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2016 (8) TMI 48 - ITAT BANGALORE

2016 (8) TMI 48 - ITAT BANGALORE - TMI - Disallowance made u/s. 40(a)(ia) in respect of expenditure on account of hiring of trucks - Held that:- The assessee has already paid the entire expenses and nothing was payable as on 31st March, 2010, therefore the provisions of section 40(a)(ia) cannot be applied. - Disallowance made u/s. 40A(3) - Held that:- We find that the CIT(Appeals) has given the full details of the payment in the impugned order, which is more than the minimum limit of exempti .....

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ITA No. 854/Bang/2015 - Dated:- 27-7-2016 - Shri A. K. Garodia, Accountant Member And Shri Vijay Pal Rao, Judicial Member For the Appellant : None For the Respondent : Dr. P.K. Srihari, Addl. CIT ( DR ) ORDER Per Vijay Pal Rao, Judicial Member This appeal is directed against the order dated 29.01.2015 of the CIT(Appeals), Hubli for the assessment year 2010-11. 2. Though the assessee has raised various grounds, however, we find that the only effective grounds are Nos.10 & 11 as under:- 10) T .....

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e Tax (Appeals), Hubbali, has erred in fairly interpreting the provisions of Section 40(A)(3) and read the said provisions in isolation. The provisions of the Section 40(A)(3) are also controlled and conditioned by the spirit and letter of the provisions of Section 40A of the IT Act, which bestows on the Assessing officer, a well reasoned discretion to allow the expenses if the said officer is of the opinion that such expenses are reasonable and not excessive or when the services or facilities f .....

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assessee. Despite the adjournment granted to the assessee, the assessee did not choose to cause appearance to represent and prosecute its appeal. 4. We have heard the ld. DR and carefully perused the impugned orders of the authorities below. Since none has appeared on behalf of the assessee, therefore we do not have the privilege of hearing the assessee or its AR. 5. As regards the disallowance made u/s. 40(a)(ia) in respect of expenditure on account of hiring of trucks, the assessee contended b .....

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through the judgment in the case of Vector Shipping Services (P.) Ltd. (supra). In the said case, Hon'ble High Court of Allahabad was considering an issue with regard to non-compliance of provisions of Section 194C by the assessee therein. The said company had advanced a contention that work was carried out by one M/s. Mercator Lines Ltd., on behalf of Vector Shipping Services (P.) Ltd. (supra) and M/s. Mercator Lines Ltd., had deducted TDS in the salary of its employees and fully complied .....

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s is sought to be justified on the ground that the agreement inter se between the assessee and the harvester is not a valid contract inasmuch as the farmer is not a party to the said agreement upon whose land the harvester works and whose produce is purchased by the assessee. It is also argued that the said agreement is not ratified by the farmer. In our considered view, the said argument advanced on behalf of the assessee is fallacious and is noted only to be rejected. We say so because, there .....

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pressed into service by the assessee in support of its case is that, assessee is a co- operative sugar factory established for the benefit of its members and therefore, the view taken by the Assessing Authority would adversely effect the profit margin to the members of the society as the society will have to pay tax, interest and penalty for non-compliance of section 194C, 194I and 194J of the Act. This would create additional burden of tax, penalty and interest and the same would run counter t .....

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another ground urged on behalf of the assessee suggesting that it did not have the benefit of proper legal advice due to its locational disadvantage, we are of the view that this argument is too feeble to countenance. While canvassing this ground, it is argued by the learned Counsel for the assessee that since the factory is situated in a remote area, it did not have access to competent consultants. Admittedly, assessee was represented by a Chartered Accountant Shri Praveen Ghali before the Tax .....

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f law is no excuse. We hasten to add that we are conscious of the fact that the Doctrine 'ignorantia juris neminem excusat', has been interpreted by the Hon'ble Supreme Court and English Courts in several cases. There cannot be an universal, strict and straight jacket application of this doctrine. It may be useful to refer to the pronouncement of the Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 18 ITR 326, wherein, it .....

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son who is said to have waived is fully informed as to his right and with full knowledge of such right, he intentionally abandons it. It is pointed out in Halsbury's Laws of England (4th Edn.) Volume 16 in para 1472 at p. 994 that for a "waiver to be effectual it is essential that the person granting it should be fully informed as to his rights" and Isaacs, J. delivering the judgment of the High Court of Australia in Craine v. Colonial Mutual Fire Insurance Co. Ltd. [(1920) 28 CLR .....

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ing that it would avail of the concessional rates of Sales Tax granted under the letter dated January 20, 1970. It is possible that the appellant might have thought that since no notification exempting the appellant from Sales Tax had been issued by the State Government under Section 4-A, the appellant was legally not entitled to exemption and that is why the appellant might have chosen to accept whatever concession was being granted by the State Government. The claim of the appellant to exempti .....

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t based on the plea of promissory estoppel which was introduced only by way of amendment. Moreover, it must be remembered that there is no presumption that every person knows the law. It is often said that everyone is presumed to know the law, but that is not a correct statement: there is no such maxim known to the law. Over a hundred and thirty years ago, Maule, J., pointed out in Martindale v. Falkner [(1846) 2 CB 706 : 135 ER 1124] : "There is no presumption in this country that every pe .....

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the law. There is the rule that ignorance of the law does not excuse, a maxim of very different scope and application." It is, therefore, not possible to presume, in the absence of any material placed before the Court, that the. appellant had full knowledge of its right to exemption so as to warrant an inference that the appellant waived such right by addressing the letter dated June 25, 1970. We accordingly reject the plea of waiver raised on behalf of the State Government.' So far as .....

