TaxTMI 
TaxTMI 
2020 (3) TMI 1201
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....)(ia) of the Act on payment of shipment expenses of Rs. 61.85 lacs. The assessee filed a detailed reply objecting for the proposed disallowance. The reply of the assessee did not find any favour of the AO to proceeded by dismissing 30% of expenses paid Rs. 61.85 lacs and made addition of Rs. 18,55,500/-. 5. The assessee agitated the matter before the CIT(A) but without any success. 6. The relevant findings of the CIT(A) read as under :- DECISION : The contention of the Appellant has been considered and the order of AO has also been perused. It is seen from the order of the AO it is an admitted fact that the assessee had made payment of Rs. 61,85,000/- to M/s. Rising Overseas, on which no TDS was deducted. The appellant is relying on the decision of M/s. Vector Shipping Service Pvt. Ltd. Of Hon'ble Allahabad High Court. Regarding the above judgment, the Hon'ble ITAT, Lucknow Bench 'B' vide order dated 11.04.2014 in the case of DCIT Vs. Ama Medical & Diagnostic Centre, [2014] 45 taxmann.com 405 (Lucknow - Trib.) / [2014] 63 SOT 136, have analyzed the order of the Hon'ble High Court and has observed that: 7.3 Having carefully examined the judgment of Hon'ble ....
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..../s. Vector Shipping Services, the assessee were sufficiently explained. In last few lines, the Hon'ble High Court has made a reference to the ratio laid down by the Special Bench of the Tribunal and observed that it is noted that for disallowing expenses from business and profession on the ground that TDS has not been deducted, the amount should be payable and not which has been paid by the end of the year. Except these observations, the Hon'ble High Court has not adverted to the legal proposition laid down by the Special Bench of the Tribunal. For the sake of reference, we extract the finding of the judgment of Hon'ble jurisdictional High Court in this regard as under: "We do not find that the revenue can take any benefit from the observations made by the Special Bench of the Tribunal in the case of Merilyn Shipping & Transport v. Add!. CIT [20121 136 1TD 23 (Visakha) quoted as above to the effect Section 40(a)(ia) was introduced in the Act by the Finance Act, 2004 with effect from 1.4.2005 with a view to augment the revenue through the mechanism of tax deducted at source. This provision was brought on statute to disallow the claim of even genuine and admissible expense....
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....he circular as under. 'Circular No.10/DV/2013 (Department view) F. No.279/Misc./M-61/2012-ITJ (Vol.II) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, The December 16th 2013 Subject: Circular or Section 40(a)(ia) of the income tax Act, 1961-reg. It has been brought to the notice of the Board that there are conflicting interpretations by judicial authorities regarding the applicability of the provisions of section 40(a)(ia) of the Income tax Act, 1961 ('in Act') with regard to the amount not deductible in the Income-tax Act, 1961 ('the Act') with regard to the amount not deductible in computing the income chargeable under the head 'Profits and gains of business or profession'. 2. Section 40(a)(ia) of the Act reads as under: "any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XV1I-B and such tax has not bee....
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....rat and Calcutta High Court as ratio decidendi prevails over an orbiter dicta. 4. After careful examination of the issue, the Board is of the considered view that the provision of section 40(a) (ia) of the Act would cover not only the amounts which arc payable as on 31st March of a previous year but also amounts which are payable at any time during the year. The statutory provisions are amply clear and in the context of section 40(a) (ia) of the Act the term 'payable' would include 'amounts which are paid during the previous year'. 5. Where any High Court decides an issue contrary to the 'Departmental View', the 'Departmental View1 thereon shall not be operative in the area falling in the jurisdiction of the relevant High Court. However, the CCIT concerned should immediately bring the judgement to the notice of the CTC. The CTC shall examine the said judgement on priority to decide as to whether filing of SLP to the Supreme Court will be adequate response for the time being or some legislative amendment is called for. 6. The above clarification may be brought to the notice of all officers.' 8. Keeping in view the aforesaid judgments of variou....