National Agro Foods, Tiruppur V. ITO, Tiruppur

ITA 2554/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9706 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 07-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: G BASKAR
• Section: 69C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2554/MDS/2014 ( )( / ASSESSMENT YEAR : 2009-10 M/S NATIONAL AGRO FOODS, 141, MANGALAM ROAD, AVINASHI, TIRUPUR 641 654. PAN : AAHFN 1444 L V. THE INCOME TAX OFFICER, WARD I(2), TIRUPUR. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI G. BASKAR, ADVOCATE -.+, / 0 / RESPONDENT BY : DR. B. NISCHAL, JCIT 1 / 2% / DATE OF HEARING : 08.03.2016 3') / 2% / DATE OF PRONOUNCEMENT : 07.04.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) II, COIM BATORE, DATED 19.06.2014 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. SHRI G. BHASKAR, THE LD. COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE FIRST ISSUE ARISES FOR CONSIDERA TION IS WITH REGARD 2 I.T.A. NO.2554/MDS/14 TO ADDITION OF ` 3,55,16,000/- UNDER SECTION 69C OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. COUNSEL, THE ASSESSEE WAS SUPPLIER OF JAGGERY TO TAMIL NADU CIVI L SUPPLIES CORPORATION LTD. THE ASSESSEE PURCHASED JAGGERY FR OM AGRICULTURISTS AND TRADERS AND MADE PAYMENTS FOR SU CH PURCHASES. IN FACT, THE JAGGERY WAS PURCHASED DURING THE MONTH S OF DECEMBER, 2008 AND JANUARY, 2009. DURING THE COURSE OF ASSES SMENT PROCEEDING, THE ASSESSING OFFICER ON SURMISE FOUND THAT THE PURCHASE OF JAGGERY WAS MADE OUTSIDE THE BOOKS OF A CCOUNT PRIOR TO 12.01.2011. THE ASSESSING OFFICER HAS ALSO OBSERVE D THAT THE WITHDRAWALS FROM THE BANK AFTER THE PAYMENT RECEIVE D FROM TAMIL NADU CIVIL SUPPLIES CORPORATION LTD. WERE SHOWN AS PAYMENTS BY THE ASSESSEE. HOWEVER, THE PAYMENTS COULD NOT HAVE BEEN MADE. REFERRING TO ASSESSMENT ORDER, THE LD. COUNSEL SUBM ITTED THAT THE ASSESSEE PURCHASED 1297 MT OF JAGGERY FOR ` 3,55,16,000/- AND MADE CASH PAYMENTS. ACCORDING TO THE LD. COUNSEL , THE ASSESSEE PURCHASED 1297 MT OF JAGGERY FROM VARIOUS FARMERS O N CREDIT WHO CAN EASILY BE IDENTIFIED. THE AMOUNT WAS PAID TO T HE FARMERS AFTER RECEIPT OF MONEY FROM TAMIL NADU CIVIL SUPPLIES COR PORATION LTD. ACCORDING TO THE LD. COUNSEL, IT IS A CUSTOMARY PRA CTICE IN VILLAGES TO PURCHASE JAGGERY ON CREDIT BASIS AND SETTLE IN A LA TER STAGE. THE LD. 3 I.T.A. NO.2554/MDS/14 COUNSEL FURTHER SUBMITTED THAT NO EVIDENCE IS AVAIL ABLE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS MADE PAYMENT AFTER 12 .01.2009. THE ASSESSING OFFICER HAS NOT MADE ENQUIRY WITH THE FARMERS FROM WHOM THE JAGGERY WAS PURCHASED. THEREFORE, THE ADD ITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. 3. ON THE CONTRARY, DR. B. NISCHAL, THE LD. DEPART MENTAL REPRESENTATIVE , SUBMITTED THAT DURING THE YEAR UND ER CONSIDERATION, THE ASSESSEE CLAIMED THAT THE JAGGERY WAS PURCHASED TO THE EXTENT OF ` 18,94,40,963/-. THE ASSESSEE HAS NOT MAINTAINED AN Y BOOKS OF ACCOUNT. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE JAGGERY WAS PURCHASED FROM 99 FARMERS. THE ASS ESSEE HAS PRODUCED ONLY SELF-MADE VOUCHERS. THE ASSESSEE CLA IMED THAT THE PURCHASES WERE MADE FROM 02.01.2009 TO 30.01.2009. REFERRING TO THE ORDER OF THE ASSESSING OFFICER, THE LD. D.R. SU BMITTED THAT THE ASSESSEE WAS EXPECTED TO SUPPLY JAGGERY WELL BEFORE THE PONGAL FESTIVAL. THE ASSESSEE, IN FACT, SUPPLIED 2766.67 MT INVOICED AT ` 7,69,81,118.09 BEFORE 12.01.2009. THE LD. D.R. FUR THER SUBMITTED THAT THE ASSESSEE HAS ALSO PURCHASED 1171 MT OF JAG GERY IN THE MONTH OF DECEMBER, 2008 FROM THE TRADERS. 