TaxTMI 
TaxTMI 
2017 (1) TMI 1688
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....t and also runs cold storage. During the course of assessment proceedings, the Assessing Officer noted that the assessee had paid a sum of Rs. 18,45,187/- to M/s H.C. Fruits, a partnership concern, in which the assessee is also a partner. The Assessing Officer was of the view that the said payment is in the nature of commission and since the assessee has not deducted tax at source from these payments the amounts are to be disallowed under section 40(a)(ia) of the Act. The Assessing Officer was further of the view that since the assessee has not paid margin money on any other transaction, clearly, the payment so made is also to be disallowed under section 40A(2)(b) of the Act. It was in this backdrop that the amount of Rs. 18,45,187/- was disallowed by the Assessing Officer. Aggrieved, assessee carried the matter in appeal before the learned CIT(A) but without any success. The learned CIT(A) was of the view that since the payment made to M/s. H.C. Fruits was in respect of products of fruits and is required to be treated as commission, the disallowance under section 40(a)(ia) was perfectly in order. The learned CIT(A) was further of the view ....
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....of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced. In view of these discussions, as also for the detailed reasons set out earlier, we cannot subscribe to the view that it could have been an "intended consequence" to punish the assessees for non deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax. That will be going much beyond the obvious intention of the section. Accordingly, we hold that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April, 2005, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. 10. In view of the above discussions, we deem it fit and proper to remit....
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....ity of second proviso to Section 40(a)(ia). It is thus evident that views of these two High Courts are in direct conflict with each other. Clearly, therefore, there is no meeting ground between these two judgments. The difficulty arises as to which of the Hon'ble non jurisdictional High Court is to be followed by us in the present situation. It will be wholly inappropriate for us to choose views of one of the High Courts based on our perceptions about reasonableness of the respective viewpoints, as such an exercise will de facto amount to sitting in judgment over the views of the High Courts something diametrically opposed to the very basic principles of hierarchical judicial system. We have to, with our highest respect of both the Hon'ble High Courts, adopt an objective criterion for deciding as to which of the Hon'ble High Court should be followed by us. We find guidance from the judgment of Hon'ble Supreme Court in the matter of CIT vs. Vegetable Products Ltd. [(1972) 88 ITR 192 (SC)]. Hon'ble Supreme Court has laid down a principle that "if two reasonable constructions of a taxing provisions are possible, that construction which favours the assessee must be adopted". This princ....
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....lem to the taxpayer, and the matter was set aside to the file of the Assessing Officer with certain directions about factual verifications on the recipient having included the same in the receipts based on which taxable income is computed, and the income having been offered to tax. It is this action of the coordinate bench that was upheld by the Tribunal and the course of action so adopted by the coordinate bench approved by Their Lordships. It is impermissible to pick up one of the aspects of the decision of the judicial authority and read the same in isolation with other aspects. The decision is not on the retrospectivity of the proviso alone, its also on deletion of disallowance in the event of the recipient having taken into account these receipts in the computation of income. The judge made law is as binding on the authorities below as is the legislated statue. The hyper technical stand of the Departmental Representatives, therefore, does not merit our approval. 9. As regards lack of guidance from Hon'ble jurisdictional High Court, that can not be reason enough to disregard the decisions from non-jurisdictional High Courts. Hon'ble Courts above, being a higher t....