2015 (10) TMI 69

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....t of payment of interest without deduction of TDS.     ii) Deleting the addition of Rs. 5,25,000/- made u/s 40(a)(ia) of the Income tax Act, 1961 on account of payment of brokerage without deduction of TDS.     iii) Deleting the addition of Rs. 1,05,157/- out of rebate and discount." 2. The brief facts of the case are that the assessee derives income from the business of building material, iron and steel, cements during the year under consideration through two proprietary concerns M/s. Delhi Steel and Cement and M/s. Mudit Steels. During the course of assessment proceedings, the A.O. disallowed the interest paid by M/s. Mudit Steels on loan taken from various institutions as TDS was not deducted on pay....

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....s of Section 40(a)(ia) are applicable only to the amounts of expenditure, which are payable as on the date of 31st March every year and it cannot be invoked to disallow expenditure, which has been actually paid during the previous year without deduction of TDS.'     I have carefully considered the submissions made by the appellant and I am of the considered opinion that the judgement of Hon'ble ITAT Special Bench Vishakhapatnam is applicable in the case of the appellant. The Special Bench of the Tribunal held that Section 40(a)(ia) of the Act was introduced by the Finance Act, 2004 w.e.f. 01.04.2005 with a view to augment the revenue through the mechanism of TDS. On a comparison between the proposed Finance (No.2) ....

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....lowed the payment of brokerage since TDS was either not deducted or there was lower deduction of TDS in some cases. In the light of the decision of Hon'ble ITAT Vishakhapatnam in the case of Merilyn Shipping & Transport (supra), this addition of Rs. 5,25,000/- is also hereby deleted.     4.4 In ground No.5, the appellant has impugned the disallowance of Rs. 1,05,157/- out of rebate & discount, claimed by the appellant in his proprietorship concern M/s. Mudit Steels. The appellant has submitted that he has claimed an amount of Rs. 3,41,871/- under the head Rebates and discount, out of which a sum of Rs. 1,04,757/- (wrongly taken by the A.O. at Rs. 1,05,157/-) pertains to the rate difference in the case of M/s. B.L. Goya....

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....d that while Hon'ble Calcutta High Court in the case of CIT Vs Crecent Export Syndicate 216 Taxman 250 and Hon'ble Gujarat High Court in the case of CIT Vs Sikandarkhan N Tunvar 357 ITR 312 has overruled the Special Bench decision in the case of Merilyn Shipping & Transports Vs ACIT 136 ITD 23. However, the Special Bench Decision has been approved by Hon'ble Allahabad High Court in CIT Vs Vector Shipping Services (P) Ltd. 357 ITR 642 and moreover, SLP filed by the Department against Hon'ble Allahabad High Court decision in the case of Vector Shipping Services has been dismissed by Hon'ble Supreme Court and therefore, the Hon'ble Supreme Court order has become the law on this issue. Without prejudice to the above, it ....