4 I.T.A. NO.2554/MDS/14 4. REFERRING TO THE ORDER OF THE CIT(APPEALS), MORE PARTICULARLY PAGE 7, THE LD. D.R. SUBMITTED THAT JAGGERY SUPPLIE D TO TAMIL NADU CIVIL SUPPLIES CORPORATION LTD. BEFORE 12.01.2009 W AS 2766.617 MT. THE ASSESSEE PURCHASED 1171 MT OF JAGGERY FROM FARMERS. THE ASSESSEE HAS ALSO CLAIMED PURCHASE OF JAGGERY I N CASH BEFORE 12.01.2009 TO THE EXTENT OF 298.620 MT. ACCORDINGL Y, THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS) COMPU TED THE EXCESS QUANTITY OF JAGGERY SUPPLIED, AT 1297 MT. ACCORDIN G TO THE LD. D.R., THE ASSESSEE HAS NOT ACCOUNTED THE PURCHASE OF JAGG ERY TO THE EXTENT OF 1297 MT. IN ORDER TO BALANCE THE BOOKS O F ACCOUNT OF THE ASSESSEE, THE PAYMENTS ARE SHOWN AS MADE IN CASH AF TER 13.01.2009. THE ASSESSING OFFICER, ACCORDING TO TH E LD. D.R., FOUND THAT 1297 MT OF JAGGERY CLAIMED TO BE PURCHAS ED BY PAYING CASH AFTER 12.01.2009 IS NOTHING BUT PURCHASES MADE OUTSIDE THE BOOKS OF ACCOUNT. THEREFORE, THE ASSESSING OFFICER ESTIMATED THE VALUE OF 1297 MT OF JAGGERY AT ` 3,55,16,000/- AND MADE THE ADDITION. ACCORDING TO THE LD. D.R., THE ASSESSEE SIMPLY CLAIMED THAT THE PURCHASES WERE MADE IN CASH JUST TO BALANC E THE BOOKS OF ACCOUNT AFTER 12.01.2009. ACCORDING TO THE LD. D.R ., THE PURCHASES WERE MADE OUTSIDE THE BOOKS OF ACCOUNT PRIOR TO ACC OUNTING OF SUCH 5 I.T.A. NO.2554/MDS/14 PURCHASES. THEREFORE, THE ASSESSING OFFICER HAS RI GHTLY MADE THE ADDITION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMED THAT 2766.617 MT OF JAGGERY WAS SUPPLIED TO TAMIL NADU CIVIL SUPPLIES CORPORATION LTD. BEFORE 12.01.2009. THE ASSESSEE HAS ALSO CLAIMED THAT 1171 MT WAS PURCHASED FROM TH E TRADERS AND ANOTHER 298.620 MT WAS PURCHASED FROM THE FARMERS I N CASH BEFORE 12.01.2009. THE ASSESSING OFFICER FOUND THAT THE E XCESS QUANTITY OF 1297 MT OF JAGGERY WAS SUPPLIED TO TAMIL NADU CI VIL SUPPLIES CORPORATION LTD. FOR PONGAL BEFORE 12.01.2009 OUTSI DE THE BOOKS OF ACCOUNT FROM UNEXPLAINED SOURCES. THE ASSESSING OF FICER HAS ALSO FOUND THAT THE PURCHASES MADE AFTER 13.01.2009 ARE SHOWN IN THE BOOKS OF ACCOUNT AS MADE IN CASH. IT SHOWS THAT TH E ASSESSEE HAS PURCHASED TO SOME EXTENT OUTSIDE THE BOOKS PRIOR TO 12.01.2009. THE ASSESSING OFFICER FURTHER FOUND THAT AFTER RECE IPT OF MONEY FROM TAMIL NADU CIVIL SUPPLIES CORPORATION LTD., CASH TO THE EXTENT OF ` 3.30.CRORES WAS WITHDRAWN FROM THE BANK AND CASH PU RCHASES WERE BOOKED IN THE BOOKS OF ACCOUNT. THE WITHDRAWA L OF MONEY FROM BANK WAS SHOWN AS PAID FOR THE FICTITIOUS PURC HASE OF JAGGERY. 6 I.T.A. NO.2554/MDS/14 THE QUESTION ARISES FOR CONSIDERATION IS WHETHER TH E ASSESSEE HAD SURPLUS CASH BALANCE FOR MAKING PURCHASES TO THE EX TENT OF 1297 MT ON THE DATE OF PURCHASE? THE ASSESSEE CLAIMS TH AT THE PURCHASES WERE MADE ON CREDIT BASIS AND THE PAYMENT S WERE MADE AT A LATER STAGE. THIS CONTENTION OF THE ASSESSEE WAS DISBELIEVED BY THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS). THE CIT(APPEALS), AFTER REFERRING TO RULE 6DD(E) OF INC OME TAX RULES, 1962, FOUND THAT IT WAS AN USUAL PRACTICE AMONG THE FARMERS TO INSIST CASH PAYMENTS AND RULE 6DD(E) PROVIDES FOR E XEMPTION OF SUCH CASH PAYMENTS. IT IS ALSO TO BE SEEN THAT DEP ENDING UPON THE CREDITWORTHINESS OF THE MERCHANTS, JAGGERY MAY ALSO BE PURCHASED ON CREDIT BASIS. HOWEVER, IT WOULD DEPEND UPON THE SITUATION WHICH PREVAILS IN A PARTICULAR VILLAGE AND THE RESPECT TH AT MERCHANTS COMMEND IN THE LOCALITY. THEREFORE, THE INDEPENDEN T FARMERS HAVE TO BE EXAMINED AND FIND OUT WHETHER THE JAGGERY WAS SOLD BY THE INDEPENDENT FARMERS ON CREDIT BASIS OR ON RECEIPT O F MONEY. UNFORTUNATELY, THE ASSESSING OFFICER HAS NOT TAKEN ANY STEP TO EXAMINE THE FARMERS FROM WHOM THE JAGGERY WAS PURCH ASED. IT IS ALSO TO BE EXAMINED WHETHER THE PURCHASES WERE MADE FROM THE TRADERS. SINCE SUCH AN EXERCISE WAS NOT DONE BY TH E ASSESSING OFFICER BY EXAMINING THE FARMERS AND TRADERS FROM W HOM THE 7 I.T.A. NO.2554/MDS/14 PURCHASES WERE MADE, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSE SSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE AFRESH AFTER EXAMINING THE FARMERS AND TRADERS FROM WHOM THE ASSESSEE CLAI MS TO HAVE PURCHASED JAGGERY AND THEREAFTER DECIDE THE ISSUE A FTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. THE NEXT ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO DISALLOWANCE OF THE RENT PAID BY THE ASSESSEE TO SH RI K. SOUNDARAJAN. 7. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE HAS PAID ` 5,50,000/- TOWARDS RENT FOR THE FACTORY BUILDING AT KANNAMPALAYAM TO M/S SRI RAJESHWARI TEX TILES. HOWEVER, TAX WAS NOT DEDUCTED AS REQUIRED UNDER SEC TION 194-I OF THE ACT. HENCE, ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER DISALLOWED THE CLAIM UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS ALREADY PAID T HE AMOUNT, THEREFORE, NO AMOUNT REMAINS TO BE PAYABLE. IN VIE W OF THE DECISION OF SPECIAL BENCH IN MERILYN SHIPPING AND TRANSPORT V. ACIT (2012) 8 I.T.A. NO.2554/MDS/14 16 ITR (TRIB.) 1 (SB), ACCORDING TO THE LD. COUNSEL , THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX. 8. ON THE CONTRARY, DR. B. NISCHAL, THE LD. DEPARTM ENTAL REPRESENTATIVE, SUBMITTED THAT THE DECISION OF SPEC IAL BENCH IN MERILYN SHIPPING AND TRANSPORT (SUPRA) WAS HELD TO BE NOT A GOOD LAW BY GUJARAT HIGH COURT IN CIT V. SIKANDARKHAN N. TUNVAR (2013) 357 ITR 312 AND CALCUTTA HIGH COURT IN CIT V. CRESC ENT EXPORT SYNDICATE (2013) 262 CTR 525. UNDER THE SCHEME OF INCOME-TAX ACT, THE ASSESSEE HAS TO DEDUCT TAX WHILE MAKING TH E PAYMENT OR GIVING CREDIT IN THE BOOKS OF ACCOUNT. IN THIS CAS E, THE ASSESSEE HAS ALREADY PAID THE AMOUNT. THE TDS HAS TO BE MADE AT THE TIME OF PAYMENT, OTHERWISE THE ENTIRE SCHEME OF INCOME-TAX ACT WOULD HAVE NO MEANING. THE AMOUNT WHICH REMAINS TO BE PA YABLE IS NOT SUBJECT MATTER OF ANY TDS UNDER THE SCHEME OF INCOM E-TAX ACT. THEREFORE, THE DISALLOWANCE CANNOT BE MADE ON THE A MOUNT WHICH REMAINS TO BE PAYABLE UNLESS THE SAME WAS GIVEN CRE DIT IN THE BOOKS OF ACCOUNT. IN THE CASE BEFORE US, THE ASSES SEE HAS ADMITTEDLY PAID THE AMOUNTS, THEREFORE, THE ASSESSE E IS EXPECTED TO DEDUCT TAX AT THE TIME OF PAYMENT. THE CONTENTION OF THE ASSESSEE THAT THE TAX HAS TO BE DEDUCTED ONLY ON THE AMOUNT REMAINS TO BE 9 I.T.A. NO.2554/MDS/14 PAYABLE AND THE AMOUNT ALREADY PAID CANNOT BE A SUB JECT MATTER OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IS, ACCORDING TO THE LD. D.R., CONTRARY TO THE SCHEME OF INCOME-TAX ACT. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN THE CASE BEFORE US, THE ASSESSEE HAS ADMITTEDLY PAID THE AMO UNTS, THEREFORE, THE ASSESSEE IS EXPECTED TO DEDUCT TAX AT THE TIME OF PAYMENT. THE CONTENTION OF THE ASSESSEE THAT THE TAX HAS TO BE D EDUCTED ONLY ON THE AMOUNT REMAINS TO BE PAYABLE AND THE AMOUNT ALR EADY PAID CANNOT BE A SUBJECT MATTER OF DISALLOWANCE UNDER SE CTION 40(A)(IA) OF THE ACT IS CONTRARY TO THE SCHEME OF INCOME-TAX ACT. IN CASE THE ASSESSEE GIVES CREDIT IN THE BOOKS OF ACCOUNT AND T HE AMOUNT WAS NOT ACTUALLY PAID, THEN THE ASSESSEE HAS TO NATURAL LY DEDUCT TAX AND CLAIM THE AMOUNT AS EXPENDITURE IN MERCANTILE SYSTE M OF ACCOUNTING. 10. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF ALLAHABAD HIGH COURT IN VECTOR SHIPPING SERVICES (P.) LTD. (S UPRA). THE ALLAHABAD HIGH COURT HAS NOT DISCUSSED ELABORATELY ABOUT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND SIMP LY REFERRED THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN MERIL YN SHIPPING AND 10 I.T.A. NO.2554/MDS/14 TRANSPORT (SUPRA) AND CONFIRMED THE ORDER OF THIS T RIBUNAL. HOWEVER, THE CALCUTTA HIGH COURT IN CRESCENT EXPORT SYNDICATE (SUPRA) AND THE GUJARAT HIGH COURT IN SIKANDARKHAN N. TUNVAR (SUPRA) EXAMINED THE ISSUE ELABORATELY. IN FACT, T HE COCHIN BENCH OF THIS TRIBUNAL IN SHRI THOMAS GEORGE MUTHOOT V. A CIT IN I.T.A. NO. 63 & 64/COCH/2014 DATED 28.08.2014, OBSERVED AS FOLLOWS:- 11. THE NEXT CONTENTION OF THE ASSESSEE IS THAT THE HAS ALREADY PAID THE AMOUNT, PROVISIONS OF SECTION 40(A)(IA) IS APPLICABLE ONLY IN RESPECT OF AMOUNT WHICH REMAINS TO BE PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR. THE LD. REPRESENTATIVE PLACED HIS RELIANCE ON THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN MERILYN SHIPPING AND TRAN SPORT V. ADDL.CIT (2012) 70 DTR 81 AND ALSO THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN CIT VS M/S VECTOR SHIPPING SERVICES (P) LTD. I.T.A. NO. 122 OF 2013 JUDGMENT DATED 09-0 7-2013 AND SUBMITTED THAT THE SLP FILED BY THE REVENUE IN THE APEX COURT AGAINST THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN M/S VECTOR SHIPPING SERVICES (P) LTD. (SUPRA) IS DISMISSED BY THE APEX COURT. IT IS WELL SETTLED PRINCIPLES OF LAW THAT T HE LAW LAID DOWN BY THE APEX COURT IS BINDING ON ALL COURTS AND AUTH ORITIES INCLUDING THIS TRIBUNAL UNDER ARTICLE 141 OF THE CO NSTITUTION OF INDIA. IT IS ALSO EQUALLY SETTLED PRINCIPLE THAT A DISMISSAL OF SLP WITHOUT ANY DISCUSSION IS NOT THE LAW DECLARED BY T HE APEX COURT. THE APEX COURT THOUGHT IT FIT THAT IT WAS N OT A FIT CASE TO BE ADMITTED FOR CONSIDERATION. THEREFORE, WHILE DI SMISSING THE SLP, THE APEX COURT DID NOT DECLARE ANY LAW. HENCE , WE CANNOT SAY THAT THE APEX COURT HAS DECLARED THE LAW DECLARING THAT SECTION 40(A)(IA) IS APPLICABLE ONLY IN RESPEC T OF THE AMOUNTS REMAINS TO BE PAYABLE AT THE LAST DAY OF TH E FINANCIAL YEAR. 12. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMEN T OF THE ALLAHABAD HIGH COURT IN CIT VS M/S VECTOR SHIPPING SERVICES (P) LTD (SUPRA), COPY OF WHICH IS FILED BY THE ASSE SSEE. THE ALLAHABAD HIGH COURT, AFTER REPRODUCING THE RELEVAN T PARAGRAPH FROM THE ORDER OF CIT(A) AND REFERRING TO THE DECIS ION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN MERILYIN SHIPPING & TRANSPORTS (SUPRA) FOUND THAT THE TRIBUNAL HAS NOT COMMITTED A N ERROR. IT IS OBVIOUS THAT THERE IS NO DISCUSSION ABOUT THE CORRE CTNESS OR 11 I.T.A. NO.2554/MDS/14 OTHERWISE OF THE DECISION RENDERED BY THE SPECIAL B ENCH OF THIS TRIBUNAL IN MERILYN SHIPPING & TRANSPORTS (SUPRA). HOWEVER, WE FIND THAT THE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIKANDARKHAN N TUNVAR ITA NOS 905 OF 2012, 709 & 71 0 OF 2012, 333 OF 2013, 832 OF 2012, 857 OF 2012, 894 OF 2012, 928 OF 2012, 12 OF 2013, 51 OF 2013, 58 OF 2013 AND 218 OF 2013 JUDGMENT DATED 02-05-2013 CONSIDERED THE DECISION O F THE SPECIAL BENCH OF THIS TRIBUNAL IN MERILYN SHIPPING & TRANSPORTS (SUPRA) AND SPECIFICALLY DISAGREED WITH THE PRINCIP LES LAID DOWN BY THE SPECIAL OF THIS TRIBUNAL IN MERILYN SHIPPING & TRANSPORTS (SUPRA). THE CALCUTTA HIGH COURT ALSO IN THE CASE O F CRESCENT EXPORTS SYNDICATE & ANOTHER IN ITAT 20 OF 2013 AND GA 190 OF 2013 JUDGMENT DATED 03-04-2013 CONSIDERED ELABORATE LY THE JUDGMENT OF THE SPECIAL BENCH OF THIS TRIBUNAL IN M ERILYN SHIPPING & TRANSPORTS (SUPRA) AND FOUND THAT THE DE CISION RENDERED BY THE SPECIAL BENCH OF THIS TRIBUNAL IS N OT THE CORRECT LAW. IT IS WELL SETTLED PRINCIPLES OF LAW THAT WHEN DIFFERENT HIGH COURTS EXPRESSED DIFFERENT OPINIONS ON A POINT OF L AW, THEN, NORMALLY, THE BENEFIT OF DOUBT UNDER THE TAXATION L AW WOULD GO TO THE ASSESSEE. IT IS ALSO EQUALLY SETTLED PRINCIP LES OF LAW THAT THE JUDGMENT WHICH DISCUSSES THE POINT IN ISSUE ELA BORATELY AND GIVES AN ELABORATE REASONING HAS TO BE PREFERRED WH EN COMPARED TO THE JUDGMENT WHICH HAS NO REASONING AND DISCUSSION. ADMITTEDLY, THE CALCUTTA HIGH COURT AND GUJARAT HIGH COURT HAVE DISCUSSED THE ISSUE ELABORATELY AND THE SPECIFIC REASONING HAS ALSO BEEN RECORDED AS TO WHY THE SPECIAL BENCH IS NOT CORRECT. THEREFORE, THIS TRIBU NAL IS OF THE CONSIDERED OPINION THAT THE JUDGMENTS OF THE CALCUT TA HIGH COURT CRESCENT EXPORTS SYNDICATE & ANOTHER (SUPRA) AND GUJARAT HIGH COURT IN SIKANDARKHAN N TUNVAR (SUPRA) HAVE TO BE PREFERRED WHEN COMPARED TO THE ALLAHABAD HIGH CO URT IN M/S VECTOR SHIPPING SERVICES (P) LTD (SUPRA). 13. FOR THE PURPOSE OF CONVENIENCE WE REPRODUCING BELOW THE OBSERVATIONS MADE BY THE CALCUTTA HIGH COURT IN CRE SCENT EXPORTS SYNDICATE & ANOTHER (SUPRA) AND GUJARAT HIG H COURT IN SIKANDARKHAN N TUNVAR (SUPRA): CALCUTTA HIGH COURT IN CRESCENT EXPORTS SYNDICATE & ANOTHER (SUPRA) 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. WE ALREADY HAVE QUOTED EXTENSIVELY BOTH THE MAJORITY AND THE MINORITY VIEWS EXPRESSED IN THE AF ORESAID CASE. THE MAIN THRUST OF THE MAJORITY VIEW IS BASED ON THE 12 I.T.A. NO.2554/MDS/14 FACT THAT THE LEGISLATURE HAS REPLACED THE EXPRESS ION AMOUNTS CREDITED OR PAID WITH THE EXPRESSION PAY ABLE IN THE FINAL ENACTMENT. COMPARISON BETWEEN THE PRE-AMENDMENT AND POST AMENDMENT LAW IS PERMISSIBLE FOR THE PURPOSE O F 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 CA SE OF CIT VS. KELVINATOR REPORTED IN 2010(2) SCC 723. BUT THE SAME COMPARISON BETWEEN THE DRAFT AND THE ENACTED L AW IS NOT PERMISSIBLE. NOR CAN THE DRAFT OR THE BILL B E USED FOR THE PURPOSE OF REGULATING THE MEANING AND PURPORT O F 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 AN Y COMPARISON BETWEEN THE DRAFT AND THE SECTION ACTUAL LY ENACTED NOR WAS IT OPEN TO SPECULATE AS TO THE EFFE CT 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 WHI CH 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 SEE K TO JUSTIFY THAT THIS FICTION CANNOT BE EXTENDED AN Y FURTHER AND, THEREFORE, CANNOT BE INVOKED BY ASSESSING OFFI CER TO DISALLOW THE GENUINE 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 MIN D THAT THE LEARNED TRIBUNAL REALIZED THE MEANING AND PURPO RT OF SECTION 40(A)(IA) CORRECTLY WHEN IT HELD THAT IN CA SE OF OMISSION TO DEDUCT TAX EVEN THE GENUINE AND ADMISSI BLE EXPENSES ARE TO BE DISALLOWED. BUT THEY SOUGHT TO R EMOVE THE RIGOUR OF THE LAW BY HOLDING THAT THE DISALLOWA NCE SHALL BE RESTRICTED TO THE MONEY WHICH IS YET TO BE PAID. WHAT THE TRIBUNAL BY MAJORITY DID WAS TO SUPPLY THE CASU S OMISSUS WHICH WAS NOT PERMISSIBLE AND COULD ONLY HA VE BEEN DONE BY THE SUPREME COURT IN AN APPROPRIATE CA SE. REFERENCE IN THIS REGARD MAY BE MADE TO THE JUDGMEN T IN 13 I.T.A. NO.2554/MDS/14 THE CASE OF BHUWALKA STEEL INDUSTRIES VS. BOMBAY IR ON & 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 ENGAGED OR TO BE ENGAGED IN ANY SCHEDULED EMPLOYMENT. THE CONTENTION RAISED WITH REFERENCE T O WHAT WAS THERE IN THE BILL WAS REJECTED BY THE SUPR EME COURT BY HOLDING AS FOLLOWS: IT MUST, AT THIS JUNC TURE, BE NOTED THAT IN SPITE OF SECTION 2(11), WHICH INCLUDE D THE WORDS BUT FOR THE PROVISIONS OF THIS ACT IS NOT AD EQUATELY PROTECTED BY LEGISLATION FOR WELFARE AND BENEFITS O F THE LABOUR FORCE IN THE STATE, THESE PRECISE WORDS WER E REMOVED BY THE LEGISLATURE AND THE DEFINITION WAS M ADE LIMITED AS IT HAS BEEN FINALLY LEGISLATED UPON. IT IS TO BE NOTED THAT WHEN THE BILL CAME TO BE PASSED AND RECE IVED THE ASSENT OF THE VICE-PRESIDENT ON 05-06-1969 AND WAS FIRST PUBLISHED IN THE MAHARASHTRA GOVERNMENT GAZET TE EXTRAORDINARY, PART IV ON 13-06-1969, THE AFOREMENT IONED WORDS WERE OMITTED. THEREFORE, T HIS WOULD BE A CLE AR POINTER TO THE LEGISLATIVE INTENT THAT THE LEGISLAT URE BEING CONSCIOUS OF THE FACT AND BEING ARMED WITH ALL THE COMMITTEE REPORTS AND ALSO BEING ARMED WITH THE FAC TUAL DATA, DELIBERATELY AVOIDED THOSE WORDS. WHAT THE APPELLANTS ARE ASKING WAS TO READ IN THAT DEFINITIO N, THESE PRECISE WORDS, WHICH WERE CONSCIOUSLY AND DELIBERAT ELY OMITTED FROM THE DEFINITION. THAT WOULD AMOUNT TO SUPPLYING THE CASUS OMISSUS AND WE DO NOT THINK THA T IT IS POSSIBLE, PARTICULARLY, IN THIS CASE. THE LAW OF SU PPLYING 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 SU PPLYING OF THIS CASUS OMISSUS WOULD BE EXTREMELY NECESSARY DUE TO THE INADVERTENT OMISSION ON THE PART OF THE LEGI SLATURE. 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 EX PENSES ARE SOUGHT TO BE DISALLOWED? THE ANSWER IS BOUND T O BE THOSE EXPENSES ON WHICH TAX IS DEDUCTIBLE AT SOURC E 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 AM OUNT IS PAYABLE, IT CAN NEITHER BE PAID NOR CREDITED. IF N AMOUNT HAS NEITHER BEEN PAID NOR CREDITED, THERE CAN BE NO OCCASION FOR CLAIMING ANY DEDUCTION. 14 I.T.A. NO.2554/MDS/14 THE LANGUAGE USED IN THE DRAFT WAS UNCLEAR AND SUSCEPTIBLE TO GIVING MORE THAN ONE MEANING. BY LOO KING AT THE DRAFT IT COULD BE SAID THAT THE LEGISLATURE WANTED TO TREAT THE PAYMENTS MADE OR CREDITED IN FAVOUR OF A CONTRACTOR OF SUBCONTRACTOR DIFFERENTLY THAN THE PA YMENTS ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, FE ES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S BECAUSE THE WORDS MOUNTS CREDITED OR PAID WERE US ED ONLY IN RELATION TO A CONTRACTOR OF SUB-CONTRACTOR. 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 ACCOUN T OF INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, F EES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S OR TO A CONTRACTOR OF SUB-CONTRACTOR SHALL NOT BE DEDUCTED IN COM PUTTING THE INCOME OF AN ASSESSEE IN CASE HE HAS NO T DEDUCTED, OR AFTER DEDUCTION HAS NOT PAID WITHIN TH E SPECIFIED TIME. THE LANGUAGE USED BY THE LEGISLATUR E IN THE FINALLY ENACTED LAW IS CLEAR AND UNAMBIGUOUS WHEREA S 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. THER E CAN BE NO DENIAL THAT THE PROVISION IN QUESTION IS HARSH. BUT THAT IS NO GROUND TO READ THE SAME IN A MANNER WHICH WAS NOT INTENDED BY THE LEGISLATURE. THIS IS OUR AN SWER TO THE SUBMISSION OF MR. BAGCHI. THE SUBMISSION OF MR. ROYCHOWDHURI THAT THE SECOND PROVISO SOUGHT TO BECO ME EFFECTIVE FROM 1ST APRIL, 2013 SHOULD BE HELD TO HA VE ALREADY BECOME OPERATIVE PRIOR TO THE APPOINTED DAT E CANNOT ALSO BE ACCEDED TO FOR THE SAME REASON INDIC ATED ABOVE. THE LAW WAS DELIBERATELY MADE HARSH TO SECUR E COMPLIANCE OF THE PROVISIONS REQUIRING DEDUCTIONS O F TAX AT SOURCE. 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 CA SE OF MERILYN SHIPPING & TRANSPORTS ARE NOT ACCEPTABLE. T HE SUBMISSIONS ADVANCED BY LEARNED ADVOCATES HAVE ALRE ADY BEEN DEALT WITH AND REJECTED. GUJARAT HIGH COURT IN SIKANDARKHAN N TUNVAR(SUPRA ) 23. DESPITE THIS NARROW INTERPRETATION OF SECTION 40(A)(IA), THE QUESTION STILL SURVIVES IF THE TRIBUNAL IN CASE OF M/S MERILYN SHIPPING & TRANSPORS VS. ACIT (SUPRA) WAS ACCURATE IN ITS OPINION. IN THIS CONTEXT, WE WOULD LIKE TO EXAMINE TWO ASPECTS. FIRSTLY, WHAT WOULD BE THE COR RECT INTERPRETATION OF THE SAID PROVISION. SECONDLY, WHE THER OUR SUCH UNDERSTANDING OF THE LANGUAGE USED BY THE 15 I.T.A. NO.2554/MDS/14 LEGISLATURE SHOULD WAVER ON THE PREMISE THAT AS PROPOUNDED BY THE TRIBUNAL, THIS WAS A CASE OF CONS CIOUS OMISSION ON THE PART OF THE PARLIAMENT. BOTH THESE ASPECTS WE WOULD ADDRESS ONE AFTER ANOTHER. IF ONE LOOKS CL OSELY TO THE PROVISION, IN QUESTION, ADVERSE CONSEQUENCES OF NOT BEING ABLE TO CLAIM DEDUCTION ON CERTAIN PAYMENTS IRRESPECTIVE OF THE PROVISIONS CONTAINED IN SECTION S 30 TO 38 OF THE ACT WOULD FLOW IF THE FOLLOWING REQUIREME NTS ARE SATISFIED:- (A) THERE IS INTEREST, COMMISSION OR BROKERAGE, REN T, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO RESIDENT OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR BEING RESIDENT FOR CAR RYING OUT ANY WORK. (B) THESE AMOUNTS ARE SUCH ON WHICH TAX IS DEDUCTIB LE AT SOURCE UNDER XVIII-B. (C) SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTI ON HAS NOT BEEN PAID ON OR BEFORE DUE DATE SPECIFIED IN SU B- SECTION (1) OF SECTION 39. FOR THE PURPOSE OF CURRENT DISCUSSION REFERENCE T O THE PROVISO IS NOT NECESSARY. 24. WHAT THIS SUB-SECTION, THEREFORE, REQUIRES IS T HAT THERE SHOULD BE AN AMOUNT PAYABLE IN THE NATURE DESCRIBED ABOVE, WHICH IS SUCH ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B BUT SUCH TAX HAS NOT BEEN DEDU CTED OR IF DEDUCTED NOT PAID BEFORE THE DUE DATE. THIS P ROVISION NOWHERE REQUIRES THAT THE AMOUNT WHICH IS PAYABLE M UST REMAIN SO PAYABLE THROUGHOUT DURING THE YEAR. TO RE ITERATE THE PROVISION HAS CERTAIN STRICT AND STRINGENT REQU IREMENTS BEFORE THE UNPLEASANT CONSEQUENCES ENVISAGED THEREI N CAN BE APPLIED. WE ARE PREPARED TO AND WE ARE DUTY BOUND TO INTERPRET SUCH REQUIREMENTS STRICTLY. SUCH REQUIREMENTS, HOWEVER, CANNOT BE ENLARGED BY ANY ADDITION OR SUBTRACTION OF WORDS NOT USED BY THE LEGISLATURE. THE TERM USED IS INTEREST, COMMISSION, BROKERAGE ETC. IS PAYABLE TO A RESIDENT OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR FOR CARRY ING OUT ANY WORK. THE LANGUAGE USED IS NOT THAT SUCH AMOUNT MUST CONTINUE TO REMAIN PAYABLE TILL THE END OF THE ACCOUNTING YEAR. ANY SUCH INTERPRETATION WOULD REQU IRE READING WORDS WHICH THE LEGISLATURE HAS NOT USED. N O SUCH INTERPRETATION WOULD EVEN OTHERWISE BE JUSTIFIED BE CAUSE IN OUR OPINION, THE LEGISLATURE COULD NOT HAVE INTENDE D TO BRING ABOUT ANY SUCH DISTINCTION NOR THE LANGUAGE U SED IN THE SECTION BRINGS ABOUT ANY SUCH MEANING. IF THE INTERPRETATION S ADVANCED BY THE ASSESSEES IS ACCEP TED, IT WOULD LEAD TO A SITUATION WHERE THE ASSESSEE THOUGH WAS 16 I.T.A. NO.2554/MDS/14 REQUIRED TO DEDUCT THE TAX AT SOURCE BUT NO SUCH DE DUCTION WAS MADE OR MORE FLAGRANTLY DEDUCTION THOUGH MADE I S NOT PAID TO THE GOVERNMENT, WOULD ESCAPE THE CONSEQUENCE ONLY BECAUSE THE AMOUNT WAS ALREADY PAI D OVER BEFORE THE END OF THE YEAR IN CONTRAST TO ANOT HER ASSESSEE WHO WOULD OTHERWISE BE IN SIMILAR SITUATIO N BUT IN WHOSE CASE THE AMOUNT REMAINED PAYABLE TILL THE END OF THE YEAR. WE SIMPLY DO NOT SEE ANY LOGIC WHY THE LEGISLATURE WOULD HAVE DESIRED TO BRING ABOUT SUCH IRRECONCILABLE AND DIVERSE CONSEQUENCES. WE HASTEN TO ADD THAT THIS IS NOT THE PRIME BASIS ON WHICH WE HA VE ADOPTED THE INTERPRETATION WHICH WE HAVE GIVEN. IF THE LANGUAGE USED BY THE PARLIAMENT CONVEYED SUCH A MEANING, WE WOULD NOT HAVE HESITATED IN ADOPTING SU CH AN INTERPRETATION. WE ONLY HIGHLIGHT THT WE WOULD NOT READILY ACCEPT THAT THE LEGISLATURE DESIRED TO BRING ABOUT AN INCONGRUOUS AND SEEMINGLY IRRECONCILABLE CONSEQUENC ES. THE DECISION OF HE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX, GUJARAT VS. ASHOKBHAI CHIMANBHAI (SUPRA), WOULD NO6T ALTER THIS SITUATION . THE SAID DECISION, OF COURSE, RECOGNIZES THE CONCEPT OF ASCERTAINING THE PROFIT AND LOSS FROM THE BUSINESS OR PROFESSION WITH REFERENCE TO A CERTAIN PERIOD I.E. THE ACCOUNTING YEAR. IN THIS CONTEXT, LAST DATE OF SUCH ACCOUNTING PERIOD WOULD ASSUME CONSIDERABLE SIGNIFICANCE. HOWEVER, THIS DECISION NOWHERE INDICA TES THAT THE EVENTS WHICH TAKE PLACE DURING THE ACCOUNT ING PERIOD SHOULD BE IGNORED AND THE ASCERTAINMENT OF F ULFILLING A CERTAIN CONDITION PROVIDED UNDER THE STATUTE MUST