2015 (7) TMI 437

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....s) erred in deleting the disallowance made under section 40(a)(ia) of the Act in respect of professional fees paid without deduction of tax at source. The Assessing Officer while completing the assessment disallowed Rs. 18,00,000/- paid towards architect fees as the assessee did not deduct TDS on such payment and therefore, Assessing Officer disallowed the said amount under section 40(a)(ia) of the Act. On appeal, Commissioner of Income Tax (Appeals) following the decision of Special Bench of the Tribunal (Visakhapatnam Bench) in the case of Merilyn Shipping & Transports Vs. Addl. CIT (136 ITD 23) (SB), deleted the disallowance as these amounts were already paid before the end of the year, therefore provisions of section 40(a)(ia) are not a....

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....cond appeal before us. 3. The Income-tax Appellate Tribunal, Visakhapatnam-Special Bench, had held in the case of Merilyn Shipping and Transports vs. Addl. CIT, 16 ITR (Trib) 1, that the provisions of section 40(a)(ia) do apply only to those amounts remained payable by the end of the previous year and the said provisions do not apply to the amounts already paid by the assessee before the close of the relevant previous year. In that way, the order of the Commissioner of Incometax( Appeals) in the present case is conducive to the decision of the Special Bench. The very same view has been upheld by the Hon'ble Allahabad High Court in the case of CIT vs. M/s. Vector Shipping Services(P) Ltd. The Hon'ble Allahabad High Court, through their ju....

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....judgment of the Hon'ble Allahabad High Court is in favour of the assessee. At the same time, we find that the orders of the Calcutta High Court and the Gujarat High Court are against the assessee. In such circumstances, the rule of Judicial Precedence demands that the view favourable to the assessee must be adopted, as held by the Hon'ble Supreme Court in the case of CIT vs. Vegetable Products Ltd., 88 ITR 192. Following the above fundamental rule declared by the Hon'ble Supreme Court, we have to follow the judgment of the Hon'ble Allahabad High Court, which is in favour of the assessee. Accordingly, we hold that the disallowance under section 40(a)(ia) applies only to those amounts 'payable' and not to those amounts 'paid'. Accordingly, we....