Appeal Details
Counselvise Citation
[2013] 140 COUNSELVISE.COM (IT) 69532 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 6 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
28-11-2013
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
D
Next Hearing Date
20-11-2013
Assessment Year
2005-2006
Appeal Filed On
25-05-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI T.S. KAPOOR ITA NO. 2547 & 2548/DEL/2012 A.YRS. 2005-06 & 2008-09 ACIT CIRCLE-II, VS. M/S LAKSONS FOOTWEAR P. LTD . FARIDABAD. PLOT NO. 131 SECTOR-24, FARIDABAD. AND ITA NO. 2204/DEL/2012 A.YRS. 2008-09 M/S LAKSONS FOOTWEAR P. LTD. VS. ACIT CIRCLE-II, PLOT NO. 131 SECTOR-24, FARIDABAD. FARIDABAD. PAN : AAACL 3114 B ( APPELLANT ) ( RESPONDENT ) DEPARTMENT BY : NONE ASSESSEE BY : SHRI M.K. MADAN CA O R D E R PER R.P. TOLANI, J.M: : THIS IS A SET OF THREE APPEALS IN THE CASE OF SAME ASSESSEE CONTAINING TWO REVENUES APPEAL FOR A.Y. 2005-06 AND 2008-09 A ND ASSESSEES APPEAL FOR A.Y. 2008-09. ALL THE THREE APPEALS ARE DISPOSE D OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. WHEN THE BENCH SET FOR HEARING AT 10.30AM ON 20- 11-2013, TO OUR SURPRISE, NONE OF THE DR WAS PRESENT IN THE COURTRO OM. IT MAY BE WORTHWHILE TO MENTION THAT ABOUT 33 APPEALS WERE FIXED FOR HEA RING WITH THE CURRENT 2 PENDENCY IT TAKES ABOUT 4 TO 5 MONTHS PERIOD FOR F IXATION OF ANY APPEAL FOR HEARING IN NORMAL COURSE. 2.1. IT MAY BE POINTED OUT THAT THERE WAS NEITHER A NY DR PRESENT IN THE COURTROOM NOR ANY APPLICATION FOR ADJOURNMENT FROM THE REVENUES SIDE. IN PUBLIC INTEREST AND INTEREST OF JUSTICE, BENCH CONT INUED WITH THE ADJOURNMENT APPLICATIONS FILED BY THE ASSESSEES AND THEREAFTER WITH THE HEARING OF THE REMAINING APPEALS. 2.2. THIS SET OF APPEALS, WHICH COMPRISES OF TWO RE VENUE APPEALS AND ONE ASSESSEES APPEAL, WAS CALLED OUT. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ISSUES INVOLVED WERE COVERED BY ITAT JUDG MENTS IN ASSESSEES OWN CASE AND IT HAS BEEN ADJOURNED SEVERAL TIMES, THERE FORE, IT MAY BE HEARD. AS NO DR WAS PRESENT, MATTER WAS PASSED OVER. 2.3. AT ABOUT 10.50 AM SHRI D.K. MISHRA CIT(DR) EN TERED THE COURTROOM IN A HUFF AND GAVE A VAGUE REASON FOR HIS ABSENCE T HAT HE WAS HELD UP SOME WHERE. SINCE SHRI D.K. MISHRA MADE THE APPEARANCE, THIS PASSED OVER MATTER WAS CALLED OUT. IT MAY BE MENTIONED THAT SHRI D.K. MISHRA CIT(DR) IS THE COMMISSIONER IN-CHARGE OF THE D BENCH AND IT IS H IS DUTY TO ENSURE THAT THE COURT IS PROPERLY ASSISTED TO DISCHARGE ITS FUN CTION OF HEARING AND DECIDE APPEALS. ON THE CALLING OUT OF THIS MATTER