New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (7) TMI 810 - KERALA HIGH COURT

2015 (7) TMI 810 - KERALA HIGH COURT - TMI - Addition invoking Sec.40(a)(ia) - whether Tribunal erred in law in making addition u/s 40(a)(ia) when the payee has included the entire interest paid by the appellant in its total income and filed return of income accordingly? - whether under Section 194A, an individual is excluded from the liability to deduct tax and that therefore, disallowance is without jurisdiction? - Held that:- In the light of the proviso to Section 194A(1), if the appellants a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

liable to deduct tax while paying interest to the firm u/s 194A(1) of the IT Act".

No material whatsoever has been supplied by the appellants to contradict this specific factual finding recorded by the Appellate Tribunal. Therefore, this contention cannot be accepted.

Whether second proviso to Section 40(a)(ia) of the Act, introduced by the Finance Act 2012, being retrospective in operation, disallowance could not have been ordered invoking Section 40 (a)(ia) of the Act? - .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to resist a proceeding under Section 40(i)(ia) of the Act. This contention, therefore, is only to be rejected.

Section 40(a)(ia) makes it clear that the consequence of disallowance is attracted when an individual, who is liable to deduct tax on any interest payable to a resident on which tax is deductible at source, commits default. The language of the Section does not warrant an interpretation that it is attracted only if the interest remains payable on the last day of the financial .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

289, 290 and 292 of 2014 - Dated:- 3-7-2015 - ANTONY DOMINIC AND SHAJI P. CHALY, JJ. FOR THE APPELLANT : SRI.T.M.SREEDHARAN (SR.), SRI.V.P.NARAYANAN, SMT.DIVYA RAVINDRAN FOR THE RESPONDENT : SRI.JOSE JOSEPH, SC, FOR INCOME TAX JUDGMENT Antony Dominic, J. 1.ITA No.278/14 and 279/14 are filed by Sri.Thomas George Muthoot in relation to the assessment orders passed for the assessment years 2006-07 and 2007-08. ITA Nos.282/14, 289/14 and 290/14 filed by Sri.Thomas Muthoot arise out of the orders fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rest paid was disallowed in terms of Section 40(a)(ia) of the Act. This order passed by the Assessing Officer was confirmed by the Commissioner (Appeals) and further appeals filed before the Tribunal were dismissed by a common order dated 28.08.2014. It is aggrieved by the orders passed by the Tribunal, the assessees have filed these appeals, formulating the following questions of law: (i) Whether on the facts and in the circumstances of the case, did not the Appellate Tribunal err in law in sus .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dustan Coca Cola Beverages Pvt. Ltd. (293 ITR 226 (SC) where it was held that the payer is not liable to pay the amounts of short/non- deduction of tax u/s 201(1) in cases whether the payee has already included the relevant amount in its total income? (iv) Should not the statutory Authorities and the Appellate Tribunal accepted the contention that the second proviso inserted with effect from 1.4.2013 was intended to remove the unintended consequences and was a beneficial provision for removal of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d common order in I.T.A. Nos.71/C/2014 dated 28.08.2014 for AY-2006-07 erroneous in law and hence unsustainable? (vii) Is the order of the Appellate Tribunal Annexure-B legal, valid and sustainable in law? 3.We heard the senior Counsel for the appellants and the learned Senior Standing Counsel appearing for the Revenue. 4. Section 194A (1) of the Act provides that any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of int .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cified under Section 44AB(a) or (b) during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income tax under Section 194A. 5.One of the consequences of the non-compliance of Section 194A is contained in Section 40 of the Act. As per this Section, notwithstanding anything to the contrary contained in Sections 30 to 38, the amounts specified in the Section shall not be deducted in computing the income chargeable under .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession".- (a) in the case of any assessee - (ia) any interest, commission or brokerage, rent, royalty, fees or professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub- contractor, being resident, for carrying out any work (including supply of labour for ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s and during the assessment years in question they have paid interest to the firms without deducting tax as required under Section 194A. It was in such circumstances that the interest paid by them to the firms was disallowed as provided under Section 40(a)(ia), which order has been concurrently upheld. 7.The first contention raised before us was that under Section 194A, an individual is excluded from the liability to deduct tax and that therefore, disallowance is without jurisdiction. In order t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y other mode, whichever is earlier, deduct income-tax thereon at the rates in force: Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause 9b) of section 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income- tax under this section." 8.R .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he financial year immediately preceding the financial year in which such interest is credited or paid. 9.In the light of the proviso to Section 194A(1), if the appellants are claiming the exemption provided in the Section, the burden is on them to establish that they, being individuals, satisfied the conditions specified in the proviso to the Section. From the orders impugned, we find that no such contention was urged before the statutory authorities. In fact the Tribunal has entered into a spec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d proviso to Section 40(a)(ia) of the Act, introduced by the Finance Act 2012, being retrospective in operation, disallowance could not have been ordered invoking Section 40 (a)(ia) of the Act. This contention was sought to be substantiated relying on the judgments in Allied Motor (P) Ltd. v. Commissioner of Income Tax [(1997) 224 ITR 677 (SC)] and Commissioner of Income Tax v. Alom Extrusions Ltd. [(2009) 319 ITR 306]. 12.The second proviso to Section 40(a)(ia) of the Act reads thus: "Prov .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

this proviso was inserted by Finance Act 2012 and came into force with effect from 01.04.2013. The fact the second proviso was introduced with effect from 01.04.2013 is expressly made clear by the provisions of the Finance Act 2012 itself. This legal position was clarified by this Court in Prudential Logistics And Transports v. Income Tax Officer [(2014) 364 ITR 689 (Ker)]. 14.However, counsel for the appellants placed reliance on the judgment in Allied Motor (P) Ltd. (supra). That was a case wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, the court held that the proviso was remedial and curative in nature and on that basis held the proviso to be retrospective in operation. In Commissioner of Income Tax (supra) also following the judgment in Allied Motors (supra), the Apex Court held that provisions of the Finance Act 2003 by which the second proviso to Section 43B was deleted and the first proviso was amended, were curative in nature and therefore retrospective. 15.A statutory provision, unless otherwise expressly stated to be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ld by this Court in Prudential Logistics and Transports (supra). Therefore, this contention raised also cannot be accepted. 16.Relying on the Apex Court judgment in Commissioner of Income Tax v. Hindustan Coca Cola Beverages Pvt. Ltd. [(2007) 293 ITR 226], learned Senior Counsel for the appellants contended that the recipients of the amounts paid by the appellants, the firms of which they are partners, have already paid tax and that therefore, it is illegal to disallow the interest paid. First o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version