the rigour of the law by holding that the disallowance shall be restricted to the money which is yet to be paid. What the Tribunal by majority did was to supply the casus omissus which was not permissible and could only have been done by the Supreme Court in an appropriate case. Reference in this regard may be made to the judgment in the case of Bhuwalka Steel Industries vs. Bombay Iron & Steel Labour Board reported in 2010(2) SCC 273. 'Unprotected worker' was finally defined in Section 2(11) of the Mathadi Act as follows:- ''unpr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... language used in the draft was unclear and susceptible to giving more than one meaning. By looking at the draft it could be said that the legislature wanted to treat the payments made or credited in favour of a contractor of sub- contractor differently than the payments on account of interest, commission or brokerage, fees for professional services or fees for technical services because the words "mounts credited or paid" were used only in relation to a contractor of sub-contractor. This differential treatment was not intended. Therefore, the legislature provided that the amounts, on which tax is deductible at source under XVII-B payable on account of interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services or to a contractor of sub-contractor shall not be deducted in com putting the income of an assessee in case he has not deducted, or after deduction has not paid within the specified time. The language used by the legislature in the finally enacted law is clear and unambiguous whereas the language used in the bill was ambiguous. A few words are now necessary to deal with the submission of Mr. Bagchi and Ms. Roychowdhuri. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature described above, which is such on which tax is deductible at source under Chapter XVII-B but such tax has not been deducted or if deducted not paid before the due date. This provision nowhere requires that the amount which is payable must remain so payable throughout during the year. To reiterate the provision has certain strict and stringent requirements before the unpleasant consequences envisaged therein can be applied. We are prepared to and we are duty bound to interpret such requirements strictly. Such requirements, however, cannot be enlarged by any addition or subtraction of words not used by the legislature. The term used is interest, commission, brokerage etc. is payable to a resident or amounts payable to a contractor or sub-contractor for carrying out any work. The language used is not that such amount must continue to remain payable till the end of the accounting year. Any such interpretation would require reading words which the legislature has not used. No such interpretation would even otherwise be justified because in our opinion, the legislature could not have intended to bring about any such distinction nor the language used in the section brings about any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have deliberately brought about a certain situation which does not require any further interpretation. This is the fundamental argument of the Tribunal in the case of M/s Merilyn Shipping & Transports vs. ACIT (supra) to adopt a particular view. 26. While interpreting a statutory provision the Courts have often applied Hyden's rule or the mischief rule and ascertained what was the position before the amendment, what the amendment sought to remedy and what was the effect of the changes. 27 to 36.................... 37. In our opinion, the Tribunal committed an error in applying the principle of conscious omission in the present case. Firstly, as already observed, we have serious doubt whether such principle can be applied by comparing the draft presented in Parliament and ultimate legislation which may be passed. Secondly, the statutory provisions is amply clear. 38. In the result, w are of the opinion that Section 40(a)(ia) would cover not only to the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirement of the said provision exist. In that context, in our opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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