The ACIT, Mehsana Circle, Mehsana V. Parth Parenterals Pvt. Ltd., Kalol

ITA 2288/AHD/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9998 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A C SHAH
• Keywords: Business income; Retrospective amendment
• Section: 143(3)

Judgement Text

I.T.A. N O. 2288 /AHD/201 2 ASSESSMENT YEAR: 200 9 - 10 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR , AM AND S S GODARA , JM ] I.T.A. NO. 2288 /AHD/201 2 ASSESSMENT YEAR: 200 9 - 10 ASSTT. COMMISSIONER OF INCOME TAX , MEHSANA CIRCLE, MEHSANA. ... .. ...... . ... . . APPELLANT VS. PARTH PARENTERAL PVT. LTD., ............... . RESPONDENT 1, GIDC ESTATE, HAIGHWAY ROAD, KALOL. [ PAN: A ABCP 1588 L ] APPEARANCES BY: P RASOON KABRA FOR THE A PPELLANT A.C. SHAH FOR THE RE SPONDENT DATE OF CONCL UDING THE HEARING : 01.09 .2016 DATE OF PRONOUNC ING THE ORDER : 29 . 1 1 .2016 O R D E R PER PRAMOD KUMAR , AM : 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 6 TH JULY, 201 2 , PASSED BY THE LEARNED CIT (A ) , IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 200 9 - 10 . 2. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO WRITTEN PETITION DATED 26.08.2016 UND ER RULE 27 WHEREBY HE HAS RAISED THE FOLLOWING GROUNDS : - I.T.A. N O. 2288 /AHD/201 2 ASSESSMENT YEAR: 200 9 - 10 PAGE 2 OF 9 THE LEARNED CIT(A ) OUGHT TO HAVE ALLOWED THE APPEAL FILED BY THE RESPONDENT IN RESPECT OF DISALLOWANCE OF INTEREST OF RS.27,63,868/ - [GROUND NO.1 OF APPEAL BY REVENUE] AND DISCOUNT CHARGES OF RS. 72,25,589 [GROUND NO.2 OF APPEAL BY REVENUE] PAID TO NBFC UNDER SECTION 40(A ) (IA) SINCE THE RESPONDENT FAILED TO DEDUCT TAX AT SOURCE UNDER SECTION 194A AND SINCE THE PAYEE HAS INCLUDED THE SAID INTEREST AND DISCOUNTING CHARGES IN HIS TOTAL INCOME AND PAID THE TAX THEREON AS PER CA CERTIFICATE RATHER THAN GRANTING RELIEF IN PART UNDER THE INTEREST TAX ACT. 3. LEARNED C OUNSEL SUBMITS THAT AS THE ISSUE RAISED BY WAY OF PETITION UNDER R ULE 27 GOES TO THE ROOT OF THE MATTER AND THAT IN C ASE OF THIS PLEA BEIN G ACCEPTED , ALL OTHER ISSUE S RAISED IN APPEAL FILED BY THE A SSESSING OFFICER APPELLANT WILL BE RENDERED INFRUCTUOUS. THIS PETITION MAY BE TAKEN UP FIRST. 4. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OPPOSES THE FILING OF PETITION UNDER R ULE 27 AT TH IS STAGE A S OF COURSE THE PLEA SO RAISED BY THE ASSESSEE ON MERITS. H E POINTS OUT THAT , THE ISSUE BEING RAISE D IN THE PETITION UNDER R ULE 27 WAS NOT RAISED AT ANY STAGE BY THE ASSESSEE. IT SHOULD NOT , THEREFORE , BE ACCEPTED. 