2016 (7) TMI 394

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....rder of the CIT (A) is erroneous in law and on facts of the case. b) That on the facts and circumstances of the case, the learned CIT (A) erred in deleting the addition made of Rs. 4,93,77,480 towards disallowance u/s 40(a)(ia) of the I.T. Act, 1961 as the assessee had failed to deduct tax on payment of interest. c) Any other ground that may be urged at the time of hearing. 2. Ground Nos. 1 and 3 are general in nature, hence needs no adjudication. 3. Brief facts relating to the case are that the assessee is a company incorporated by the State of Andhra Pradesh, engaged in mobilizing funds and funding power projects of the State of A.P. It has filed its return of income for the A.Y 2012-13 on 30.09.2012 admitting 'Nil....

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....lt does not arise and accordingly disallowance cannot be made. 5. That the assessee further submitted before the CIT (A) that the amounts have already been paid and the proviso of section 40(a)(ia) are applicable only if the amounts are payable. In this regard the assessee cited the decision of the Special Bench of the ITAT Visakhapatnam in the case of Merlyn Shipping & Transport (136 ITD 23). This decision though stayed by the Hon'ble A.P. High Court, the same High Court in a later case held that the Tribunal is bound to follow this decision as it has not been reversed by the High Court. The Hyderabad ITAT in a recent case followed the decision of the Merlyn Shipping (Supra) and held that no disallowance u/s 40(a)(ia) once the amoun....

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.... Court has sanctified that the decision of Merlyn Shipping shall have to be followed by the smaller and Coordinate Benches of the Tribunal. The learned CIT (A) in her order observed that the assessee has claimed that the payment has been made to 204 investors mostly which are public trust and welfare fund. All of them are income tax assessees. That therefore, following the direction of the jurisdictional High Court in the case of Janapriya Engineers Syndicate (Supra) and following the Special Bench directive in the case of Meryln Shipping & Transport (Supra), the learned CIT (A) held that section 40(a)(ia) of the Act cannot be applied in the case of the assessee and therefore, the addition of Rs. 4,93,77,480 were deleted. Being aggrieved, t....