FOR HEAR ING, SHRI D.K. MISHRA REPLIED THAT HE WILL NOT ARGUE THESE APPEALS AS THE Y ARE NOT ASSIGNED TO HIM AND OTHER DR WHO IS ABSENT, ALSO WAS HELD UP IN TRA FFIC JAM. 2.4. IT WAS CLEARLY POINTED OUT TO HIM THAT THERE A RE TWO REVENUES APPEALS AND IT IS ITS DUTY OF THE REVENUE TO ENSURE THAT TH EIR OWN APPEALS ARE REPRESENTED. IN THESE CIRCUMSTANCES, THE BENCH WILL BE LEFT WITH NO CHOICE 3 BUT TO PROCEED WITH THE MATTER EX PARTE QUA REVENUE . SHRI D.K. MISHRA CONTENDED THAT THE BENCH MAY TAKE A VIEW IT LIKES. 2.5. THESE DEVELOPMENTS AND CIRCUMSTANCES LEAVE AN IMPRESSION ON THE BENCH THAT REVENUE IS NOT TAKING THE COURT PROCEEDI NGS WITH RESPONSIBILITY, WHICH IS DESERVED BY JUDICIAL PROCEEDINGS AND CAUSE CONSTERNATION IN OUR MIND. AS THE ISSUES ARE PLEADED BY ASSESSEE TO BE C OVERED BY ITAT ORDER IN ITS OWN CASE AND ON SEVERAL EARLIER OCCASIONS THE APPEALS HAVE BEEN ADJOURNED. THE D BENCH DRS ATTITUDE IS OF RECALC ITRANCE AND NON- COOPERATION, IN THE PUBLIC INTEREST AND INTEREST OF JUSTICE WE ARE OF THE VIEW THAT FURTHER ADJOURNMENT OF A SEEMINGLY COVERED MAT TER WILL CAUSE HARDSHIP TO ASSESSEE AND AMOUNT TO OBSTRUCTION TO DISPENSATI ON OF JUSTICE. UNDER THESE CIRCUMSTANCES, WE ARE LEFT WITH NO CHOICE BUT TO PR OCEED WITH THE HEARING OF THESE APPEALS EX PARTE QUA THE DEPARTMENT. 2.6. AFTER THIS HEARING WAS OVER, AT ABOUT 11.30AM A BUNCH OF HASTILY WRITTEN ADJOURNMENT APPLICATIONS BY THE DEPARTMENT WAS MOVED WITH SCRIBBLING DR IS NOT AVAILABLE. WE HAVE ADJOURNED ALL THE OTHER MATTERS ON THESE REVENUES APPLICATIONS. THOUGH THE CAUSE OF T HE ADJOURNMENTS SOUGHT BY REVENUE IS NON SPECIFIC AND DOES NOT INVOKE ANY JUDICIAL CONSCIENCE. NEVERTHELESS TO EMPHASIZE THAT THE ITAT BENCHES CON SIDER REVENUE WITH DUE REGARDS AND ESTEEM, THESE BELATEDLY AND HASTIL Y MOVED ADJOURNMENT APPLICATIONS WERE ALLOWED EXCEPT THE HEARD APPEALS. 2.7. FROM THE ABOVE PROCEEDINGS IT BECOMES CRYSTAL CLEAR THAT THE ACTIONS OF D BENCH DRS HAS CAUSED OBSTRUCTION OF JUSTICE AND LACK OF DUE RESPECT TO THE JUDICIAL DISCIPLINE AND SET NORMS OF ITAT PR OCEEDINGS. WE MAY ALSO 4 MENTION THAT ON EARLIER DATE I.E. 18-11-2013 ABOUT 40 CASES WERE FIXED AND ON 19-11-2013 29 CASES WERE FIXED AND A HUGE NUMBER OF CASES WERE COMPELLED TO BE ADJOURNED AS THE REVENUE MOVED APPL ICATIONS WITH SCRIBBLING DR IS NOT AVAILABLE. THE BENCH HAS BEE N MORE THAN FAIR TO THE DEPARTMENT IN ALLOWING SUCH ADJOURNMENTS. THE D B ENCH DRS FAILED EVEN TO EXTEND MINIMUM COURTESY OF APPLYING ADJOURNMENT IN ADVANCE AND INFORM THE OPPOSITE PARTIES WHO COME PREPARED FROM VARIOUS OUT STATIONS. 2.8. ON 2.30 PM MR. BHATIA, SR. DR D BENCH, EXPL AINED HIS ABSENCE AS BEING BUSY WITH THE MARRIAGE CEREMONY OF HIS NEPHEW AT LUCKNOW AND HE GOT DELAYED WHICH RESULTED IN NON-APPEARANCE. HE WA S REMINDED THAT MARRIAGE CEREMONIES ARE FIXED WELL IN ADVANCE AND D UE INTIMATION SHOULD BE GIVEN IF THE DRPROCEEDS ON A PLANNED LEAVE. THE ABO VE FACTS ARE BEING NARRATED IN DETAIL TO MAKE THE DEPARTMENT AWARE OF THE SITUATION OF SOME OF THE DRS WHOSE RECALCITRANT WAY OF WORKING IS LEADIN G TO UN-ANTICIPATED ADJOURNMENTS AND OBSTRUCTION OF JUSTICE, WHICH DES ERVES TO BE IMPROVED. 3. TO PROMOTE PUBLIC INTEREST AND DISPENSATION OF J USTICE, AS A SYMBOLIC GESTURE, THE BENCH DEEMS IT FIT AND IN THE INTERES T OF JUSTICE TO IMPOSE A TOKEN COST OF RS. 500/- ON THE ABSENTEE DR MR. BHAT IA WHICH SHOULD BE DEDUCTED FROM HIS SALARY. THIS ORDER SHOULD BE DULY FORWARDED BY REGISTRY TO CIT(DR)-I, CHIEF COMMISSIONER IN-CHARGE OF DELHI BENCH, THE LEARNED CHAIRMAN CBDT FOR RECORD PURPOSES. 4. NOW WE PROCEED TO DECIDE THESE APPEALS. WE HAVE HEARD LD. AR OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECO RD AND WE PROCEED TO DECIDE THE APPEALS AS UNDER: 5 ASSESSMENT YEAR 2005-06 ( REVENUES APPEAL) : 5. SOLE EFFECTIVE GROUND RAISED IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING TH E ADDITION OF RS. 23,18,590/- MADE BY THE ASSESSING OFFICER U/ S 36(1)(III) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF INTEREST ON INVESTMENT IN SHARES IN THE LIGHT OF FOLLOWING JUDG MENTS: (I) JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES (186 ITR 1); (II) HONBLE MADRAS HIGH COURT IN THE CASE OF K. SOMASUNDARAM & BROS. VS. CIT 238 ITR 939; AND (III) CIT VS. SMT. LEENA RAMCHANDRAN 339 ITR 296 (KER). 6. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE I SSUE IN QUESTION IS COVERED BY ITATS CONSOLIDATED ORDER DATED 30-3-201 2 IN ASSESSEES OWN CASE IN ITA NOS. 3361 & 3362/DEL/2010 FOR A.Y. 2003 -04 & 2004-05, INTER ALIA, OBSERVING AS UNDER: 8. .. THE ASSESSEE HAS BUSINESS RELATIONSHIP WITH ALL PERSONS WITH WHOM TRADING IS MADE. BUSINESS RELATIO NSHIP CAN BE SAID TO EXIST EVEN WITH THE PERSONS FROM WHOM FU NDS ARE BORROWED. HENCE THE PRINCIPLE OF COMMERCIAL EXIGENC Y CANNOT BE BLINDLY APPLIED IN THE CASE OF PERSONS WITH WHOM THE ASSESSEE HAS SOME BUSINESS RELATIONSHIP. THE ASSESS EE AHS TO DEMONSTRATE THE PURPOSE FOR WHICH HE WAS MAKING THE INVESTMENT IN THE SHARES OF ASSOCIATE CONCERN; WHET HER IT IS FOR GETTING DISTRIBUTORSHIP OR EARNING DIVIDEND INCOME OR FOR CONTROLLING INTERESTS. THE