TaxTMI 
TaxTMI 
2015 (8) TMI 760
X X X X Extracts X X X X
X X X X Extracts X X X X
....s) found that there is no question of disallowance under Section 40(a)(ia) of the Act. According to the Ld. D.R., tax has to be deducted on the amount paid by the assessee and not only the amount payable by the assessee. 3. On the contrary, Shri K. Balasubramanian, the Ld.counsel for the assessee, submitted that this Tribunal by interpreting Section 40(a)(ia) of the Act found that tax has to be deducted only on the amount remaining payable on the last date of financial year. Since the entire amount was already paid, according to the Ld. counsel, there is no question of deducting any tax. The Ld.counsel placed his reliance on the decision of this Tribunal in ITO v. Theekathir Press in I.T. A. No.2076/Mds/2012 dated 18.09.2013. 4. We have considered the rival submissions on either side and perused the relevant material on record. It is an admitted fact that the point of deduction of tax at source is at the time of payment or credit of the amount to the account of the payee. No provision of Income-tax Act requires the assessee to deduct tax at source in respect of the amount which was not paid. In other words, in respect of the amount which remains payable or to be credited, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Services (P) Ltd. (supra) was rejected by the Apex Court at the admission state. Therefore, the Apex Court has not laid down any law. In other words, mere dismissal of the Special Leave Petition by the Apex Court at the admission stage does not amount to laying down any law on the elaborate judgments on the ground Calcutta High Court and Gujarat High Court available on the same subject. On identical circumstances, the Cochin Bench of this Tribunal in Thomas George Muthoot v. ACIT in I.T. A. No.63 & 64/Coch/2014 had an occasion to consider an identical issue. The Cochin Bench has observed as follows:- "12. We have also carefully gone through the judgment of the Allahabad High Court in CIT vs M/s Vector Shipping Services (P) Ltd (supra), copy of which is filed by the assessee. The Allahabad High Court, after reproducing the relevant paragraph from the order of CIT(A) and referring to the decision of the Special Bench of this Tribunal in Merilyin Shipping & Transports (supra) found that the Tribunal has not committed an error. It is obvious that there is no discussion about the correctness or otherwise of the decision rendered by the Special Bench of this Tribunal in Merilyn Shipp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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 the mischief sought to be remedied or the object sought to be achieved by an amendment. This is precisely what was done by the Apex Court in the case of CIT Vs. Kelvinator reported in 2010(2) SCC 723. But the same comparison between the draft and the enacted law is not permissible. Nor can the draft or the bill be used for the purpose of regulating the meaning and purport of the enacted law. It is the finally enacted law which is the will of the legislature. The Learned Tribunal fell into an error in not realizing this aspect of the matter. The Learned Tribunal held "that where language is clear the intention of the legislature is to be gathered from the language used". Having held so, it was not open to seek to interpret the section on the basis of any comparison between the draft and the section actually enacted nor was it open to speculate as to the effec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 and deliberately omitted from the definition. That would amount to supplying the casus omissus and we do not think that it is possible, particularly, in this case. The law of supplying the casus omissus by the courts is extremely clear and settled that though this Court may supply the casus omissus, it would be in the rarest of the rate case and thus supplying of this casus omissus would be extremely necessary due to the inadvertent omission on the part of the legislature. But, that is certainly not the case here. We shall now endeavour to show that no other interpretation is possible. The key words used in Section 40(a)(ia), according to us, are "on which tax is deductible at source under Chapter XVII-B". If the question is "which expenses are sought to be disallowed?" The answer is bound to be "those expenses on which tax is deductible at source under Chapter XVII-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....darkhan 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 interpretation of the said provision. Secondly, whether our such understanding of the language used by the legislature should waver on the premise that as propounded by the Tribunal, this was a case of conscious omission on the part of the Parliament. Both these aspects we would address one after another. If one looks closely to the provision, in question, adverse consequences of not being able to claim deduction on certain payments irrespective of the provisions contained in Sections 30 to 38 of the Act would flow if the following requirements are satisfied:- (a) There is interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to resident or amounts payable to a contractor or sub-contractor being resident for carrying out any work. (b) These amounts are such on which tax is deductible at source under XVII....
X X X X Extracts X X X X
X X X X Extracts X X X X
....opting 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 alter this situation. The said decision, of course, recognizes the concept of ascertaining the profit and loss from the business or profession with reference to a certain period i.e. the accounting year. In this context, last date of such accounting period would assume considerable significance. However, this decision nowhere indicates that the events which take place during the accounting period should be ignored and the ascertainment of fulfilling a certain condition provided under the statute must be judged with reference to last date of the accounting period. Particularly, in the context of requirements f Section 40(a)(ia) of the Act, we see no warrant in the said decision of the Supreme Court to apply the test of payability only as on 31st March of the year under consideration. Merely because, accounts are closed on that date and the computation of profit and loss is to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ollowing 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." 12. One of us, the Judicial Member is a party to the above order of the Cochin Bench of this Tribunal. In fact, the assessee before the Cochin Bench filed a Miscellaneous Petition on the ground that there is an error in the order of this Tribunal. The Cochin Bench rejected the Miscellaneous Petition filed by the assessee. The assessee challenged the correctness of the order passed by the Cochin Bench on the Miscellaneous Petition by way of Writ Petition before the Kerala High Court. The Kerala High Court, however, dismissed the Writ Petition filed by the assessee. In those circumstances, this Tribunal is of the considered opinion that the judgments of Calcutta High Court and Gujarat High Court have to be preferred rather than the judgment of Allahabad High Court. In other words, the judgment of Allahabad High Court does not contain any reasoning, therefore, it has to be treated as per incuriam. By respe....