TaxTMI 
TaxTMI 
2014 (4) TMI 1137
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....t is not covered under the head income from business and profession. (iii) On the facts and in circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance u/s 40(a)(ia) of the Act, by ignoring the facts that the expenditure added to the income of the appellant have not been debited to Income & Expenditure account of the appellant. (iv) On the facts and in circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance u/s 40(a)(ia) of the Act, by ignoring the facts that the provisions of Sec. 40(a)(ia) of the Act are applicable in the case of amounts payable & not amounts paid. (v) On the facts and in circumstances of the case and in law, the learned CIT(A) fails to appreciate that the appellant was not required to file return as per the provisions of S. 139(1)(4C) of the Act, the appellant could not be penalized for voluntary act of filing return. (vi) That the appellant craves to leave to add, amend, modify, delete any of the ground of appeal before or at the time of hearing and all the above grounds are without prejudice to each other." 2. The brief facts of the case are that t....
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....der consideration. During the course of assessment proceedings, it was asked why the said amount may not be added back to the income in contravention to the provision of Section 40(a)(ia) of the Act. 3. After considering the reply of the assessee, the Assessing Officer observed that since there was a contract for supply, erection, testing & commissioning of 13 Mtrs. each Medium High Mast Lighting System containing 4 No. & 6 No. 400 Watt Halide Luminaries alongwith other gadgets according to the specification of the Committee (By using material purchased from such customer). TDS was required to be deducted on the whole of the invoice value and the assessee was failed to do so & thus contravened the provisions of section 40(a)(ia) of Act and accordingly, an amount of Rs. 34,56,791/- was added back to the income of the assessee. 4. Learned DR relied upon the order of the Assessing Officer. 5. We have heard the rival contentions and perused the facts of the case. We concur with the views of learned CIT(A) that the expenditure under consideration was incurred on account of supply, erection, testing & commissioning of lights. M/s Mahaluxmi Enterprises has raised a consolidated b....
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.... "1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 14,35,040/-made by the A.O. on account of violation of provisions of section 40(a)(ia) of the I.T. Act, 1961. 2. It is prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored. 3. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard and disposed off. 3. The assessee has raised following grounds in its Cross Objection: "1. That on the facts and in the circumstances of the case and in law, the ld. CIT Bathinda erred in giving sanction for filing second appeal as he himself has decided the appeal in favour of the respondent assessee as CIT(A) Bathinda. 2. That on the facts and in the circumstances of the case and in law, the appeal of the revenue is not maintainable as the same was decided by the Ld. CIT(A) on the admission of the AO in his remand report that crushing charges of Binola are the part of the trading/manufacturing account and the CIT(A) has given a clear finding that it would fall u/s 28 which section is not there in section 40(a)(ia) of the Income....
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.... submissions were advanced on 30.03.2009 whereby the comments of the AO too were called for on 30.03.2009 through letter No. 200 not being convinced, the assessment order was held to be erroneous and prejudicial to the interest of the revenue for which the findings are extracted below: "In view of the above mentioned and legal position, it is held that it is a fit case for invoking the provisions of Section 263 of the I.T. Act, 1961, as the assessment framed by the A.O. on 28.02.2007 u/s 143(3) is erroneous in so far as it is prejudicial to the interest of the revenue. Accordingly, the assessment framed by the I.T.O., Ward-II(1), Bathinda on 28.02.2007 u/s 143(3) of the I.T. Act, 1961 is cancelled u/s 263 of the Act and the A.O. is directed to frame fresh assessment, in the light of the observations made by the undersigned in the foregoing paragraph." 7. The revision order dated 31.03.2009 has attained finality undisputedly on legality whereas consequential the fresh notice under section 143(2) dated 22.05.2009 was issued and served whereby the proceedings were continued and concluded under section 143(3) of the Act vide order dated 02.10.2009 at an assessed income of R....
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.... not deducted TDS on this out sourcing job work of crushing of Binola on the advice of its statutory auditor so this addition is liable to be deleted." 9. Before the Ld. CIT(A), the contentions were raised relying upon the Dictionary meaning to the word "contractor', the decision of Jaipur Vidyut Vitran Nigam vs. DCIT, J.C. Bansal, Chief Engineers vs. TRO-2 Ujjain. Section 194C, section 40a(ia) and the words utilized in the Finance Bill 2004 certain opinion of the authors and in consequence thereto the remand report of the A.O. vide letter No.2677 dated 31.03.2010 was called for, for which was prayed for upholding AO's order dated 02.10.2009. Having noticed the aforesaid points raised by the assessee and in the remand report, the ld. CIT(A) allowed the grounds treating the appeal partly allowed through order dated 06.05.2010 at pages 10 & 11 of his order by giving the following findings: 'I have considered the arguments of learned counsel for the appellant and the remand report of the A.O. on this issue as well as the aforesaid judgment of the Hon'ble Supreme Court and hold that the A.O. should have seen the true nature and quality of the receipt and not....
