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Chadalavada Hariprasad Versus Deputy Commissioner of Income Tax

Disallowance made u/s. 40(a)(ia) - amount payable - Held that:- We direct the AO to delete the addition so made following the principles laid down by the Hon'ble Special Bench of ITAT in the case of Merilyn Shipping and Transport Ltd., Vs. ACIT [2012 (4)290 - ITAT VISAKHAPATNAM] wherein held section 40(a)(ia) is applicable only to expenditure which is payable as on 31st March of every year and cannot be invoked to disallow the amounts which are already been paid during the previous year, without .....

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Tax Act [Act]. Assessee has preferred Stay Application seeking stay of outstanding demand of ₹ 7,19,653/- by his petition dt. 30-01-2017. When this was taken up, it was noticed that the issue in main appeal is also covered in favour of assessee and accordingly, after hearing both parties, the appeal itself is disposed-off along with Stay Petition. 2. Briefly stated, assessee filed return of income declaring total income of ₹ 3,44,566/-. Assessment u/s. 143(3) of the Act was complete .....

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e amounts which are already paid. Revenue preferred an appeal before the ITAT and it was disposed-off setting aside the matter to the file of the AO to examine and decide in the light of the Special Bench decision in the case of Merilyn Shipping and Transport Ltd., Vs. ACIT [136 ITD 23 (SB)] [16 ITR 1] (SB)(Visakha.)(Trib.). The order of the ITAT dt. 05-07-2012 is as under: 7. We have heard both the parties and have carefully gone through the orders of the authorities as well as the order of the .....

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re, we are not going in to the dispute regarding applicability of section 194-I, however, we limit our adjudication to the extent of applicability of provisions of section 40(a)(ia) of the Act. As the Assessing Officer has no occasion to examine the issue with reference to the special bench decision (supra), which was settled on a later date and there is no examination of the fact whether the expenses incurred by the assessee paid or payable, as on the date of Balance Sheet i.e. 31st March of ac .....

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l Bench decision, though in favour of assessee has been put under interim suspension by the Hon'ble High Court of AP. Following the CBDT Circular dt. 16-12- 2013 and also following the judgments of the Hon'ble Calcutta High Court and Gujarat High Court on Section 40(a)(ia), AO made the same disallowance of ₹ 11,68,000/-. Ld.CIT(A) confirmed the order, by elaborately discussing the issue based on various judgments of High Courts, following a predominant view taken, even though asses .....

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that the Co-ordinate Benches of ITAT are following the Special Bench decision. Accordingly, the disallowance is not warranted as the amount was already paid and was offered by the payee. 5. Ld. DR fairly admitted the legal position but relied on the orders of the CIT(A). 6. We have considered the rival contentions and perused the details available on record. There is no dispute to the fact that the amount was already paid during the year. Ld.CIT(A) in the first round of appeal has already consid .....

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kha.)(Trib.) (Supra). The relevant para of the said judgment is as under: "4. We are of the view that until and unless the decision of the Special Bench is upset by this Court, it binds smaller Bench and coordinate Bench of the Tribunal. Under the circumstances, it is not open to the Tribunal, as rightly contended by Mr. Narasimha Sarma, learned counsel, to remand on the ground of pendency on the same issue before this Court, overlooking and overruling, by necessary implication, the decisio .....

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