5. HAVING CONSIDERED THE R IVAL SUBMISSIONS AND HAVING PERUSED THE MATERIAL ON RECORD , WE ARE OF THE CONSIDERED VIEW THAT , AS IS THE SETTLED LEGAL POSITION , A RESPONDENT CAN SUPPORT CONCLUSIONS ARRIVED AT BY THE FIRST APPELLATE AUTHORITY EVEN THOUGH HE IS NOT IN APPEAL AND ON ANY OF THE GROUNDS IN CLUDING GROUND DECIDED AGAINST HIM. IN THIS VIEW OF THE MATTER AND IN THE LIGHT OF LEGAL POSITION , AS SET OUT IN DETAIL , BY A CO - ORDINATE BENCH OF THIS T RIBUNAL IN THE CASE OF DCIT VS. GUPTA OVERSEAS (2014) 15 3 ITD 35 7 (AGRA - TRIB) , WE ARE INCLINED TO ACCEPT THE PETITION UNDER R ULE 27 AND PROCEED TO TAKE THE SAME ON MERITS. I.T.A. N O. 2288 /AHD/201 2 ASSESSMENT YEAR: 200 9 - 10 PAGE 3 OF 9 6. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. D URING T HE COURSE OF ASSESSMENT PROCEEDINGS , THE A SSESSING OFFICER NOTED THAT THE A SSESSEE HAS TAKEN SECUR ITY LOANS FROM SEVERAL FINANCE C OMPAN IES AND PAID INTEREST TO THEM DURING THE RELEVANT PREVIOUS YEAR AS PER THE DETAILS GIVEN BELOW : - SR. NAME OF THE COMPANY AMOUNT OF INTEREST CREDITED/PAID (RS.) 1 RELIANCE CAPITAL LTD. 4,22,099/ - 2 RELIGARE FINVEST LTD. 40,375/ - 3 KOTAK MAHINDRA PRIME LTD. 12,73,118/ - 4 CHOLAMANDALAM DBS FINANCE LTD. 2,69,288/ - 5 GE MONEY FINANCIAL SERVICES LTD. 1,20,609/ - 6 INDIA BULLS FINANCIAL SERVICES LTD. 6,38,379/ - TOTAL 27,63,868 / - 7. THE ASSESSIN G OFFICER AL SO NOTED THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE AS REQUIRED UNDER SECTION 194 FOR THE AFORESAID PAYMENT AND , THEREFORE , THE DEDUCTION CANNOT BE GRANTED IN RESPECT OF THE SAME. IT WAS IN THIS BACKDROP THE A SSESSING OFFICER DISALLOWED THE AMOUNT OF RS .27,63,868/ - UNDER SECTION 40(A)(IA) . A GGRIEVED , ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE L EARNED CIT ( A ) WHO DELETED THE DISALLOWANCE ON THE GROUND THAT IN VIEW OF THE S PECIAL B ENCH DECISION IN THE CASE OF MER ILYN SHIPPING & T RANS PORT S 136 ITD (SB) 23, WHEREIN IT IS HELD THAT DISALLOWANCE UNDER SECTION 40 (A0(IA) IS CONFINED TO THE AMOUNTS WHICH HAVE R EMAINED PAYABLE AT THE YEAR END, W HEREAS , EXCEPT FOR AN AMOUNT OF RS.6 , 17 , 123/ - THE BALANCE AMOUNTS WERE PAID DURING THE RELEVANT PRE VIOUS YE A R AND A S SUCH SECTION 40 (A)(IA) DISALLOWANCE IN RESPECT OF THE SAME NOT ATTRACTE D . THE A SSESSING OFFICER IS AGGRIEVED AND IS IN APPEAL BEF ORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS , PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF T HE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. I.T.A. N O. 2288 /AHD/201 2 ASSESSMENT YEAR: 200 9 - 10 PAGE 4 OF 9 9. W HILE IT IS INDEED TRUE THAT HON BLE HIGH COURT I N THE CASE OF CIT VS . SIK AND AR K HAN N. TUNVAR (2013) 357 ITR 312 (GUJ) DISAPPROVED THE S PECIAL B ENCH DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORT S (SUPRA) , I T IS USEFUL TO TAKE NOTE OF THE FACT