TaxTMI 
TaxTMI 
2014 (11) TMI 1197
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....elfare Fund Board 19950 2055 Kerala Head Load Workers Welfare Board 82872 8536 Kerala Head Load Workers Welfare Board 139544 14373 Kerala Staff Co-op Employees Pension Board 11134502 1261539 Kerala State Co-op Employees Welfare Board 1476197 167253 Kerala Toddy Workers Welfare Fund Board 5212446 590570 The Secretary Circle Co-op Union, Kasaragod 40153 4136 According to the ld.representative, these concerns were established by the state government under a specific legislation, therefore, they are corporate entities eligible for exemption u/s 10(23C) of the Act. The ld.representative further submitted that in fact the Kerala Co-operative Employees Pension Board filed its return of income disclosing the receipt of income. The Kerala Building & Other Constructions Workers Welfare Board and Kerala Toddy Workers Welfare Fund Board have been notified u/s 10(23C) of the Act for the purpose of exemption. According to the ld.representative, once the recipient entities are entitled for exemption u/s 10(23C) the assessee is not liable to deduct tax. 4. The ld.representative further submitted that the assessee h....
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....t in Crescent Exports Syndicate & Another (supra) and the Gujarat High Court in Sikandarkhan N Tunwar (supra) and confirmed the disallowance made by the lower authorities. 6. Referring to the approval said to be granted u/s 10(23C) of the Act, the ld.DR submitted that section 10(23C) is applicable for institution or fund established for charitable purpose which may be approved by the prescribed authority after considering the object of the fund or institution, as the case may be. The income of the assessee, if any, is exempt provided the same is applied for charitable purpose on the basis of its object and surplus, if any, as per the conditions imposed by the concerned authority. Therefore, according to the ld.DR, it is not a case of total exemption of income received by the approved fund. Hence, the assessee has to file return of income disclosing all the payments made to the respective concern and the assessee cannot decide about the taxability of income in the hands of the recipient concern since the exemption is subject to utilization of the fund for charitable purpose. Therefore, according to the ld.DR, it cannot now be said that the interest paid by the assessee is not tax....
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.... provisions of the Act. On the contrary, the object of section 201 is only to compensate the government for failure of the assessee to deduct tax at source. Section 201 enables the government to recover the tax from the assessee who defaults in making the deduction at the time of payment. Therefore, the provisions of section 40(a)(ia) and 201 operate in two different fields. Section 40(a)(ia) will not override the provisions of section 201 of the Income-tax Act. Therefore, this Tribunal is of the considered opinion that the judgment of the Apex Court in Hindustan Coco Cola Beverages (P) Ltd (supra) rendered in the context of section 201 may not be applicable in the context of application of section 40(a)(ia) of the Act. 7. We have carefully gone through the provisions of section 40(a)(ia) of the Act. The Parliament by Finance Act, 2012 incorporated second proviso to section 40(a)(ia) of the Act with effect from 01-04-2013. For the purpose of convenience, we are reproducing second proviso as it is inserted by Finance Act, 2012 below: "Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapte....
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....1/04/2013. Therefore, the said benefit is not applicable to the assessee. Even otherwise, on factual situation, the very fact that these amounts were claimed as loan initially, till the scrutiny came up for consideration before assessing authority would only indicate the real intention of the assessee firm i.e not to disclose this amount as freight charges but something else as repayment of loan." 10. In view of the above judgment of the jurisdictional High Court, it is binding on this Tribunal that second proviso which was introduced by Finance Act, 2012 is not applicable for the assessment years under consideration. Hence, the CIT(A) has rightly confirmed the addition made by the assessing officer. 11. The next contention of the assessee is that the assessee has already paid the amount, provisions of section 40(a)(ia) is applicable only in respect of the amount which remains to be payable on the last day of the financial year. The ld.representative placed his reliance on the decision of the Special Bench of this Tribunal in Merilyn Shipping & Transports vs AddlCIT (2012) 70 DTR 81 and also the judgment of the Allahabad High Court in CIT vs M/s Vector Shipping Se....
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....bunal is not the correct law. It is well settled principles of law that when different High Courts expressed different opinions on a point of law, then, normally, the benefit of doubt under the taxation law would go to the assessee. It is also equally settled principles of law that the judgment which discusses the point in issue elaborately and gives an elaborate reasoning has to be preferred when compared to the judgment which has no reasoning and discussion. Admittedly, the Calcutta High Court and Gujarat High Court have discussed the issue elaborately and the specific reasoning has also been recorded as to why the Special Bench is not correct. Therefore, this Tribunal is of the considered opinion that the judgments of the Calcutta High Court Crescent Exports Syndicate & Another (supra) and Gujarat High Court in Sikandarkhan N Tunvar (supra) have to be preferred when compared to the Allahabad High Court in M/s Vector Shipping Services (P) Ltd (supra). 13. For the purpose of convenience we reproducing below the observations made by the Calcutta High Court in Crescent Exports Syndicate & Another (supra) and Gujarat High Court in Sikandarkhan N Tunvar (supra): Calc....
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....ing 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(11) 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 benefits of the labour forc....
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....y in relation to a contractor of sub-contractor. This differential treatment was not intended. Therefore, the legislature provided that the amounts, on which tax is deductible at source under 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 of sub-contractor shall not be deducted in com putting the income of an assessee in case he has not deducted, 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 Mr. 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 acceded to for the same re....
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....fore the unpleasant consequences envisaged therein can be applied. We are prepared to and we are duty bound to interpret such requirements strictly. Such requirements, however, cannot be enlarged by any addition or subtraction of words not used by the legislature. The term used is interest, commission, brokerage etc. is payable to a resident or amounts payable to a contractor or sub-contractor for carrying out any work. The language used is not that such amount must continue to remain payable till the end of the accounting year. Any such interpretation would require reading words which the legislature has not used. No such interpretation would even otherwise be justified because in our opinion, the legislature could not have intended to bring about any such distinction nor the language used in the section brings about any such meaning. If the interpretation s advanced by the assessees is accepted, it would lead to a situation where the assessee though was required to deduct the tax at source but no such deduction was made or more flagrantly deduction though made is not paid to the Government, would escape the consequence only because the amount was already paid over before the end ....
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....rule and ascertained what was the position before the amendment, what the amendment sought to remedy and what was the effect of the changes. 27 to 36.................... 37. In our opinion, the Tribunal committed an error in applying the principle of conscious omission in the present case. Firstly, as already observed, we have serious doubt whether such principle can be applied by comparing the draft presented in Parliament and ultimate legislation which may be passed. Secondly, the statutory provisions is amply clear. 38. In the result, ware of the opinion that Section 40(a)(ia) would cover not only to the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirement of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s Merilyn Shipping & Transports vs ACIT (supra), does not lay down correct law." 14. By following the judgments of the Calcutta High Court in Crescent Export Syndicate (supra) and the Gujarat High Court in Sikandarkhan N Tunvar (supra), this Tribunal is of ....