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TMI Blog2014 (11) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... for exemption u/s 80P unless return is filed either u/s 139(1) or 139(4) or within the time provided by the assessee in the notice issued u/s 142(1) of the Act or u/s 148 of the Act and a claim was made for deduction u/s 80P of the Act. In view of the above, , this Tribunal do not find any infirmity in the order of the lower authority. 5. The next ground of appeal is with regard to disallowance on account of payment of interest amount to Rs. 10,24,015 u/s 40(a)(ia) of the Act. 6. Shri Arun Raj S, the ld.counsel for the assessee submitted that interest was paid to the respective depositors without deducting tax. Therefore, in view of the decision of the Special Bench of this Tribunal in Merilyn Shipping & Transports 136 ITD 23 (Vizag) disallowance can be made only in respect of the amount outstanding as at the end of the accounting year only. 7. On the contrary, Shri K.K. John, the ld.DR submitted that admittedly, the assessee paid interest to its members and tax was not deducted. The assessee now claims that since the amount has already been paid, provisions of section 40(a)(ia) is not applicable. The ld.DR placed his reliance on the decision of this Tribunal in ITA Nos 63 & 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee paid the tax, no demand visualized u/s 201(1) of the Act shall be enforced against the defaulter-assessee. In the case before us, the disallowance was made u/s 40(a)(ia) of the Act. The object of section 40(a)(ia) is to compel the assessee to deduct tax at source. In other words, as a precondition for claiming the expenditure otherwise allowable, the assessee has to deduct tax as required under the relevant provisions of the Act. On the contrary, the object of section 201 is only to compensate the government for failure of the assessee to deduct tax at source. Section 201 enables the government to recover the tax from the assessee who defaults in making the deduction at the time of payment. Therefore, the provisions of section 40(a)(ia) and 201 operate in two different fields. Section 40(a)(ia) will not override the provisions of section 201 of the Income-tax Act. Therefore, this Tribunal is of the considered opinion that the judgment of the Apex Court in Hindustan Coco Cola Beverages (P) Ltd (supra) rendered in the context of section 201 may not be applicable in the context of application of section 40(a)(ia) of the Act. 7. We have carefully gone through the provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as freight charges in the returns and later explained that it was not the loan amount but freight charges. It was never the case of the assessee that there was no mandate subsequent to amendment, to deduct tax as TDS in the light of above provisions. The assessment year in question is 2007-08 and the amendment giving breathing space to payer of amounts is with effect from 01/04/2013. Therefore, the said benefit is not applicable to the assessee. Even otherwise, on factual situation, the very fact that these amounts were claimed as loan initially, till the scrutiny came up for consideration before assessing authority would only indicate the real intention of the assessee firm i.e not to disclose this amount as freight charges but something else as repayment of loan." 10. In view of the above judgment of the jurisdictional High Court, it is binding on this Tribunal that second proviso which was introduced by Finance Act, 2012 is not applicable for the assessment years under consideration. Hence, the CIT(A) has rightly confirmed the addition made by the assessing officer. 11. The next contention of the assessee is that the assessee has already paid the amount, provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ping & 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 Shipping & Transports (supra) and found that the decision rendered by the Special Bench of this Tribunal is not the correct law. It is well settled principles of law that when different High Courts expressed different opinions on a point of law, then, normally, the benefit of doubt under the taxation law would go to the assessee. It is also equally settled principles of law that the judgment which discusses the point in issue elaborately and gives an elaborate reasoning has to be preferred when 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 Tun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer to disallow the genuine and reasonable expenditure on the amounts of expenditure 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 the Tribunal by majority did was to supply the casus omissus which was not permissible and could only have been done by the Supreme Court in an appropriate case. Reference in this regard may be made to the judgment in the case of Bhuwalka Steel Industries vs. Bombay Iron & Steel Labour Board reported in 2010(2) SCC 273. 'Unprotected worker' was finally defined in Section 2(11) of the Mathadi Act as follows:- ''unprotected worker' means a manual worker who is engaged or to be engaged in any scheduled employment." The contention raised with reference to what was there in the bill was rejected by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a contractor of subcontractor differently than the payments on account of interest, commission or brokerage, fees for professional services or fees for technical services because the words "mounts credited or paid" were used only in relation to a contractor of sub-contractor. This differential treatment was not intended. Therefore, the legislature provided that the amounts, on which tax is deductible at source under XVII-B payable on account of interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services or to a contractor of sub-contractor 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 manner which was not intended by the legislature. This is our answer to the submission of Mr. Bagchi. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requires 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 resident or amounts payable to a contractor or sub-contractor 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 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts vs. ACIT (supra) to adopt a particular view. 26. While interpreting a statutory provision the Courts have often applied Hyden's rule or the mischief rule and ascertained what was the position before the amendment, what the amendment sought to remedy and what was the effect of the changes. 27 to 36.................... 37. In our opinion, the Tribunal committed an error in 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 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirement of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s Merilyn Shipping & Transports vs ACIT (supra), does not lay down correct law." 14. By following the judgments of the Calcutta H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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