TaxTMI 
TaxTMI 
2014 (6) TMI 987
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....he Income-tax Act, 1961 (in short "the Act") pertaining to the assessment year 2006-07. 2. In the appeal of the Revenue, following Ground of Appeal has been raised :- "1. Whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in deleting the disallowance u/s 40(a)(ia) by holding that TDS disallowance applies only to amounts 'payable' as on 31st March and not to amounts already paid during the year?" 3. In so far as the Cross Objection of the cross-objector/assessee, the following Grounds of Appeal have been raised :- "a) Without considering the fact that provisions of section 40(a)(ia) are not applicable for payment of expenses, the Assessing Officer has erred in disallowing payments under provisions of secti....
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.... inter-alia, included a plea that the provisions of section 194C of the Act were not applicable to the impugned transactions. The assessee also relied upon the decision of the Special Bench of the Tribunal in the case of Merilyn Shipping and Transport vs. Addl. CIT, 70 DTR 81 for the proposition that the disallowance u/s 40(a)(ia) of the Act was to be restricted to only those amounts which were outstanding for payment as at the end of the relevant previous year. On the basis of the said proposition, the CIT(A) has restricted the disallowance to Rs. 14,17,460/- only, as according to him, the balance of the expenditure was actually paid during the year itself. The other issues raised by the assessee were however dismissed. Accordingly, the Re....
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.... to the assessee by following the decision of the Special Bench of the Tribunal in the case of Merilyn Shipping and Transport (supra) has to be reversed. We hold so. 7. One of the pleas of the learned counsel before us was that the applicability of section 194C of the Act to the impugned sum of Rs. 1,47,14,023/- deserves to be appreciated and in case the assessee is able to demonstrate that it was not liable to deduct the tax u/s 194C of the Act at all, then no disallowance u/s 40(a)(ia) of the Act would be merited. For the said purpose, a reference has been made to the Grounds raised in the Cross Objection. Apart therefrom, the learned counsel has referred to a new plea, which is based on the second proviso to section 40(a)(ia) of the Act....
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....to the file of the Assessing Officer to examine the aforesaid contention in accordance with law. 8. The learned Departmental Representative appearing for the Revenue has not seriously disputed the plea of the assessee for restoring the matter back for adjudication on merits with regard to the new plea. 9. We have carefully considered the rival submissions. In our considered opinion, the issues relating to the applicability of section 194C of the Act, as contained in the Grounds raised in the Cross Objection, as also the fresh plea raised by the assessee before us based on the second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 w.e.f. 01.04.2013, deserve to be examined afresh on their merits. The aforesaid new ....