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y Council also observed: "It was said on the respondent's part that the order made by the minister under the powers conferred by Section 9 of the Ordinance was an instance of the exercise of delegated legislation and therefore that the order, once made, became part of the law of Singapore of which ignorance could provide no excuse on a charge of contravention of the section. Their Lordships are unable to accept this contention. In their Lordships' opinion, even if the making of the .....

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o enable a man by appropriate inquiry to find out what 'the law' is." 15. But then in State of Maharashtra v. Mayer Hans George [AIR 1965 SC 722, 742 : (1965) 1 Cri LJ 641 : (1965) 1 SCR 123] Rajagopala Ayyangar, J. referred to the following comment of Prof. C.K. Allen on Johnson v. Sargant & Sons [(1918) 1 KB 101 : 87 LJ KB 122 : 118 LT 95] : "This was a bold example of judgment-made law. There was no precedent for it, and indeed a decision, Jones v. Robson [(1901) 1 KB 67 .....

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87 LJ KB 122 : 118 LT 95]. Taking the present case, the question would immediately arise is it to be made known in India or throughout the world, for the argument on behalf of the respondent was that when the respondent left Geneva on November 27 he was not aware of the change in the content of the exemption granted by the Reserve Bank. In a sense the knowledge of the existence or content of a law by an individual would not always be relevant, save on the question of the sentence to be imposed .....

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pass through India. It was 'published' and made known in India by publication in the Gazette on the 24th November and the ignorance of it by the respondent who is a foreigner is, in our opinion, wholly irrelevant." 16. Again in B.K. Srinivasan v. State of Karnataka [(1987) 1 SCC 658, 672 : AIR 1987 SC 1059, 1067] it was observed: (SCC p. 672, para 15) "There can be no doubt about the proposition that where a law, whether parliamentary or subordinate, demands compliance, those t .....

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here is hardly any field of activity where governance by delegated or subordinate legislative powers is not as important if not more important, than governance by parliamentary legislation. But unlike parliamentary legislation which is publicly made, delegated or subordinate legislation is often made unobtrusively in the chambers of a Minister, a Secretary to the Government or other official dignitary. It is, therefore, necessary that subordinate legislation, in order to take effect, must be pub .....

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CC 658, 672 : AIR 1987 SC 1059, 1067] AIR at p. 1067 : SCC pp. 672-73, para 15] : "Where the parent statute is silent, but the subordinate legislation itself prescribes the manner of publication, such a mode of publication may be sufficient, if reasonable. If the subordinate legislation does not prescribe the mode of publication or if the subordinate legislation prescribes a plainly unreasonable mode of publication, it will take effect only when it is published through the customarily recog .....

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ring Sugar and its byproducts in a large scale. Therefore, the assessee has no escape but to comply with various Fiscal Statues such as Income Tax, Sales Tax, Customs Act, Central Excise Act etc., and Labour Laws such as Factories Act, ESI Act, PF Act etc. Further, there is clear evidence on record to show that the assessee has paid large sums of fee to the Lawyers and availed services of Chartered Accountant also. These two aspects namely, evidence of expenditure towards fee paid to the lawyers .....

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challenging the validity of the orders passed prior to January 26, 1950. But we are in agreement with the High Court on the other two grounds. As mentioned earlier, the impugned assessments were made in 1949. The writ petition was filed in 1956. The explanation given by the petitioner for this long delay is that he did not know the correct legal position and he came to know about the same after the decision of the Allahabad High Court in the Commissioner of Sales Tax, U.P. v. Modi Food Products .....

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over several months. There is no satisfactory explanation for that delay. That being so, the High Court was fully justified in refusing to exercise its discretion under Article 226 of the Constitution in favour of the appellant." (Underlining is by us) State of A.P. v. Twin City Jewellers Assn. [2005] 13 SCC 552 at page 554, wherein it is held as follows: "8. It could not be denied that GO No. 303 dated 15-4- 1997 was published in the Official Gazette on 23-4-1997. It is settled law t .....

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the assessing officer, who had assessed wrongly, could always reopen the assessment. 9. All that the errata, issued on 4-5-1998, does it reduce the rate of tax from 4% to 3%. The High Court has therefore also erred in concluding that the rate of tax has been increased. The whole judgment proceeds on the basis that the rate of tax has been increased when in fact it has been reduced. 10. We are unable to accept the submission that as GO No. 304 is an errata, it necessarily means that GO No. 303 ha .....

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with the judgment of the High Court which has been passed on equitable basis. We see no substance in this submission. If the law is clear then it must be given effect to. Merely because the parties were unaware of the law does not mean that courts can ignore the law and provide to the contrary." (Underlining is by us) 31. The following judgments are relied upon by the Revenue in support of their case: (i) In the case of Thomas George Muthoot v. CIT [2015] 93 CCH 0151 Ker HC. It is held by t .....

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ontractor 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 such meaning. If the interpretation as advanced by th .....

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ny 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 that we would not readily accept that the legislature desired to bring about an incongruous and seemingly irreconcilable consequen .....

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revious year. In the result the question is decided in favour of revenue and against the assessee." 32. While citing the aforesaid judgments, the learned Counsel for the Revenue also emphasized that the judgment in the case of Vector Shipping Services (P.) Ltd. (supra), is not applicable to the facts of this case. He submitted that in the light of the unambiguous and admitted facts non-compliance of statutory compliance of statutory provisions of Sections 194C, 194I and 194J of the Act stan .....

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