ASSESSEE HAD BORROWED MO NEY FOR ITS OWN PURPOSE BUT HAS BEEN INVESTING IT IN SHARES. PR IMA FACIE IT APPEARS TO BE DIVERSION OF FUNDS FOR ACQUISITION OF SHARE. IT IS NOT A CASE OF DEPOSIT OF MONEY WITH LAKHANI INDIA F OR THE PURPOSE OF SECURING BUSINESS OF DISTRIBUTORSHIP. WH AT WAS THE POSITION IN THE VERY FIRST YEAR WHEN BUSINESS OF DI STRIBUTORSHIP WAS ASSIGNED TO ASSESSEE IS NOT KNOWN. IF THERE WAS NO CONDITION IN THE VERY FIRST YEAR OR IN SUBSEQUENT Y EARS, THE AMOUNTS INVESTED IN VARIOUS YEARS IN SHARES OF LAKH ANI INDIA LTD. CANNOT BE TREATED AS ASSESSEES COMPULSION TO MAKE 6 INVESTMENT IN SHARES WITHIN THE MEANING OF COMMERCI AL EXPEDIENCY. THE LEARNED CIT(A) /A.O. HAS NOT EXAMIN ED THIS ASPECT OF THE CASE ALSO. SINCE THE ISSUE HAS NOT BE EN EXAMINED EITHER BY THE ASSESSING OFFICER OR THE LEARNED CIT( A), WE FEEL IT PROPER TO SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTIONS TO EXAMINE THE ISSUE IN THE LIG HT OF OUR AFORESAID OBSERVATIONS AND DECIDE IT AFRESH AFTER A FFORDING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 6.1. SINCE THE ISSUE IN QUESTION HAS BEEN SET ASIDE , RESTORED BACK TO THE FILE OF ASSESSING OFFICER, THE MATTER MAY BE ACCORDINGLY SET ASIDE BACK TO THE FILE OF ASSESSING OFFICER WITH SIMILAR DIRECTIONS. 7. WE HAVE HEARD LD. AR OF THE ASSESSEE AND GONE TH ROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ISSUE HAS BEEN SE T ASIDE BY THE ITAT IN EARLIER YEARS (SUPRA) TO DECIDE THE ISSUE IN THE LI GHT OF OBSERVATIONS MADE BY IN THE ITAT ORDER. RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE ISSUES BACK TO THE FILE OF ASSESSING OFFICER WITH SIMILAR DIRECTIONS. THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. A.Y. 2008-09 CROSS APPEALS: 8. SOLE EFFECTIVE GROUND RAISED BY THE REVENUE IS A S UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING TH E ADDITION OF RS. 15,81,991/- OUT OF TOTAL ADDITION OF RS. 18, 84,991/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF VARIOUS EXPENSES EVEN THOUGH THESE EXPENSES WERE INCURRED ON EXEMPTE D INCOMES, THEREFORE NOT ALLOWABLE IN VIEW OF SECTION 14A OF THE INCOME TAX ACT, 1961 AND IN THE LIGHT OF FOLLOWING JUDGMENTS: (I) JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES (186 ITR 1); 7 (II) HONBLE MADRAS HIGH COURT IN THE CASE OF K. SOMASUNDARAM & BROS. VS. CIT 238 ITR 939; (III) HONBLE CALCUTTA HIGH COURT IN THE CASE OF DH ANUKA AND SONS VS. CIT (CAL) 339 ITR 319;AND (IV) CIT V. SMT. LEENA RAMACHANDRAN 339 ITR 296 (KE R.) ASSESSEES APPEAL : 9. FOLLOWING GROUNDS ARE RAISED: 1. (A) THAT THE ORDER PASSED BY LD. CIT(A) IS BAD I N LAW AND ON FACTS. (B) THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF INTEREST OF RS. 49,87,440/- U/S 40( A)(IA) OF THE INCOME TAX ACT, 1961. 2. THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DISALLOWANCE OF ADMINISTRATIVE EXPENSES OF RS. 3,03 ,000/- U/S 14A OF THE INCOME TAX ACT READ WITH CLAUSE (III) OF RULE 8D (2) OF THE INCOME TAX RULES. 10. THE SOLE EFFECTIVE GROUND OF REVENUES APPEAL A ND GROUND NO. 2 OF ASSESSEES APPEAL ARE COMMON. HERE ALSO LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT SIMILAR ISSUE AROSE IN A.Y. 2006-07 A ND 2007-08 AND ITAT VIDE CONSOLIDATED ORDER DATED 22-3-2012 IN ITA NOS. 2117 AND 2118/DEL/2011, REFERRED TO THE FOLLOWING JUDGMENTS: - GODREJ & BOYCE MFG. CO. LTD. VS. DCIT & ANOTHER 328 ITR 81 (BOM.); - MAXOPP VS. CIT ( HONBLE DELHI HIGH COURT ITA NO. 667/2009 DATED 18-11-2009); - CIT VS. WINSOME TEXTILE INDUSTRIES LTD. 319 ITR 204 (P&H) JURISDICTIONAL HIGH COURT IN ASSESSEES CASE. 8 11. THE ITAT REFERRING TO THE JURISDICTIONAL HIGH C OURT JUDGMENT (SUPRA) AND VARIOUS OTHER JUDGMENTS AND CONSIDERING THE ARG UMENTS AND ON PERUSAL OF THE RECORD SET ASIDE THE ISSUE, RESTORED BACK TO THE FILE OF ASSESSING OFFICER BY FOLLOWING OBSERVATIONS: 8.3. IN THE LIGHT OF THE AFOREMENTIONED PECULIAR F ACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT IT IS APPROP RIATE TO RESTORE THE ISSUE BACK TO THE FILE OF THE A.O. AS I T IS SEEN THAT ON FACTS NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE CIT(A) TO CONCLUDE THAT FACTS QUA THE GROUP CONCERN NAMELY LA KHANI MARKETING INCORPORATION IN 2000-2001 A.Y ARE EXACTL Y IDENTICAL TO THE FACTS OF THE ASSESSEE IN A.Y. 2006 -07. IT IS SEEN THAT NO SUCH EXERCISE HAS BEEN DONE BY THE A.O. ACC ORDINGLY, THE APPLICABILITY OF THE FACTS PERTAINING TO COMMER CIAL EXPEDIENCY AS CONSIDERED IN THE FACTS OF GROUP CONC ERN NEEDS TO BE SEEN AND BROUGHT ON RECORD. THE A.O. SHALL IN TH E LIGHT OF THE JUDGMENTS OF THE APEX COURT AND JURISDICTIONAL HIGH COURT SHALL EXAMINE AND DISCUSS EACH AND EVERY TIME FUNDS WERE ADVANCED BY THE ASSESSEE TO LAKHANI INDIA LTD. IN C ONTEXT OF NEXUS AND COMMERCIAL EXPEDIENCY AS HAS BEEN LAI D DOWN BY THE APEX COURT IN THE CASE OF S.A. BUILDERS 288 ITR 1 (SC) AND MUNJAL SALES CORPORATION 298 ITR 298 (SC). THUS NOT ONLY THE FACTS QUA THE LAKHANI MARKETING INCORPORATION STATE D TO BE IDENTICAL TO ASSESSEES CASE IN THE CONTEXT OF COM MERCIAL EXPEDIENCY NEED TO BE TAKEN INTO CONSIDERATION BUT ALSO THE FINDING IN ASSESSEES OWN CASE IN 2003-04 AND 2004- 05 A.YS IS ALSO RELEVANT AS THE ISSUE IN THE EARLIER YEARS IN THE CASE OF ASSESSEE HAS BEEN RESTORED TO THE A.O. VIDE ORDER D T. 16-4-2009 IN ITA 2233 AND 4545/DEL/2007. ACCORDINGLY AFTER MA RSHALLING THE FACTS, THE CASE LAW CAN BE APPLIED. 