2016 (8) TMI 742

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....hese cases is 2006-2007. 2. The common facts of the case are that the assessees filed the appeals aggrieved by the order passed by the Commissioner of Income Tax (Appeals) upholding the additions made by the Assessing Officer on freight payments, under Section 40a(ia) of the Income Tax Act. This was on the ground that the assessee did not deduct tax at source on the freight charges paid by them. Accepting the contention of the assessees that the payment in question were made in the previous year and that, therefore, Section 40a(ia) was inapplicable, the Tribunal allowed the appeals. The acceptance of the aforesaid contention of the assessees was on the basis that the Special Bench of the Tribunal itself in the case of Merilyn Shipping & ....

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.... sustained. This contention was sought to be substantiated by relying on the judgment of the Allahabad High Court in Commissioner of Income Tax v. Vector Shipping Services (P) [(2013) 357 ITR 642 (All)]. Primarily, this contention should be answered with reference to the language used in the statutory provision. Section 40(a)(ia) makes it clear that the consequence of disallowance is attracted when an individual, who is liable to deduct tax on any interest payable to a resident on which tax is deductible at source, commits default. The language of the Section does not warrant an interpretation that it is attracted only if the interest remains payable on the last day of the financial year. If this contention is to be accepted, this Court wil....