THAT SECOND PROVISO TO SECTION 40 (A)(IA) HAS BEEN ADDED IN THE MEANTIME. THIS PROVISO IN EFFECT LAYS DOWN THAT WHERE THE RECIPIENT OF THE PAYMENT HAS PAID DUE TAX ON INCOME EMBEDDED IN SUCH PAYMENTS, DISALL OWANCE UNDER SECTION 40(A)(IA) CANNOT BE MADE. IN EFFECT THUS , IN TERMS OF THE AFORESAID LEGAL POSITION , AS LONG AS THERE IS NO LOSS OF REVENUE TO THE EXCHEQUER, FROM NON - DEDUCTION OF TAX AT SOURCE BY THE ASSESSEE, THE DISALLOWANCE UNDER SECTION 4 0 (A)(IA) CANNOT BE RESORTED TO. WHILE , THE AFORESAID AMENDMENT IN LAW WAS STATED TO BE IN THE STATUTE EFFECTIVE FROM 01.04.2013 I.E. A . Y . 20 13 - 14 ONWARDS, T HE LEGAL POSITION , AS IT STANDS NOW , PROVIDES THAT THE AFORESAID RELAXATION FROM THE RIGOR OF PROVISIONS OF SECTION 40(A)(IA) IS TO BE TREATED AS RETROSPECTIVE IN EFFECT W.E.F. 01.04.2005. WHILE DEALING THIS ASPECT OF THE MATTER , WE MAY REFER TO THE FOLLOWING OBSERVATIONS MADE BY A CO - ORDINATE BENCH OF THIS T RIBUNAL IN THE CASE OF RKP COMPANY, KORBA VS. ITO, K ORBA (ITA NO. 106/RPR/2016 - ORDER DATED 24.06.2016) WHEREIN TAKING NOTE OF THE LAW LAID DOWN BY THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LANDMARK TOWNSHIPS PVT. LTD. (SUPRA), THE DIVISION BENCH HAS OBSERVED AS FOLLOWS : - 2. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISALLOWED A SUM OF RS 6,48,456, BEING PAYMENT MADE TO NBFCS ON ACCOUNT OF INTEREST CHARGES WITHOUT DEDUCTION OF TAX AT SOURCE, UNDER SECTION 40(A)(IA). AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPAL, AND RELIED UPON, INTER ALIA, HON BLE DELHI HIGH COURT S JUDGMENT IN THE CASE OF CIT VS ANSAL LANDMARK TOWNSHIPS PVT LTD [(2015) 377 ITR 635 (DEL)] , BUT WITHOUT ANY SUCCES S. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVES, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE IN THE LIGHT OF I.T.A. N O. 2288 /AHD/201 2 ASSESSMENT YEAR: 200 9 - 10 PAGE 5 OF 9 THE APPLICABLE LEGAL POSITION. NO NE HAS APPEARED FOR THE ASSESSEE BUT AS THE ISSUE IN APPEAL IS A SHORT LEGAL ISSUE, SET OUT IN A NARROW COMPASS OF FACTS, WHICH CAN BE DISPOSED OF EVEN WITHOUT THE BENEFIT OF ASSISTANCE FROM THE ASSESSEE, WE CONSIDER IT APPROPRIATE TO PROCCED WITH THE MATT ER EX PARTE QUA THE ASSESSEE. 4. WE FIND THAT HON BLE DELHI HIGH COURT HAS SPECIFICALLY APPROVED THE STAND TAKEN BY A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF RAJEEV KUMAR AGARWAL VS ACIT [(2014) 149 ITD 363 (AGRA)] , AND UPHELD THE ACTION OF THE TRIBUNAL IN FOLLOWING THE SAME. 9. . NOW THAT THE LEGISLATURE HAS BEEN COMPASSIONATE ENOUGH TO CURE THESE SHORTCOMINGS 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 WHE N 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 THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND AFTER CARRYING OUT NECESSARY VERIFICATIONS REGARDING RELATED PAYMENTS HAVING BEEN TAKEN INTO ACCOUNT BY T HE RECIPIENTS IN COMPUTATION OF THEIR INCOME, REGARDING PAYMENT OF TAXES IN RESPECT OF SUCH INCOME AND REGARDING FILING OF THE RELATED INCOME TAX RETURNS BY THE RECIPIENTS. WHILE GIVING EFFECT TO THESE DIRECTIONS, THE ASSESSING OFFICER SHALL GIVE DUE AND F AIR OPPORTUNITY OF HEARING TO THE ASSESSEE, DECIDE THE MATTER IN ACCORDANCE WITH THE LAW AND BY WAY OF A SPEAKING ORDER. WE ORDER SO I.T.A. N O. 2288 /AHD/201 2 ASSESSMENT YEAR: 200 9 - 10 PAGE 6 OF 9 5. IN EFFECT THUS, THEIR LORDSHIPS HAVE APPROVED THE ACTION OF THE TRIBUNAL IN REMITTING THE MATTER TO THE FILE OF THE ASS ESSING OFFICER WITH A DIRECTION TO ASCERTAIN WHETHER THE RECIPIENT HAS TAKEN INTO ACCOUNT RELATED PAYMENTS INTO COMPUTATION OF HIS INCOME AND OFFERING THE SAME TO TAX, AND, IF SO, DELETE THE DISALLOWANCE UNDER SECTION 40(A)(IA) IN RESPECT OF THE SAME. 6. WHEN, HOWEVER, WE ASKED THE LEARNED DEPARTMENTAL REPRESENTATIVE AS TO WHY WE SHOULD ALSO NOT REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER, WITH THE SAME DIRECTIONS, HE, ALONGWITH HIS SENIOR COLLEAGUE SHRI DARHAN SINGH, WHO HAPPENS TO BE THE CIT( A) AUTHORING THE IMPUGNED ORDER AND WHO WAS ON DUTY AS CIT(DR) BEFORE US, HAD THREE POINTS TO MAKE - FIRST, THAT THERE ARE DECISIONS IN SUPPORT OF THE STAND OF THE ASSESSING OFFICER S STAND, BY WAY OF HON BLE KERALA HIGH COURT S DECISION IN THE CASE OF THOM AS GEORGE MUTHOOT VS CIT [(2015) 63 TAXMANN.COM 99 (KERALA)] ; SECOND, THAT EVEN IF INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) CAN BE CONSTRUED AS RETROSPECTIVE IN EFFECT, THE CORRESPONDING RULE IN THE INCOME TAX RULES 1962 IS NOT, AND HAS NOT BEEN HE LD TO BE, RETROSPECTIVE, AND THE SECOND PROVISO TO SECTION 40(A)(IA) CANNOT, THEREFORE, BE GIVE RETROSPECTIVE EFFECT; AND, THIRD, THAT THERE IS NO DECISION ON THIS ISSUE BY HON BLE JURISDICTIONAL HIGH COURT AND, AS SUCH, THE STAND OF THE ASSESSING OFFICER CANNOT BE FAULTED. 7. AS FOR HON BLE KERALA HIGH COURT S DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA), UNDOUBTEDLY, OUTSIDE THE JURISDICTION OF HON BLE KERALA HIGH COURT AND OUTSIDE THE JURISDICTION OF HON BLE DELHI HIGH COURT - WHICH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, THERE ARE CONFLICTING DECISIONS ON THE ISSUE OF RESTROSPECTIVITY 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 HIERAR CHICAL 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 CO URT 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 A DOPTED'. THIS PRINCIPLE HAS BEEN CONSISTENTLY FOLLOWED BY THE VARIOUS AUTHORITIES AS ALSO BY THE HON BLE SUPREME COURT ITSELF. IN ANOTHER I.T.A. N O. 2288 /AHD/201 2 ASSESSMENT YEAR: 200 9 - 10 PAGE 7 OF 9 SUPREME COURT JUDGMENT, PETRON ENGG. CONSTRUCTION (P) LTD. & ANR. VS. CBDT & ORS. (1988) 75 CTR (SC) 20 : (1989) 175 I TR 523 (SC), IT HAS BEEN REITERATED THAT THE ABOVE PRINCIPLE OF LAW IS WELL ESTABLISHED AND THERE IS NO DOUBT ABOUT THAT. HON BLE SUPREME COURT HAD, HOWEVER, SOME OCCASIONS TO DEVIATE FROM THIS GENERAL PRINCIPLE OF INTERPRETATION OF TAXING STATUTE WHICH CA N BE CONSTRUED AS EXCEPTIONS TO THIS GENERAL RULE. IT HAS BEEN HELD THAT THE RULE OF RESOLVING AMBIGUITIES IN FAVOUR OF TAX - PAYER DOES NOT APPLY TO DEDUCTIONS, EXEMPTIONS AND EXCEPTIONS WHICH ARE ALLOWABLE ONLY WHEN PLAINLY AUTHORISED. THIS EXCEPTION, LAID DOWN IN LITTMAN VS. BARRON 1952(2) AIR 393 AND FOLLOWED BY APEX COURT IN MANGALORE CHEMICALS & FERTILIZERS LTD. VS. DY. COMMR. OF CT (1992) SUPPL. (1) SCC 21 AND NOVOPAN INDIA LTD. VS. CCE & C 1994 (73) ELT 769 (SC ), HAS BEEN SUMMED UP IN THE WORDS OF LOR D LOHEN, 'IN CASE OF AMBIGUITY, A TAXING STATUTE SHOULD BE CONSTRUED IN FAVOUR OF A TAX - PAYER DOES NOT APPLY TO A PROVISION GIVING TAX - PAYER RELIEF IN CERTAIN CASES FROM A SECTION CLEARLY IMPOSING LIABILITY'. THIS EXCEPTION, IN THE PRESENT CASE, HAS NO APP LICATION. THE RULE OF RESOLVING AMBIGUITY IN FAVOUR OF THE ASSESSEE DOES NOT ALSO APPLY WHERE THE INTERPRETATION IN FAVOUR OF ASSESSEE WILL HAVE TO TREAT THE PROVISIONS UNCONSTITUTIONAL, AS HELD IN THE MATTER OF STATE OF M.P. VS. DADABHOY S NEW CHIRMIRY PO NRI HILL COLLIERY CO. LTD. AIR 1972 (SC) 614 . THEREFORE, WHAT FOLLOWS IS THAT IN THE PECULIAR CIRCUMSTANCES OF THE CASE AND LOOKING TO THE NATURE OF THE PROVISIONS WITH WHICH WE ARE PRESENTLY CONCERNED, THE VIEW EXPRESSED BY THE HON BLE DELHI HIGH COURT IN THE CASE OF ANSAL LANDMARK (SUPRA), WHICH IS IN FAVOUR OF ASSESSEE, IS REQUIRED TO BE FOLLOWED BY US. REVENUE DOES NOT, THEREFORE, DERIVE ANY ADVANTAGE FROM HON BLE KERALA HIGH COURT S DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA). 8. THE SECOND ISSUE IS WITH RESPECT TO THE SECOND PROVISO TO SECTION 40(A)(IA) BEING HELD TO BE RETROSPECTIVE, WITHOUT CORRESPONDING ENABLING PROVISION IN THE RULES BEING HELD TO BE RETROSPECTIVE. THAT IS A HYPER TECHNICAL ARGUMENT AND TOO PEDANTIC AN APPROACH. THE SECO ND PROVISO TO SECTION 40(A)(IA) WAS HELD TO BE RETROSPECTIVE IN IN THE CONTEXT OF FINDING SOLUTION TO THE PROBLEM 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 CO ORDINATE 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 I.T.A. N O. 2288 /AHD/201 2 ASSESSMENT YEAR: 200 9 - 10 PAGE 8 OF 9 HYPER TECHNICAL STAND OF THE DE PARTMENTAL 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 TIER OF THE JUDICIAL HIERARCHY, BIND THE LOWER FORUMS NOT ONLY IN THE JURISDICTION OF RESPECTIVE HIGH COURTS, BUT UNLESS, THERE IS ANYTHING CONTRARY THERETO BY THE JURISDICTIONAL HIGH COURTS, OTHER JURISDICTIONS AS WELL. THERE CANNOT BE ANY DISPUTE ON THE FUNDAMENTAL PROPOSITION THAT IN THE HIERARCHICAL JUDICIAL SYSTEM THAT WE HAVE, BETTER WISDOM OF THE COURT BELOW HAS TO YIELD TO HIGHER WISDOM OF THE COURT ABOVE, AND THEREFORE WE HAVE TO HUMBLY BOW BEFORE THE VIEWS EXPRESSED BY HON BLE COURT S ABOVE. SUCH A HIGH COURT BEING A NON - JURISDICTIONAL HIGH COURT DOES NOT ALTER THE POSITION AS LAID DOWN BY HON BLE BOMBAY HIGH COURT IN THE MATTER OF CIT VS. GODAVARI DEVI SARAF ([1978) 113 ITR 589 (BOM)] AND AS ANALYSED BY A COORDINATE BENCH OF THIS TRI BUNAL IN THE CASE OF ACIT VS AURANGABAD HOLIDAY RESORTS PVT LTD [(2009) 118 ITD 1 (PUNE)] . 10. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFIC ER FOR LIMITED VERIFICATION ON THE ASPECT AS TO WHETHER RECIPIENT OF PAYMENT HAS INCLUDED THE SAME IN HIS COMPUTATION OF BUSINESS INCOME OFFERED TO TAX, AND, IF FOUND TO BE SO, DELETE THE DISALLOWANCE IN QUESTION. WITH THESE DIRECTIONS, THE MATTER STANDS R ESTORED TO THE FILE OF THE ASSESSING OFFICER. 10. IN VIEW OF THE ABOVE LEGAL POSITION, THE PLEA TAKEN BY THE LD. COUNSEL IS INDEED WELL TAKEN. THE BASIS OF WHICH RELIEF WAS GIVEN BY THE LEARNED CIT(A) , IN THE LIGHT OF LEGAL DEVELOPMENT POINTED OUT BY TH E LEARNED COUNSEL , CEASES TO BE LEGALLY VALID BUT NEVERTHELESS AS LONG AS THE RECIPIENT OF PAYMENTS IN QUESTION HAVE PAID TAX ON THE INCOME EMBEDDED IN SUCH PAYMENTS, THE DISALLOWANCE UNDER SECTION 40(A ) (IA) CANNOT BE JUSTIFIED. IN THIS VIEW OF THE MATTE R , WHAT IS CRUCIAL AND DECISIVE IS WHETHER OR NOT THE RECIPIENTS OF THESE PAYMENTS HAVE TAKEN INTO ACCOUNT RECEIPTS IN QUESTION IN THEIR COMPUTATION OF INCOME AND PAID DUE TAX THEREON. WE, THEREFORE , DEEM IT FIT AND PROPER TO REMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR ADJUDICATION DENOVO ON THIS LIMITED ASPECT AND FOR THIS LIMITED VERIFICATION IN THE LIGHT OF OUR OBSERVATION ABOVE. I.T.A. N O. 2288 /AHD/201 2 ASSESSMENT YEAR: 200 9 - 10 PAGE 9 OF 9 11. AS THE MATTER IS BEING SENT BACK TO THE ASSESSING OFFICER FOR FACTUAL VERIFICATION , AS POINTED OUT ABOVE, OTHER ISSUES RAISED IN THE APPEAL ARE ACADEMIC AND INFRUCTUOUS AT THIS STAGE. WE NEED NOT TO DEAL WITH THIS ASPECT OF THE MATTER. 12. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TO DAY ON 29 TH DAY OF NOVEMBER , 2016. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 29 TH DAY OF NOVEMBER , 2016. COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMI SSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD