DCIT,Circle-52, Kolkata, Kolkata V. Sri Dilip Kumar Banerjee, Kolkata

ITA 1619/KOL/2012

• Counselvise Citation: 161923514 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 06-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAKASH N ATH BARNWAL
• Assessee Lawyers: S L KOCHAR; ANIL KOCHAR ADVOCAT

Judgement Text

I.T.A. NO . 1619 / KOL ./20 12 ASSESSMENT YEAR: 200 7 - 200 8 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.K. BANSAL , ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH , JUDICIAL MEMBER I.T.A. NO. 1619 / KOL / 20 12 ASSESSMENT YEAR : 200 7 - 20 0 8 DEPUTY COMMISSIONER OF INCOME TAX, ............. ... .. .APP ELL ANT CIRCLE - 52 , KOLKATA, AAYAKAR BHAWAN DAKSHIN, 2, GARIAHAT ROAD (SOUTH), KOLKATA - 700 068 - VS. - SHRI DILIP KUMAR BANERJEE,............ ... ....... ... . RESPONDENT SUMANGAL APARTMENT, SUITE NO. 202, 133, N.S.C. BOSE ROAD, KOLKATA - 700 04 0 [PAN : ADXPB 0417 E] APPEARANCES BY: SHRI PRAKASH NATH BARNWAL , J CIT, SR. D.R., FOR THE DEPARTMENT SHRI S.L. KOCHAR & SHRI ANIL KOCHAR, ADVOCATE , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : APRIL 0 9 , 2 01 5 DATE OF PRONOUNCING THE ORDER : APRIL 09 , 201 5 O R D E R PER P.K. BANSAL : THIS A PPEAL HA S BEEN FILED BY THE REVENU E AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - XXXIII , KOLKATA IN APPEAL NO. 317/CIT(A) - XXXIII/ACIT, CIR. - 52/09 - 10 D ATED 22 . 08 .20 1 2 FOR THE ASSESSMENT YEAR 200 7 - 0 8 . 2. THE ONLY ISSUE INVOLVED IN TH IS APPEAL RELATES TO THE DELETION OF DISALLOWANCE UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT NOTICED THAT THE A SSESSEE HAS CLAIMED AN I.T.A. NO . 1619 / KOL ./20 12 ASSESSMENT YEAR: 200 7 - 200 8 PAGE 2 OF 6 EXPENDITURE OF RS.13,75,000/ - ON ACCOUNT OF ANCILLARY AND SUPERVISORY DUTIES, WHICH WERE CARRIED OUT BY THE SNB ASSOCIATES. SINCE NO TDS HAS BEEN DEDUCTED BY THE ASSESSEE, THEREFORE, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SE CTION 40(A)(IA) OF THE ACT. THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(APPEALS) AND RELIED ON THE DECISION OF THE SPECIAL BENCH OF ITAT, VISHAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORT LIMITED VS. - ACIT DATED 29.03.2012 IN ITA NO. 477/VIZAG /2008 IN WHICH IT WAS HELD THAT I N THE AMOUNT WHICH REMAIN ED PAYABLE AT THE END OF THE YEAR CAN BE DISALLOWED UNDER SECTION 40(A)(IA) , IN CASE THE ASSESSEE FAILS TO DEDUCT THE TAX. THE LD. CIT(APPEALS) FOLLOWING THE AFORESAID DECISION OF THE ITAT, SPECIAL BENCH, VISHAKHAPATNAM DELETED THE ADDITION. 4. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT SUBSEQUENTLY THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF CRESCENT EXPORTS SYNDICATE IN ITA NO. 23 OF 2013 DID NOT APPROVE THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORT LTD VS. - ACIT REPORTED IN 16 ITR (TRIB.) 1. THE HON BLE HIGH COURT TOOK THE FOLLOWING VIEW: - BEFORE DEALING WITH THE SUBMISSIONS OF THE LEARNED COUNSEL APPEARING FOR THE ASSESSEES IN BOTH THE APPEALS WE HAVE TO EXAMINE THE CORRECTNESS OF THE MAJORITY VIEWS IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS . WE ALREADY HAVE QUOTED EXTENSIVELY BOTH THE MAJORITY AND THE MINORITY VIEWS EXPRESSED IN THE AFORESAID CASE. THE MAIN THRUST OF THE MAJORITY VIEW IS BASED ON THE FACT THAT THE LEGISLATURE HAS REPLACED THE EXPRESSION AMOUNTS CREDITED OR PAID WITH THE EXPRESSION PAYABLE IN THE FINAL ENACTMENT . COMPARISON BETWEEN THE PRE - AMENDMENT AND POST AMENDMENT LAW IS PERMISSIBLE FOR THE PURPOSE OF ASCERTAINING THE MISCHIEF SOUGHT TO BE REMEDIED OR THE OBJECT SOUGHT TO BE ACHIEVED BY AN AMENDMENT. THIS IS PRECISELY WHAT WAS DONE BY THE APEX COURT IN THE CASE OF CIT VS. KELVINATOR REPORTED IN 2010(2) SCC 723. BUT THE SAME COMPARISON BETWEEN THE DRAFT AND THE ENACTED LAW IS NOT PERMISSIBLE. NOR CAN THE DRAFT OR THE BILL BE USED FOR THE PURPOSE OF REGULATING THE MEANING AND I.T.A. NO . 