TMI Blog2014 (9) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... a headman / tharakan. A tharakan is commonly known as a broker or a middleman who facilitate finalization of the price between the seller and purchaser. A tharakan also known as Agent who would act either on behalf of seller or purchaser as the case may be. However, headman of fishermen is part of fishermen who will sort the fish catch and sell the fish on behalf of fishermen. Therefore, it is necessary to find out the exact role played by the person to whom the payment was made by cash. Merely because the assessee has paid ₹ 1,66,59,325 by cheque to the very same person that cannot alone be a reason to disallow the claim of the assessee. When the assessee claims that the payment was made to a headman who sorts the fish catch, the assessing officer shall find out the exact role played by the person who received payment by cash. When the very same person received huge payment by cheque, it may not be difficult for the assessing officer to summon them and examine the actual role played by him. Had the assessee claimed that the fish or fish products are purchased from fisherman or producers the matter would stand on different footing. Since the fish was admittedly purchased from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deduct tax u/s 194J of the Act. The CIT(A) rejected the claim of the assessee on the ground that the assessee admitted the disallowance. The ld.representative explained that merely because the assessee admitted before the assessing officer that cannot be a reason to confirm the order of assessing officer. The CIT(A) has to adjudicate the issue on merit. On a query from the bench whether the assessee admitted for the disallowance during the course of assessment proceedings before the assessing officer, the ld.representative for the assessee submitted that he is not aware of the exact thing. The assessee may by ignorance have admitted for disallowance. We heard Shri M. Anil Kumar, the ld.DR. 4. The assessing officer disallowed the claim of the assessee on the ground that the assessee could not offer any explanation for failure to deduct tax u/s 194J in respect of payment made for consumption testing fee. The CIT(A) found that the assessee agreed for disallowance and admitted that he would not prefer any appeal on that ground. Though the ld.counsel for the assessee claims that he could not confirm whether the assessee admitted for disallowance, he explained that even after it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 343 (Ker). The assessee filed copy of the judgment. The ld.representative has also placed reliance on the circular issued by the CBDT in circular No.10/2008 dated 05-12-2008, copy of which is available at page 18 of the paper book. 7. On the contrary, Shri M Anil Kumar, the ld.DR submitted that the assessee purchased fish from middlemen, who are known as Tharakans. According to the ld.DR, from the very same Tharakan the assessee purchased fish to the extent of ₹ 1,66,59,325 and made the payment by cheque during the year under consideration. Therefore, nothing prevented the assessee from paying this amount of ₹ 17,01,500 also through account payee cheque. The assessee also could not produce the party for examination to find out whether they were producers or traders or they were middlemen. From the explanation of the assessee, according to the ld.DR, the fish was purchased from middlemen / tharakan, therefore, the payment made to tharakan was rightly disallowed u/s 40A(3). 8. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee purchased fish by paying cash exceeding ₹ 20,000. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh brought by fishermen from the sea at the sea shore itself and then sells the fish or fish products to traders, exporters etc. The CBDT has also clarified that the exemption will not be available to trader, broker or any other middlemen by whatever name called. The assessee now claims that the payment was made to a headman / tharakan. A tharakan is commonly known as a broker or a middleman who facilitate finalization of the price between the seller and purchaser. A tharakan also known as Agent who would act either on behalf of seller or purchaser as the case may be. However, headman of fishermen is part of fishermen who will sort the fish catch and sell the fish on behalf of fishermen. Therefore, it is necessary to find out the exact role played by the person to whom the payment was made by cash. Merely because the assessee has paid ₹ 1,66,59,325 by cheque to the very same person that cannot alone be a reason to disallow the claim of the assessee. When the assessee claims that the payment was made to a headman who sorts the fish catch, the assessing officer shall find out the exact role played by the person who received payment by cash. When the very same person received hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... habad High Court in M/s Vector Shipping Services (P) Ltd (supra) was confirmed by the Apex Court by dismissing the Special Leave Petition filed by the department. The ld.representative has also placed reliance on the decision of the Chennai Bench of this Tribunal for the proposition that when two views are possible, one favourable to the assessee has to be followed. We heard the ld.DR also. 13. The only contention of the assessee is that the amount has already been paid and that provisions of section 40(a)(ia) is applicable only in respect of the amount remains to be paid. No doubt, in the case of Merlyn Shipping Transports (supra), the Special Bench of this Tribunal found that the amount remains to be paid at the year end alone is hit by provisions of section 40(a)(ia) of the Act and in respect of the amount already paid the provisions of section 40(a)(ia) cannot be applied. 14. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sikandarkhan N Tunvar (supra): Calcutta High Court in Crescent Exports Syndicate Another (supra) Before dealing with the submissions of the learned Counsel appearing for the assessees in both the appeals we have to examine the correctness of 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 object sought to be achieved by an amendment. This is precisely what was done by the Apex Court in the case of CIT Vs. Kelvinator reported in 2010(2) SCC 723. But the same comparison between the draft and the enacted law is not permissible. Nor can the draft or the bill be used for the purpose of regulating the meaning and purport of the enacted law. It is the finally enacted law which is the will of the legislature. The Learned Tribunal fell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved 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 the Vice-President on 05-06-1969 and was first published in the Maharashtra Government Gazette Extraordinary, Part IV on 13-06-1969, the aforementioned words were omitted. Therefore, t his would be a clear pointer to the legislative intent that the legislature being conscious of the fact and being armed with all the Committee reports and also being armed with the factual data, deliberately avoided those words. What the 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 extremely necessary due to the inadvertent omission on the part of the legislature. But, that is certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the provisions 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. 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 opinion. In this context, we would like to examine two aspects. Firstly, what would be the correct interpretation of the said provision. Secondly, whether our such understanding of the language used by the legislature should waver on the premise that as propounded by the Tribunal, this was a case of conscious omission on the part of the Parliament. Both these aspects we would address one after another. If one looks closely to the provision, in question, adverse consequences of not being able to claim deduction on certain payments irrespective of the provisions contained in Sections 30 to 38 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable till the end of the year. We simply do not see any logic why the legislature would have desired to bring about such irreconcilable and diverse consequences. We hasten to add that this is not the prime basis on which we have adopted the interpretation which we have given. If the language used by the Parliament conveyed such a meaning, we would not have hesitated in adopting such an interpretation. We only highlight tht we would not readily accept that the legislature desired to bring about an incongruous 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 nowhere indicates that the events which take place during the accounting period should be ignored and the ascertainment of fulfilling a certain condition provided under the statute must be j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh 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. The dismissal of SLP by Apex Court is not a declaration of law under Article 141 of the Constitution of India. Therefore, mere dismissal of SLP by Apex Court does not mean that the Apex Court declared any law on the subject. Moreover, the Mumbai Bench of the Tribunal in ACIT vs Rishti Stock Shares P Ltd in ITA No.112/Mum/2012 held the judgment of the Allahabad High Court in Vector Shipping Services (P) Ltd (supra) is obiter dicta. Therefore, the decision of the Chennai Bench of this Tribunal is also not of any assistance to the assessee. Respectfully following the judgments of the Calcutta High Court in Crescent Export Syndicate (supra) and the Gujarat High Court in Sikandarkhan N Tunvar (supra), we do not see any infirmity in the orders of the lower authorities. Accordingly, the orders of the lower authorities are confirmed. 17. In the result, appeal filed by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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