8.4. ACCORDINGLY FOR THE DETAILED REASONS GIVEN HER EINABOVE THE ISSUE IS RESTORED TO THE FILE OF THE A.O. FOR B OTH THE YEARS WITH THE DIRECTION TO DECIDE THE SAME IN ACCORDANCE WITH LAW BY WAY OF SPEAKING ORDER. NEEDLESS TO SAY THAT T HE AS SESSEE SHALL BE AFFORDED A REASONABLE OPPORTUNITY OF BEING HEARD . 9 12. IT IS PLEADED THAT BOTH THE GROUNDS IN CASE OF ASSESSEE AND REVENUES APPEAL SHOULD BE SET ASIDE ON THE ISSUE OF DISALLOW ANCE U/S 14A. 13. APROPOS GROUND NO. 1 OF ASSESSEES APPEAL, BRI EF FACTS ARE THAT DISALLOWANCE U/S 40(A)(IA) WAS MADE ON THE GROUND T HAT ASSESSEE HAD NOT DEDUCTED TDS ON INTEREST AMOUNTING TO RS. 49,87,440 /- PAID TO THE BANK THROUGH THE ACCOUNT OF NITIN MIGLANI. SINCE TDS WA S NOT DEDUCTED BY THE ASSESSEE WHILE MAKING THE PAYMENT TO NITIN MIGLANI THE ASSESSING OFFICER PURPOSED TO DISALLOW THE INTEREST FOR WANT OF COMPL IANCE TO SEC. 40(A)(IA). THE ASSESSEE PLEADED AS UNDER: DE-FACTO THE LOAN WAS TAKEN FROM THE BANK AND INTE REST WAS ALSO PAID TO THE BANK AND IN SUCH A SITUATION THERE IS NO NEED OF DEDUCTION OF TAX U/S 194A OF THE INCOME TAX ACT, 19 61. IT IS NOT A CASE OF THE REVENUE THAT MONEY WAS BORROWED FROM THE SAVING BANK OF MR. NITIN MIGLANI NOR IS THE CASE THAT MONE Y/ INTEREST WAS PAID TO NITIN MIGLANI. THERE ARE NO TWO INDEPE NDENT TRANSACTIONS THAT IS COMPANY WITH MR. NITIN MIGLANI AND MR. NITIN MIGLANI WITH THE BANK. THIS IS RATHER ONE TRA NSACTION IN WHICH MR. NITIN MIGLANI WAS A CONDUIT TO CIRCUMVENT THE PROBLEM FACED DUE TO CESSATION OF BOARD AND TO PREV ENT THE CLOSURE OF BUSINESS. FROM THE CONDUIT LOAN DIRECTLY COME TO APPELLANT, INTEREST WAS PAID TO THE BANK BY THE GRO UP COMPANY/ ITS MD. IT IS RESPECTFULLY SUBMITTED THAT THE PROV ISION OF SECTION 40(A)(IA) ARE INTRODUCED TO PROTECT THE EVASION OF TAXES. THERE IS NO SUCH CASE. THE BANK IS A NATIONALIZED BANK AN D AHS PAID THE TAXES ON THE INTEREST EARNED IN ITS ASSESSMENT. IT IS HELD BY THE HONBLE SUPREME COURT THAT IN CASE THE TAX IS P AID BY THE PAYEE NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA). AS SESSEE RELIES UPON THE JUDGMENT OF THE HONBLE SUPREME COU RT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE PVT. LTD. VS. CIT (293 ITR 226). 10 14. CIT(A) HOWEVER, UPHELD THE DISALLOWANCE BY RELY ING ON ITAT MUMBAI BENCH IN THE CASE OF MAHESH ENTERPRISES VS. ITO 42 SOT 125; ITAT BANGALORE BENCH IN THE CASE OF GAONKAR MINES V S. ADDL. CIT ( 9 TAXMANN.COM33) AND UPHELD THE ACTION OF ASSESSING O FFICER BY FURTHER FOLLOWING OBSERVATIONS: THE ITAT, DELHI BENCH H DELHI IN THE CASE OF DCI T VS. UMANG DAIRIES LTD. [ 36 SOT 383], AFTER EXAMINING T HE OBJECTS STATED FOR BRINGING SUCH PROVISIONS ON STATUTE AND MEMORANDUM EXPLAINING THE PROVISIONS RELATING TO DIRECT TAXES, HAS HELD THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE COULD BE AL LOWED ONLY IF THE ASSESSEE HAD PAID TDS THEREON. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BE VERAGE PVT. LTD. VS. CIT 9293 ITR 226), RELIED UPON BY THE APPELLANT, IS IN THE CONTEXT OF PROVISIONS OF SECTION 201(1) AND NOT IN THE CONTEXT OF SECTION 40(A)(IA) OF THE ACT, WHICH ARE SEPARATE AND DISTINCT PROVISIONS MEANT FOR ENSURING COMPLIANCE T O THE PROVISIONS OF CHAPTER XVII OF THE ACT. KEEPING IN V IEW THE PROVISIONS OF LAW AND THE DECISION OF JURISDICTION AL ITAT IN UMANG DAIRIES LTD. (SUPRA), THE A.O WAS FULLY JUSTI FIED IN DISALLOWING THE INTEREST OF RS. 49,87,440/- UNDER S ECTION 40(A)(IA) OF THE ACT SINCE NO TDS AT ALL WAS MADE. HENCE, THE ADDITION MADE BY THE A.O IS UPHELD AND THIS GROUND OF APPEAL IS DISMISSED. AGGRIEVED, ASSESSEE IS BEFORE US. 15. LD. COUNSEL FOR THE ASSESSEE RELIED ON ITAT VIS AKHAPATNAM SPECIAL BENCH JUDGMENT IN THE CASE OF MERILYN SHIPPING & TR ANSPORTS VS. ADDL. CIT (2012) 136 ITD 23 (VISAKHAPATNAM) (SB), HOLDING THA T WHAT CAN BE DISALLOWED U/S 40(A)(IA) IS ONLY THE OUTSTANDING BA LANCE AS ON 31 ST MARCH OF THE YEAR AND CANNOT BE INVOKED AGAINST PAYMENT MADE PRIOR TO 31 ST MARCH OF EVERY YEAR. 11 16. LD. COUNSEL THOUGH PLEADED THAT THE SPECIAL BEN CH JUDGMENT HAS BEEN REVERSED BY THE HONBLE CALCUTTA AND MADRAS HIGH CO URTS. HONBLE ALLAHABAD HIGH COURT HAS TAKEN A VIEW IN FAVOUR OF MERILYN SHIPPING & TRANSPORTS. 17. SINCE THE ISSUE IN QUESTION HAS BECOME DEBATABL E IN VIEW OF SPECIAL BENCH JUDGMENT AND CONTRARY JUDGMENTS OF HIGH COURT S, IN THE INTEREST OF SUBSTANTIAL JUSTICE WE SET ASIDE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO VERIFY WHETHER THE TDS HAS BEEN DEDUCTED IN THE SUBSEQUENT YEAR AND TO DECIDE THE SAME IN ACCORDANCE WITH LAW KEEPING IN VIEW THE LATEST LEGAL POSITION. 18. IN THE RESULT, ALL THE THREE APPEALS STAND ALLO WED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN OPEN COURT ON 28-11-2013. SD/- SD/- ( T.S. KAPOOR ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28-11-2013. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR
