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2015 (6) TMI 665 - ITAT KOLKATA

2015 (6) TMI 665 - ITAT KOLKATA - TMI - Disallowance u/s 40(a)(ia) - non deduction of TDS - CIT(A) deleted the addition following the decision of Merilyn Shipping & Transport Limited - Held that:- The decision of Merilyn Shipping & Transport Limited [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] as relied upon by CIT(A) in allowing claim but the said decision has not been approved in the case of Crescent Exports Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT ]. Thus on the basis of which the ld. CIT .....

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), the assessee submitted that the ROC expenses is part of preliminary expenses and pre-operative expenses as mentioned in Schedule 8 and only 1/5t h of such expenses has been claimed as deduction. CIT(Appeals) restored this issue to the file of the Assessing Officer mentioning that Assessing Officer while giving effect to this order will re-check the amount actually claimed by the assessee and give consequential relief. This ground of appeal is allowed subject to the directions given above. - D .....

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en at the end of the year, i.e. 31.03.2008 in the impugned case. The basic presumption made by the Assessing Officer is incorrect while making the addition on the basis of difference in the stock as taken in the books of accounts. We accordingly confirm the order of CIT(Appeals) - Decided against revenue. - I.T.A. No. 16/KOL/ 2013 - Dated:- 9-6-2015 - Shri P.K. Bansal and Shri Mahavir Singh,JJ For the Petitioner:Shri Pinaki Mukherjee, JCIT, Sr. D.R. For the Respondent:Shri S.M. Surana, Advocate .....

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erred in law and on facts by allowing the relief of ₹ 94,741/-, disallowed by the Assessing Officer on account of ROC expenses treating as capital expenditure which led to the increase in Authorized capital. (3) That the ld. CIT(A), Asansol has erred in law and on facts by allowing the relief of ₹ 69,826/-, disallowed by the Assessing officer on account of treating the amount as capital expenditure debited in Profit & Loss A/c. (4) That the ld. CIT(A), Asansol has erred in law an .....

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herefore, disallowed the said sum under section 40(a)(ia) of the Act. When the matter went in appeal before the CIT(Appeals), CIT(Appeals) deleted the disallowance following the decision dated 29.03.2012 of ITAT, Special Bench, Vishakhapatnam in the case of Merilyn Shipping & Transport Limited in ITA No. 477/Vizag./2008, wherein it was held that the disallowance under section 40(a)(ia) can be made only in respect to the expenditure which is payable as on 31s t March of the year. 3. After hea .....

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assessees in both the appeals we have to examine the correctness of the majority views in the case of Merilyn Shipping and Transports. We already have quoted extensively both the majority and the minority views expressed in the aforesaid case. The main thrust of the majority view is based on the fact that the Legislature has replaced the expression amounts credited or paid with the expression payable in the final enactment. Comparison between the pre-amendment and post amendment law is permissib .....

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e Learned Tribunal fell into an error in not realizing this aspect of the matter. The Learned Tribunal held that where language is clear the intention of the legislature is to be gathered from the language used . Having held so, it was not open to seek to interpret the section on the basis of any comparison between the draft and the section actually enacted nor was it open to speculate as to the effect of the so-called representations made by the professional bodies. The Learned Tribunal held th .....

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enditure 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 th .....

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d employment. The contention raised with reference to what was there in the bill was rejected by the Supreme Court by holding as follows: It must, at this juncture, be noted that in spite of Section 2(11), which included the words but for the provisions of this Act is not adequately protected by legislation for welfare and benefits of the labour force in the State , these precise words were removed by the legislature and the definition was made limited as it has been finally legislated upon. It .....

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appellants are asking was to read in that definition, these precise words, which were consciously and deliberately omitted from the definition. That would amount to supplying the casus omissus and we do not think that it is possible, particularly, in this case. The law of supplying the casus omissus by the courts is extremely clear and settled that though this Court may supply the casus omissus, it would be in the rarest of the rate case and thus supplying of this casus omissus would be extreme .....

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othing turns on the basis of the fact that the legislature used the word payable and not paid or credited . Unless any amount is payable, it can neither be paid nor credited. If an amount has neither been paid nor credited, there can be no occasion for claiming any deduction. The 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 contract .....

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ofessional services or fees for technical services or to a contractor or sub-contractor shall not be deducted in computing 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. There can be no denial that .....

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ns requiring deductions of tax at source. It is not the case of an inadvertent error. For the reasons discussed above, we are of the opinion that the majority views expressed in the case of Merilyn Shipping & Transports are not acceptable. The submissions advanced by learned advocates have already been dealt with and rejected. Since the Hon ble Jurisdictional High Court did not approve the decision of the Special Bench of the Tribunal in the case of Merilyn Shipping & Transport Ltd -vs.- .....

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submissions, we noted that the CIT(Appeals) has not allowed the relief to the assessee amounting to ₹ 94,741/-. Before the CIT(Appeals), the assessee submitted that the ROC expenses is part of preliminary expenses and pre-operative expenses as mentioned in Schedule 8 and only 1/5t h of such expenses has been claimed as deduction. CIT(Appeals) restored this issue to the file of the Assessing Officer mentioning that Assessing Officer while giving effect to this order will re-check the amount .....

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e been incurred by the assessee as inspection, processing and rating charges for obtaining bank loan during the course of business. These expenses by no stretch of imagination can be regarded to the capital expenditure. The expenses relate to obtaining cash credit facilities and are of recurring nature. We, therefore, do not find any infirmity or illegality in the order of CIT(Appeal s) treating this expenditure to be the revenue expenditure and allowing the relief to the assessee. We accordingl .....

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r that there is material in godown for ₹ 1,25,00,000/-. There was another policy for building of ₹ 15,00,000/-, and stock/contents of ₹ 40,00,000/-, plant and machinery for ₹ 32,00,000/-, Spare for machinery and spare electric motor for ₹ 3,00,000/- and electrical installation/electrical equipment for ₹ 5,00,000/-. The Assessing Officer noted that the assessee has shown stock in it s audited balance sheet as on 31.03.2008 at ₹ 74,09,486/-. The Assessing .....

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policy for ₹ 1.25 crores while the stock as per the books were ₹ 75 lakhs. The difference was ₹ 50,00,000/- by mistake. The Assessing Officer has worked out the same at ₹ 75,00,000/-, in fact, he made an addition of ₹ 50,00,000/-. CIT(Appeal s) after hearing the submissions of the assessee and after noting that the insurance policy was taken on 12.02.2008 took the view t hat the assessee was not having stock for which the insurance policy has been taken and, theref .....

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ented him from making direct enquiries and finding out what details of finished goods, as on 31.03.2008 has been submitted to the Bank. No such enquiry is evident on record. The implications drawn by the AO fail in the face of the failure to conduct such enquiries. It is noted that the AO had written a letter to the Bank which was not replied to before the passing of the order. In that event, enquiries could have been conducted through an Inspector or summons to the bank manager could have been .....

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