1619 / KOL ./20 12 ASSESSMENT YEAR: 200 7 - 200 8 PAGE 3 OF 6 PURPORT OF THE ENACTED LAW. IT IS THE FINALLY ENACTED LAW WHICH IS THE WILL OF THE LEGISLATURE. THE LEARNED TRIBUNAL FELL INTO AN ERROR IN NOT REALIZING THIS ASPECT OF THE MATTER. THE LEARNED TRIBUNAL HELD THAT WHERE LANGUAGE IS CLEAR THE INTENTION OF THE LEGISLATURE IS TO BE GATHERED FROM THE LANGUAGE USED . HAVING HELD SO, IT WAS NOT OPEN TO SEEK TO INTERPRET THE SECTION ON THE BASIS OF ANY COMPARISON BETWEEN THE DRAFT AND THE SECTION ACTUALLY ENACTED NOR WAS IT OPEN TO SPECULATE AS TO THE EFFECT OF THE SO - CALLED REPRESENTATIONS MADE BY THE PROFESSIONAL BODIES. THE LEARNED TRIBUNAL HELD THAT SECTION 40(A)(IA) OF THE ACT CREATES A LEGAL FICTION BY VIRTUE OF WHICH EVEN THE GENUINE AND ADMISSIBLE EXPENSES CLAIMED BY AN ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION : IF THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES ARE DISALLOWED . HAVING HELD SO WAS IT OPEN TO THE TRIBUNAL TO SEEK TO JUSTIFY THAT THIS FICTION CANNOT BE EXTENDED ANY FURTHER AND, THEREFORE, CANNOT BE INVOKED BY ASSESSING OFFICER TO DISALLOW THE GENU INE AND REASONABLE EXPENDITURE ON THE AMOUNTS OF EXPENDITURE ALREADY PAID ? DOES THIS NOT AMOUNT TO DELIBERATELY READING SOMETHING IN THE LAW WHICH IS NOT THERE? WE, AS SUCH, HAVE NO DOUBT IN OUR MIND THAT THE LEARNED TRIBUNAL REALIZED THE MEANING AND PU RPORT 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 I N 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 ENGAG ED 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: I.T.A. NO . 1619 / KOL ./20 12 ASSESSMENT YEAR: 200 7 - 200 8 PAGE 4 OF 6 IT MUST, AT THIS JUNCTURE, BE NOTED THAT IN SPITE OF SECTION 2(11), WHICH INC LUDED THE WORDS BUT FOR THE PROVISIONS OF THIS ACT IS NOT ADEQUATELY PROTECTED BY LEGISLATION FOR WELFARE AND BENEFITS OF THE LABOUR FORCE IN THE STATE , THESE PRECISE WORDS WERE REMOVED BY THE LEGISLATURE AND THE DEFINITION WAS MADE LIMITED AS IT HAS BEE N FINALLY LEGISLATED UPON. IT IS TO BE NOTED THAT WHEN THE BILL CAME TO BE PASSED AND RECEIVED THE ASSENT OF THE VICE - PRESIDENT ON 05 - 06 - 1969 AND WAS FIRST PUBLISHED IN THE MAHARASHTRA GOVERNMENT GAZETTE EXTRAORDINARY, PART IV ON 13 - 06 - 1969, THE AFOREMENTI ONED WORDS WERE OMITTED. THEREFORE, THIS WOULD BE A CLEAR POINTER TO THE LEGISLATIVE INTENT THAT THE LEGISLATURE BEING CONSCIOUS OF THE FACT AND BEING ARMED WITH ALL THE COMMITTEE REPORTS AND ALSO BEING ARMED WITH THE FACTUAL DATA, DELIBERATELY AVOIDED THO SE WORDS. WHAT THE APPELLANTS ARE ASKING WAS TO READ IN THAT DEFINITION, THESE PRECISE WORDS, WHICH WERE CONSCIOUSLY AND DELIBERATELY OMITTED FROM THE DEFINITION. THAT WOULD AMOUNT TO SUPPLYING THE CASUS OMISSUS AND WE DO NOT THINK THAT IT IS POSSIBLE, PAR TICULARLY, IN THIS CASE. THE LAW OF SUPPLYING THE CASUS OMISSUS BY THE COURTS IS EXTREMELY CLEAR AND SETTLED THAT THOUGH THIS COURT MAY SUPPLY THE CASUS OMISSUS, IT WOULD BE IN THE RAREST OF THE RATE CASE AND THUS SUPPLYING OF THIS CASUS OMISSUS WOULD BE E XTREMELY NECESSARY DUE TO THE INADVERTENT OMISSION ON THE PART OF THE LEGISLATURE. BUT, THAT IS CERTAINLY NOT THE CASE HERE. WE SHALL NOW ENDEAVOUR TO SHOW THAT NO OTHER INTERPRETATION IS POSSIBLE. THE KEY WORDS USED IN SECTION 40(A)(IA), ACCORDING TO US, ARE ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B . IF THE QUESTION IS WHICH EXPENSES ARE SOUGHT TO BE DISALLOWED? THE ANSWER IS BOUND TO BE THOSE EXPENSES ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B. ONCE THIS IS REALIZED NOTHING TURNS ON THE BASIS OF THE FACT THAT THE LEGISLATURE USED THE WORD PAYABLE AND NOT PAID OR CREDITED . UNLESS ANY AMOUNT IS PAYABLE, IT CAN NEITHER BE PAID NOR CREDITED. IF A N AMOUNT HAS NEITHER BEEN PAID NOR CREDITED, THERE CAN BE NO OCCASION FO R CLAIMING ANY DEDUCTION. THE LANGUAGE USED IN THE DRAFT WAS UNCLEAR AND SUSCEPTIBLE TO GIVING MORE THAN ONE MEANING. BY LOOKING AT THE DRAFT IT COULD BE SAID THAT THE LEGISLATURE WANTED TO TREAT THE PAYMENTS MADE OR CREDITED IN FAVOUR OF A CONTRACTOR O R SUB - CONTRACTOR DIFFERENTLY THAN THE PAYMENTS ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES BECAUSE THE WORDS AMOUNTS CREDITED OR PAID WERE USED ONLY IN RELATION TO A CONTRACTOR O R SUB - CONT RACTOR. 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 SERV ICES OR FEES FOR TECHNICAL SERVICES OR TO A CONTRACTOR O R SUB - CONTRACTOR SHALL NOT BE DEDUCTED IN COMPUTING 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 I.T.A. NO . 1619 / KOL ./20 12 ASSESSMENT YEAR: 200 7 - 200 8 PAGE 5 OF 6 LEGISLATU RE 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 QUESTIO N 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 1 ST APRI L, 2013 SHOULD BE HELD TO HAVE ALREADY BECOME OPERATIVE PRIOR TO THE APPOINTED DATE CANNOT ALSO BE ACCEDED TO FOR THE SAME REASON INDICATED ABOVE. THE LAW WAS DELIBERATELY MADE HARSH TO SECURE COMPLIANCE OF THE PROVISIONS REQUIRING DEDUCTIONS OF TAX AT SOU RCE. IT IS NOT THE CASE OF AN INADVERTENT ERROR. FOR THE REASONS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE MAJORITY VIEWS EXPRESSED IN THE CASE OF MERILYN SHIPPING & TRANSPORTS ARE NOT ACCEPTABLE. THE SUBMISSIONS ADVANCED BY LEARNED ADVOCATES HAVE ALREADY BEEN DEALT WITH AND REJECTED. SINCE THE HON BLE JURISDICTIONAL HIGH COURT DID NOT APPROVE THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORT LTD VS. - ACIT, ON THE BASIS OF WHICH THE LD. CIT(APPEALS) HAS ALLOWED THE RELIEF TO THE ASSESSEE , W E, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND RESTORE THIS ISSUE TO THE FILE OF THE CIT(APPEALS) WITH A DIRECTION THAT THE LD. CIT(APPEALS) SHALL RE - DECIDE THE APPEAL OF THE ASSESSEE AFRESH IN ACCORDANC E WITH LAW AFTER GIVING PROPER AND SUFFICIENT OPPORTUNITY TO THE ASSESSEE. 5 . IN THE RESULT, THE APPEAL FILED BY THE REVENU E STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH APRIL , 201 5 . SD/ - SD/ - MAHAVIR SINGH P.K. BANSAL ( JUDICIAL MEMBER) ( ACCOUNTANT MEMBER) KOLKATA, THE 09 TH D AY OF APRIL , 201 5 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 52, KOLKATA, AAYAKAR BHAWAN DAKSHIN, 2, GARIAHAT ROAD (SOUTH), KOLKATA - 700 068 I.T.A. NO . 1619 / KOL ./20 12 ASSESSMENT YEAR: 200 7 - 200 8 PAGE 6 OF 6 ( 2) SHRI DILIP KUMAR BANERJEE, SUMANGAL APARTMENT, SUITE NO. 202, 133, N.S.C. BOSE ROAD, KOLKATA - 700 040 (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .