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

2015 (5) TMI 987 - ITAT CHENNAI

2015 (5) TMI 987 - ITAT CHENNAI - TMI - Disallowance under Section 14A in a proceeding under Section 154 - Held that:- Assessing Officer has amended the order passed under the provisions of Income-tax Act. According to the Ld. D.R., in this case, what was rectified is only an arithmetical error which crept in the order. The Ld. D.R. submitted that on the basis of material already available on record, the Assessing Officer rectified the arithmetical error which crept. Therefore, it is not a debat .....

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 for deduction of tax under Section 194-I of the Act. Therefore, the assessee is expected to deduct tax at the time of making the payment. Therefore, the alternative contention of the assessee is also does not hold any merit at all. Accordingly, the order of the CIT(Appeals) is confirmed.

Depreciation on Maruthi car - Held that:- The assessee has claimed depreciation on Innova car at 50% of normal rate. Therefore, this Tribunal is of the considered opinion that there is no ques .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ony (Accountant Member) For the Petitioner : T. S. Lakshmi Venkataraman (CA) For the Respondents: N. Madhavan (JCIT) ORDER N. R. S. Ganesan (Judicial Member) Both the appeals of the assessee are directed against the different orders of the Commissioner of Income Tax (Appeals), Salem, pertaining to assessment years 2008-09 and 2010-11. First, let s take I.T.A. No.336/Mds15. 2. The only issue arises for consideration in this appeal is with regard to disallowance made by the Assessing Officer 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

he purpose of rectifying error which is apparent on the face of the record. According to the Ld. representative, the issue arises for consideration is a debatable one, therefore, it is not subject to rectification under Section 154 of the Act. According to the Ld. representative, disallowance under Section 14A needs to be examined in detail in regular course of assessment. Therefore, disallowing the claim of the assessee in a proceeding under Section 154 of the Act is not justified. 4. On the co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cer rectified the arithmetical error which crept. Therefore, it is not a debatable issue. Hence, the Assessing Officer has rightly disallowed the claim of the assessee. 5. We have considered the rival submissions on either side and perused the relevant material on record. Though the assessee claims that the issue of disallowance under Section 14A of the Act is a debatable one, from the orders of the lower authorities it appears that the Assessing Officer has rectified the arithmetical error whil .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

available on record. 6. In view of the above, we do not find any infirmity in the order of the CIT(Appeals). Accordingly, the same is confirmed. Now let s take I.T.A. No.337/Mds/15. 7. The first issue arises for consideration in this appeal is with regard to disallowance of ₹ 1,55,100/- paid as machine hire charges under Section 40(a)(ia) of the Act. 8. Shri T.S. Lakshmi Venkatraman, the Ld. representative for the assessee, submitted that the assessee paid machine hire charges. However, th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(P) Ltd. (357 ITR 642) and the decision of Special Bench of this Tribunal in Merilyn Shipping and Transport v. ACIT (2012) 16 ITR (Trib.) 1 (SB), allowed the claim of the assessee. Therefore, according to the Ld. representative, the disallowance made by the Assessing Officer under Section 40(a)(ia) of the Act is not justified. 9. Alternatively, the Ld. representative submitted that Section 40 starts with non obstante clause which says that notwithstanding anything to the contrary in Sections 30 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

entative, the disallowance made under Section 40(a)(ia) of the Act is totally contrary to the provisions of Section 40(a)(ia) of the Act. 10. On the contrary, Shri N. Madhavan, the Ld. Departmental Representative submitted that Gujarat High Court and Caulcutta High Court specifically held that the decision of Special Bench of this Tribunal in Merilyn Shipping and Transport v. ACIT (2012) 16 ITR (Trib.) 1 (SB) is not a good law. The Allahabad High Court had no occasion to consider the correctness .....

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 rival submissions on either side and perused the relevant material on record. The first contention of the assessee is that the assessee had already paid on or before 31.03.2010 and nothing remained to be paid. The Ld. representative placed reliance on the judgment of Allahabad High Court in Vector Shipping Services (P) Ltd. (supra) and on the decision of this Bench of the Tribunal in Theekathir Press (supra). We have carefully gone through the judgment of Allahabad High Court in Vector Shippi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

unvar had an occasion to examine the legality or otherwise of the decision of the Special Bench of this Tribunal. The Calcutta High Court and the Gujarat High Court have examined the matter in detail and found that the decision of the Special Bench of this Tribunal is not sustainable in law. However, the Allahabad High Court by way of passing reference decided the matter in favour of the assessee. The Special Leave Petition filed by the Revenue against the judgment of Allahabad High Court in Vec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

I.T.A. No.63 & 64/Coch/2014 had an occasion to consider an identical issue. The Cochin Bench has observed as follows:- 12. We have also carefully gone through the judgment of the Allahabad High Court in CIT vs M/s Vector Shipping Services (P) Ltd (supra), copy of which is filed by the assessee. The Allahabad High Court, after reproducing the relevant paragraph from the order of CIT(A) and referring to the decision of the Special Bench of this Tribunal in Merilyin Shipping & Transports ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt dated 02-05-2013 considered the decision of the Special Bench of this Tribunal in Merilyn Shipping & Transports (supra) and specifically disagreed with the principles laid down by the Special of this Tribunal in Merilyn Shipping & Transports (supra). The Calcutta High Court also in the case of Crescent Exports Syndicate & Another in ITAT 20 of 2013 and GA 190 of 2013 judgment dated 03-04-2013 considered elaborately the judgment of the Special Bench of this Tribunal in Merilyn Ship .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

compared to the judgment which has no reasoning and discussion. Admittedly, the Calcutta High Court and Gujarat High Court have discussed the issue elaborately and the specific reasoning has also been recorded as to why the Special Bench is not correct. Therefore, this Tribunal is of the considered opinion that the judgments of the Calcutta High Court Crescent Exports Syndicate & Another (supra) and Gujarat High Court in Sikandarkhan N Tunvar (supra) have to be preferred when compared to the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f the majority views in the case of Merilyn Shipping. 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 permissible for the purpose of ascertaining the mischief sought to be remedied or the obje .....

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 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 that Section 40(a)(ia) of the Act creates a legal fiction by virtue of which even 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

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 permissi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 is to be noted that when the Bill came to be passed and received the assent of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h 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 extremely necessary due to the inadvertent omission on the part of the legislature. But .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and not paid or credited . Unless any amount is payable, it can neither be paid nor credited. If n 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 contractor of subcontractor differently than the payments on account of interest, commiss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ctor 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. There can be no denial that the provision in question is harsh. But that is no ground to read the same in 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

rror. 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. Gujarat High Court in Sikandarkhan N Tunvar(supra) 23. Despite this narrow interpretation of section 40(a)(ia), the question still survives if the Tribunal in case of M/s Merilyn Shipping & Transpors vs. ACIT (supra) was accurate in its opinio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

deduction on certain payments irrespective of the provisions contained in Sections 30 to 38 of the Act would flow if the following requirements are satisfied:- (a) There is interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to resident or amounts payable to a contractor or sub-contractor being resident for carrying out any work. (b) These amounts are such on which tax is deductible at source under XVIII-B. (c) Such tax has not .....

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 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 resi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

meaning. If the interpretation s advanced by the assessees is accepted, it would lead to a situation where the assessee though was required to deduct the tax at source but no such deduction was made or more flagrantly deduction though made is not paid to the Government, would escape the consequence only because the amount was already paid over before the end of the year in contrast to another assessee who would otherwise be in similar situation but in whose case the amount remained payable till .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ous and seemingly irreconcilable consequences. The decision of he Supreme Court in the case of Commissioner of Income-Tax, Gujarat vs. Ashokbhai Chimanbhai (supra), would no6t alter this situation. The said decision, of course, recognizes the concept of ascertaining the profit and loss from the business or profession with reference to a certain period i.e. the accounting year. In this context, last date of such accounting period would assume considerable significance. However, this decision nowh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

losed on that date and the computation of profit and loss is to be judged with reference to such date, does not mean that whether an amount is payable or not must be ascertained on the strength of the position emerging on 31t March. 25. This brings us to the second aspect of this discussion, namely, whether this is a case of conscious omission and therefore, the legislature must be seen to have deliberately brought about a certain situation which does not require any further interpretation. This .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n 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 20 ITA No. 63&64m 83-85&7-72/Coch/2014 31st March of a particular y .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

idered opinion that the decision of the Special Bench of this Tribunal in the case of M/s Merilyn Shipping & Transports (supra) and the judgment of the Allahabad High Court in Vector Shipping Services (P) Ltd (supra) are not applicable to the facts of the case under consideration whereas the judgments of the Calcutta High Court in Crescent Export Syndicate (supra) and the Gujarat High Court in Sikandarkhan N Tunvar (supra) are squarely applicable to the facts of the case. Respectfully follow .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rder of this Tribunal. The Cochin Bench rejected the Miscellaneous Petition filed by the assessee. The assessee challenged the correctness of the order passed by the Cochin Bench on the Miscellaneous Petition by way of Writ Petition before the Kerala High Court. The Kerala High Court, however, dismissed the Writ Petition filed by the assessee. In those circumstances, this Tribunal is of the considered opinion that the judgments of Calcutta High Court and Gujarat High Court have to be preferred 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

claims that it is a business expenditure. For the purpose of business, business expenditure would fall under Section 37(1) of the Act. Therefore, this Tribunal is of the considered opinion that the provisions of Section 40 of the Act is equally applicable. Hire charges paid by the assessee on machine is liable for deduction of tax under Section 194-I of the Act. Therefore, the assessee is expected to deduct tax at the time of making the payment. Therefore, the alternative contention of the asse .....

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