TMI Blog2014 (11) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... of the lower authorities are confirmed. - Decided against assessee. Payment was paid to the fund which was approved u/s 10(23C)(iv) - HELD THAT:- The recipient entities are required to file the returns of income even though they are approved u/s 10(23C) by the concerned Chief Commissioner wherever the income exceeds the taxable limit without giving effect to provisions of section 10(23C) of the Act. Therefore, for computation of total income, the recipient entity may exclude the income which is applied for charitable purpose as per the object of the fund / institution and the conditions imposed by the Chief Commissioner. Hence, it is a matter factually to be verified in each and every case and there cannot be a total exemption. In the case before us, only in respect of one recipient, viz. Kerala Building & Other Constructions Workers Welfare Board the assessee has filed copy of the approval received from the Chief Commissioner. In respect of other recipient funds / board the copies of the approval are not filed. Therefore, it needs to be verified. Accordingly, the orders of lower authorities are set aside only for the limited purpose of examining whether the recipient conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for exemption u/s 10(23C) of the Act. The ld.representative further submitted that in fact the Kerala Co-operative Employees Pension Board filed its return of income disclosing the receipt of income. The Kerala Building Other Constructions Workers Welfare Board and Kerala Toddy Workers Welfare Fund Board have been notified u/s 10(23C) of the Act for the purpose of exemption. According to the ld.representative, once the recipient entities are entitled for exemption u/s 10(23C) the assessee is not liable to deduct tax. 4. The ld.representative further submitted that the assessee has already paid the interest. The provisions of section 40(a)(ia) is applicable only in respect of the amounts remains to be paid as on the last day of the financial year. The ld.representative placed his reliance on the judgment of the Allahabad High Court in CIT vs Vector Shipping Services (P) Ltd (2013) 38 taxmann.com 77 (Allahabad) and also the Special Bench decision of Visakhapatnam Bench of this Tribunal in Merilyn Shipping Transports vs Addl CIT (2012) 20 taxmann.com 244 (Visakhapatnam). According to the ld.representative, since the interest has already been paid there cannot be any disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject and surplus, if any, as per the conditions imposed by the concerned authority. Therefore, according to the ld.DR, it is not a case of total exemption of income received by the approved fund. Hence, the assessee has to file return of income disclosing all the payments made to the respective concern and the assessee cannot decide about the taxability of income in the hands of the recipient concern since the exemption is subject to utilization of the fund for charitable purpose. Therefore, according to the ld.DR, it cannot now be said that the interest paid by the assessee is not taxable in the hands of the recipient concerns. The interest paid by the assessee is exempt in the hands of the institutions provided they used the same for charitable purpose and it is approved by the concerned authority u/s 10(23C) of the Act. The ld.DR further submitted that though the assessee claims that in the earlier assessment years tax was not deducted, it is not known since when the assessee was not deducting the tax. The ld.DR submitted that principles of res judicata is not applicable to the income-tax proceedings, therefore, merely because the tax was not deducted in earlier assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 section 40(a)(ia) of the Act. The Parliament by Finance Act, 2012 incorporated second proviso to section 40(a)(ia) of the Act with effect from 01-04-2013. For the purpose of convenience, we are reproducing second proviso as it is inserted by Finance Act, 2012 below: Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso. 8. In view of this second proviso which came to be inserted in the statute book with effect from 01-04-2013, wherever the assessee fails to deduct tax on any sum, but is not deemed to be an assessee in default u/s 201(1) then, it shall be deemed that the assessee has d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 section 40(a)(ia) is applicable only in respect of the amount which remains to be payable on the last day of the financial year. The ld.representative placed his reliance on the decision of the Special Bench of this Tribunal in Merilyn Shipping Transports vs AddlCIT (2012) 70 DTR 81 and also the judgment of the Allahabad High Court in CIT vs M/s Vector Shipping Services (P) Ltd I.T.A No.122 of 2013 judgment dated 09-07-2013 and submitted that the SLP filed by the revenue in the Apex Court against the judgment of the Allahabad High Court in M/s Vector Shipping Services (P) Ltd (supra) is dismissed by the Apex Court. It is well settled principles of law that the law laid down by the Apex Court is binding on all courts and authorities including this Tribunal under Article 141 of the Constitution of India. It is also equally settled principle that a dismissal of SLP without any discussion is not the law declared by the Apex Court. The Apex Court thought it fit that it was not a fit case to be admitted for considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is 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 Allahabad High Court in M/s Vector Shipping Services (P) Ltd (supra). 13. For the purpose of convenience we reproducing below the observations made by the Calcutta High Court in Crescent Exports Syndicate Another (supra) and Gujarat High Court in 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 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. The submission of Mr. Roychowdhuri that the second proviso sought to become effective from 1st April, 2013 should be held to have already become operative prior to the appointed date cannot also be acceded to for the same reason indicated above. The law was deliberately made harsh to secure compliance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rings 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 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 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 alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion 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 High Court in Crescent Export Syndicate (supra) and the Gujarat High Court in Sikandarkhan N Tunvar (supra), this Tribunal is of the considered 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 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. 9. In view of the above decision of this Tribunal on identical set of facts, this T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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