M/s. Panalal Shriram Malu, Sangli V. ITO, Sangli

ITA 1061/PUN/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9716 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 16-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y K BHASKAR
• Assessee Lawyers: S V DESHPANDE
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K.PANDA, ACCOUNTANT MEMBER. ITA.NO.1061/PN/2010 (ASSTT. YEAR : 2007-08) M/S.PANALAL SHRIRAM MALU HIGH SCHOOL ROAD, VAKHAR BHAG, SANGLI. .. APPELLANT VS. ITO, WARD-1(2), SANGLI. .. RESPONDENT AND ITA.NO.1063/PN/2010 (ASSTT. YEAR : 2007-08) M/S.SHAH RATANSHI KHIMJI & CO., 92, MARKET YARD, SANGLI. .. APPELLANT VS. ITO, WARD-1(2), SANGLI. .. RESPONDENT AND ITA.NO.1065/PN/2010 (ASSTT. YEAR : 2007-08) M/S.RAMESHWARLAL SHANKARLAL MALU, 181, MALU INVESTMENT, VAKHAR BHAG, SANGLI. .. APPELLANT VS. ITO, WARD-1(2), SANGLI. .. RESPONDENT APPELLANT BY : SHRI S.V.DESHPANDE RESPONDENT BY : SHRI Y.K.BHASKAR DATE OF HEARING : 07.08.2012 DATE OF PRONOUNCEMENT : 28.08.2012 ORDER PER SHAILENDRA KUMAR YADAV, JM : ALL THESE 3 APPEALS FILED BY ASSESSEES ARE ARISING FROM RESPECTIVE ORDERS OF CIT(A) ON SIMILAR ISSUES. SO THEY ARE 2 BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ISSUE IN THESE APPEALS IS WITH REGARD TO DIS ALLOWANCE U/S. 40(A)(IA) OF THE INCOME TAX ACT, 1961, OF RS.7,01,6 87/-, RS.2,70,216/- AND RS.3,16,593/- RESPECTIVELY, PAID TO SANGLI MIRAJ KAMGAR MATHADI BOARD. THIS ISSUE IS CLAIMED TO BE C OVERED BY DECISION OF THE SPECIAL BENCH IN THE CASE OF MERILY N SHIPPING & TRANSPORTS REPORTED IN 70 DTR (VISAKHA)(SB) (TRIB) 81, WHEREIN TRIBUNAL HAS OBSERVED AS UNDER: THE LEGISLATURE BY CONSCIOUSLY REPLACING THE WORDS FROM CREDITED OR PAID TO PAYABLE, THE INTENT HAS B EEN MADE CLEAR THAT ONLY THE OUTSTANDING AMOUNT OR THE PROVI SION FOR EXPENSES WHICH ARE LIABLE FOR TDS ARE TO BE DISALLO WED IN THE EVENT THERE IS DEFAULT IN NOT FOLLOWING THE TDS PRO VISIONS UNDER CHAPTER XVII-B. NO DOUBT THE OBJECT OF S. 40( A)(IA) IS TO ENSURE THAT THE TDS PROVISION AS PROVIDED IN CHAPTE R XVII-B IS IMPLEMENTED WITHOUT ANY DEFAULT. THE SUB-SECTION SPEAKS OF THE AMOUNT PAYABLE ON WHICH THE TAX IS NOT DEDUCT ED AND THEREFORE IT SHOULD APPLY ONLY IF ANY AMOUNT IS PA YABLE, BUT IF THE AMOUNT IS ALREADY PAID THE PROVISIONS OF THIS S ECTION SHOULD NOT APPLY. THE CRUCIAL WORD IS PAYABLE. IF ONE LOOKS INTO THE TDS PROVISIONS FROM SS. 194A TO 194K, IT W ILL BE APPARENT THAT AS PER THE LANGUAGE OF THOSE SECTIONS , TAX IS TO BE DEDUCTED AT THE TIME THE AMOUNT IS PAID OR AT TH E TIME WHEN THE MOUNT IS CREDITED, I.E. WHEN THE LIABILITY IS ADMITTED AND IT BECOMES PAYABLE. THEREFORE, WHEREVER THE PAY MENT IS COVERED BY AFORESAID SECTIONS WHETHER PAID OR CREDI TED, TAX HAS TO BE DEDUCTED. SECTIONS 194L AND 194LA MAY ALSO BE LOOKED INTO WHICH SAY THAT TAX HAS TO BE DEDUCTED ONLY AT THE TIME OF PAYMENT. THE LANGUAGE IN THESE SECTIONS THEREFORE S HOWS THAT THE LEGISLATURE HAS USED DIFFERENT LANGUAGE IN DIFF ERENT SECTIONS. IT IS TRITE LAW THAT EACH AND EVERY WORD OF THE SECTION HAS ITS OWN MEANING AND WHILE DRAFTING S. 40(A)(IA) THE LEGISLATURE WAS CONSCIOUS OF THE FACT THAT THERE MA Y BE A CASE WHERE THE AMOUNT IS PAID AND THERE MAY BE A CASE WH ERE THE AMOUNT IS PAYABLE AND HAS USED APPROPRIATE WORDS SO THAT THE LANGUAGE MAYBE CLEAR AND CLEAR MEANING MAY BE GIVEN . ONE MAY LOOK INTO THE LANGUAGE CONTAINED IN FINANCE BIL L, 2004 WHEREIN THIS PROVISION WAS INTRODUCED. IN THE FINAN CE BILL BOTH THE WORDS PAID AND PAYABLE WERE USED. HOWEVER THE WORD PAID WAS SUBSEQUENTLY DROPPED WHICH SHOWS THAT S. 4 0(A)(IA) WAS MEANT TO BE APPLICABLE ONLY IF THE AMOUNT COVER ED THEREIN 3 WAS PAYABLE AT THE END OF THE YEAR. REFERENCE MAY BE MADE FOR THE SCOPE AND EFFECT OF S. 40(A)(IA) AS CLARIFI ED BY CBDT IN CIRCULAR NO 5 OF 2005, DT 15 TH JULY, 2005 TO SHOW THAT THE INTENTION TO INTRODUCE THIS PROVISION WAS BROUGHT T O CURB BOGUS PAYMENTS BY CREATING BOGUS LIABILITY. CIT V . UPNISHAD INVESTMENT (P)LTD & ORS (2002) 177 CTR (GUJ) 176: ( 2003) 260 ITR 532 (GUJ) APPLIED. THE FACTS BEING CLAIMED TO BE SIMILAR, SO IN THE I NTEREST OF JUSTICE THE MATTER IS RESTORED TO THE ASSESSING OFF ICER TO DECIDE THE SAME IN LIGHT OF THE LEGAL PROPOSITION LAID DOWN BY SPECIAL BENCH DECISION IN MERILYN SHIPPING & TRANSPORTS (SUPRA) A FTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEES. 3. IN THE RESULT, THE APPEALS ARE ALLOWED FOR STATI STICAL PURPOSES. SD/- SD/- ( R.K.PANDA ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 28 TH AUGUST, 2012. COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ITO, WARD-1(2), SANGLI. 3. THE CIT(A), KOLHAPUR. 4. THE CIT CONCERNED. 5. THE DR B BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.