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....o where been defined in the I.T. Act, 1961. Thus, by implication, the word "payable" does not include "paid" simply because there is no such definition or deeming provision for the word "payable". Therefore, in my view, the disallowance under Section 40(a)(ia) can only be made in respect of expenditure which is payable and if the expenditure has already been paid, no such disallowance can be made. Thus, section 40(a)(ia) is not applicable where the expenditure is paid. It is applicable only in a cases where the payments are due and outstanding. Therefore, after going through the facts and provisions of Law and respectfully following the judgment of the Hon'ble Bench (discussed (supra)), I agree with the appellant and therefore, hold that provisions are applicable only in respect of the expenditure which remained payable at the end of the year. After perusing the records, I find that as per the Balance sheet at the end of the year, only a sum of Rs. 1649262/- remained payable out of Rs. 86238103/-. Therefore, the maximum disallowance which could be made u/s 40(a)(ia) should be Rs. 1649262/-. The appellant has claimed that out of this most of the amounts payables are on ....
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....he person who renders the service/work a certain amount of payment becomes payable to that person and it does not make any difference whether that payment is paid during a particular year or in the subsequent year. The learned CIT(A) has not interpreted the provisions of section 40(a)(ia) in broad sense, as the intention of legislature in enacting these provisions was to levy tax on the amounts coming due from any service rendered on which TDS was not deducted. Keeping in view above facts learned CIT(A) has erred in deleting the addition of Rs. 14,35,040/- made by the A.O. without considering the facts discussed in the assessment order as well as remand report dated 26.04.2010 submitted before him. 11. The Ld. counsel for the assessee has placed on record paper book containing 20 pages dated 23.05.2013 for substantiating the contentions primarily devoted to the grounds of cross objections dated 01.08.2010 addressing to the granting of allowance and upholding the findings of the ld. CIT(A) and additionally a valiant attempt made to buttress the arguments by relying upon the decision of Coordinate Bench in the case of Teja Constructions vs. ACIT (2010) 36 DTR 220 (Hyd. Trib) an....
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.... (supra) and Hon'ble Calcutta High Court in the case of CIT vs. Crescent Export Syndicate (supra), which are the decisions on the impugned issues as raised. The ld. counsel for the assessee relied upon the decision of Special Bench in the case of CIT vs. Merilyn Shipping & Transports (supra) only in this regard but has not rebutted the said decisions of the hon'ble High Courts mentioned hereinabove. 15. Secondly, regarding reliance placed on the decision of Coordinate Bench of Hyderabad in the case of Teja Constructions vs. ACIT (supra), we are of the view that the arguments have not been concluded to the logical end while the said order with greatest respect of the ITAT is dated 23.10.2009 before the constitutional virus were under challenge as revealed through the judgments being by the Hon'ble High Court of Allahabad in the case of Dey's Medical (U.P.) P Ltd. (supra) which is dated 15.02.2008 and judgment of Hon'ble Madras High Court in the case of Tube Investments of India Vs. ACIT (supra) which is dated 29.09.2009 and decision of ITAT, Special Bench in the case of Merilyn Shipping & Transports dated 29.03.2012 whereby at the time of case disposal before ....
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....DS provisions. (iv) When the provisions and procedures relating to TDS are scrupulously applied, first and foremost it ensures the identification of the payees and thereby network of assessees gets confirmed. When once such identity of assessees, who are in receipt of the income can be ascertained, it will enable tax collection machinery to bring within its fold all such persons who are liable to come within the network of taxpayers. Thus, if it is held that the provisions of section 40(a)(ia) are not applicable in respect of those payments which have been paid without making TDS and at the end of the year no amount is outstanding then the very object of identification of payees will get frustrated. (v) The legislative intent of the introduction of section 40(a)(ia) is in the larger perspective of augmenting the very TDS provisions themselves. It is not merely related to the collection of TDS only. (vi) The intention of the legislature is not to tax the payer for its failure to deduct the tax at source. The object of introduction of section 40(a)(i) as well as section 40(a)(ia) is to ensure that one of the modes of recovery as provided in Chapter XVII-B i....
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....ty 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 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 a....
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....Government Gazette Extraordinary, Part IV on 13-06-1969, the aforementioned words were omitted. Therefore, this 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 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 rare 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 "....
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.... in the case of Merilyn Shipping & Transports are not acceptable. The submissions advanced by learned advocates have already been dealt with and rejected. The appeal is, thus, allowed in favour of the revenue." 16. It would be relevant to deal with the arguments of the ld. counsel of the assessee which were pressed repeatedly that the provisions of section 28 'stand alone', grant the allowance to the assessee and this claim has been made validly thus eligible for allowance nevertheless no deduction of tax made. In this context, we refer that the said arguments by Ld. AR are berefet of merits and substance since the act has to be read as an "integrated code" and not to the choice of the assessee being pick and choose to the provisions of law suiting the requirements of a litigant ands the similar argument has been dealt in the aforesaid judgment of Hon'ble Calcutta high Court in the case of CIT vs. Crescent Export Syndicate (supra) and which findings are while noticing the judgment of Hon'ble Supreme Court in A.S. Krishna vs. State of Madras reported in AIR 1957 SCC 297 (supra). 17. That the said argument is hereby rejected and even the Hon....