TaxTMI 
TaxTMI 
2013 (7) TMI 963
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....ply to all amounts - whether actually paid or remaining payable during the year. 2. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) was justified in holding that the provisions of sec. 40(a)(ia) are applicable only to amounts payable or outstanding and not to the amounts already paid during the year ? 3. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) has erred in ignoring that, the provisions of sec. 40(a)(ia) have to be read in conjunction with Chapter XVII-B r.w.s. 194C, which provides for deduction of tax at source, by any person responsible for paying any sum to a contractor or subcontractor, for carrying out any work on his behalf, shall at the time of credit of such sum to the account of the payee or at the time, payment thereof, whichever is earlier, deduct tax at source at the rates in force ? 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring that, the provisions of sec. 40(a)(ia) r.w.s. Ch. XVII-B, comes into operation once the amount is credited or paid to the account of the payee, and it does not provide an exception to the payments ....
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....ow the issue stands covered against the assessee by the following two decisions (i) CIT Vs. Sikandarkhan N Tunvar (2013) 33 taxmann.com 133 (Gujarat) and (ii) CIT, Kolkata Vs. Crescent Export Syndicate (2013) 33 taxmann.com 250 (Kolkata). In the case of Crescent Export Syndicate (supra) the decision of the Hon'ble Special Bench of the ITAT in the case of Merilyn Shipping and Transports 136 ITD 23 (SB) (Visakha) has come for the judicial scrutiny in which it was held that the disallowance u/s. 40(a)(ia) applies only to amounts payable as on 31st March of the previous year on which the TDS has not been deducted and no disallowance to be made in respect of sums paid during the previous year without deducting TDS. The Hon'ble High Court reversed the decision of the Special Bench in the case of Merilyn Shipping and Transport (supra). The operative part of the judgment is as under: In view of above discussion, we answer the question as under:- The provisions of section 40(a)(ia) of the Income Tax Act, 1961, are applicable not only to the amount which is shown as payable on the date of balance-sheet, but it is applicable to such expenditure, which become payable at any time duri....
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....hat the Learned Tribunal realized the meaning and purport of Section 40(a)(ia) correctly when it held that in case of omission to deduct tax even the genuine and admissible expenses are to be disallowed. But they sought to remove the rigour of the law by holding that the disallowance shall be restricted to the money which is yet to be paid. What the Tribunal by majority did was to supply the casus omissus which was not permissible and could only have been done by the Supreme Court in an appropriate case. Reference in this regard may be made to the judgment in the case of Bhuwalka Steel Industries vs. Bombay Iron & Steel Labour Board reported in 2010 (2) SCC 273. 'Unprotected worker' was finally defined in Section 2 (II) of the Mathadi Act as follows:- "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....
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....ited or paid" were used only in relation to a contractor or sub-contractor. This differential treatment was not intended. Therefore, the legislature provided that the amounts, on which tax is deductible at source under Chapter XVII-B payable on account of interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services or to a contractor or sub-contractor shall not be deducted in computing the income of an assessee in case he has not deduced, or after deduction has not paid within the specified time. The language used by the legislature in the finally enacted law is clear and unambiguous whereas the language used in the bill was ambiguous. A few words are now necessary to deal with the submission of Mr. Bagchi and Ms. Roychowdhuri. There can 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 Ms. 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 ac....