BE JUDGED WITH REFERENCE TO LAST DATE OF THE ACCOUNTIN G PERIOD. PARTICULARLY, IN THE CONTEXT OF REQUIREMENTS F SECT ION 40(A)(IA) OF THE ACT, WE SEE NO WARRANT IN THE SAID DECISION OF THE SUPREME COURT TO APPLY THE TEST OF PAYABILIT Y ONLY AS ON 31ST MARCH OF THE YEAR UNDER CONSIDERATION. MERE LY BECAUSE, ACCOUNTS ARE CLOSED ON THAT DATE AND THE COMPUTATION OF PROFIT AND LOSS IS TO BE JUDGED WITH REFERENCE TO SUCH DATE, DOES NOT MEAN THAT WHETHER AN AMOUNT IS PAYABLE OR NOT MUST BE ASCERTAINED ON THE STRENGTH OF THE POSITION EMERGING ON 31T MARCH. 25. THIS BRINGS US TO THE SECOND ASPECT OF THIS DIS CUSSION, NAMELY, WHETHER THIS IS A CASE OF CONSCIOUS OMISSIO N AND THEREFORE, THE LEGISLATURE MUST BE SEEN TO HAVE DELIBERATELY BROUGHT ABOUT A CERTAIN SITUATION WHIC H DOES NOT REQUIRE ANY FURTHER INTERPRETATION. THIS IS THE FUNDAMENTAL ARGUMENT OF THE TRIBUNAL IN THE CASE OF M/S MERILYN SHIPPING & TRANSPORTS VS. ACIT (SUPRA) TO A DOPT A PARTICULAR VIEW. 17 I.T.A. NO.2554/MDS/14 26. WHILE INTERPRETING A STATUTORY PROVISION THE CO URTS HAVE OFTEN APPLIED HYDENS RULE OR THE MISCHIEF RUL E AND ASCERTAINED WHAT WAS THE POSITION BEFORE THE AMENDM ENT, WHAT THE AMENDMENT SOUGHT TO REMEDY AND WHAT WAS TH E EFFECT OF THE CHANGES. 27 TO 36.. 37. IN OUR OPINION, THE TRIBUNAL COMMITTED AN ERROR IN APPLYING THE PRINCIPLE OF CONSCIOUS OMISSION IN THE PRESENT CASE. FIRSTLY, AS ALREADY OBSERVED, WE HAVE SERIOUS DOUBT WHETHER SUCH PRINCIPLE CAN BE APPLIED BY COMPARING THE DRAFT PRESENTED IN PARLIAMENT AND ULTIMATE LEGISLAT ION WHICH MAY BE PASSED. SECONDLY, THE STATUTORY PROVIS IONS IS AMPLY CLEAR. 38. IN THE RESULT, W ARE OF THE OPINION THAT SECTIO N 40(A)(IA) WOULD COVER NOT ONLY TO THE AMOUNTS WHICH ARE PAYAB LE AS ON 20 ITA NO. 63&64M 83-85&7-72/COCH/2014 31ST MARCH OF A PARTICULAR YEAR BUT ALSO WHICH ARE PAYAB LE AT ANY TIME DURING THE YEAR. OF COURSE, AS LONG AS THE OTHER REQUIREMENT OF THE SAID PROVISION EXIST. IN THAT CO NTEXT, IN OUR OPINION THE DECISION OF THE SPECIAL BENCH OF TH E TRIBUNAL IN THE CASE OF M/S MERILYN SHIPPING & TRAN SPORTS VS ACIT (SUPRA), DOES NOT LAY DOWN CORRECT LAW. 14. BY FOLLOWING THE JUDGMENTS OF THE CALCUTTA HIG H COURT IN CRESCENT EXPORT SYNDICATE (SUPRA) AND THE GUJARAT HIGH COURT IN SIKANDARKHAN N TUNVAR (SUPRA), THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN T HE CASE OF M/S MERILYN SHIPPING & TRANSPORTS (SUPRA) AND THE JUDGMENT OF T HE ALLAHABAD HIGH COURT IN VECTOR SHIPPING SERVICES (P) LTD (SUPRA) A RE NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION WHEREAS T HE JUDGMENTS OF THE CALCUTTA HIGH COURT IN CRESCENT EXPORT SYNDICATE (S UPRA) AND THE GUJARAT HIGH COURT IN SIKANDARKHAN N TUNVAR (SUPRA) ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE. RESPECTFULLY F OLLOWING THE JUDGMENTS OF THE CALCUTTA HIGH COURT IN CRESCENT EXPORT SYNDI CATE (SUPRA) AND THE GUJARAT HIGH COURT IN SIKANDARKHAN N TUNVAR (SU PRA), WE DO NOT SEE ANY INFIRMITY IN THE ORDERS OF THE LOWER AUTHOR ITIES. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE CONFIRMED. THIS DECISION OF COCHIN BENCH OF THIS TRIBUNAL WAS CONFIRMED BY THE KERALA HIGH COURT BY JUDGMENT DATED 3 RD JULY, 2015 IN SHRI GEORGE MUTHOOT V. CIT IN ITA.NO.278 OF 2014 AS FOL LOWS:- 18 I.T.A. NO.2554/MDS/14 17. ANOTHER CONTENTION THAT WAS PRESSED INTO SERVICE WAS THAT THE APPELLANTS HAD ALREADY PAID THE AMOUNT AND THER EFORE, THE PROVISIONS OF SECTION 40(A)(IA), APPLICABLE ONLY IN R ESPECT OF THE AMOUNT WHICH REMAINS TO BE PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR, IS NOT ATTRACTED. THEREFORE, ACCORDING TO TH E APPELLANTS, DISALLOWANCE CANNOT BE SUSTAINED. THIS CONTENTION WAS SOUGHT TO BE SUBSTANTIATED BY RELYING ON THE JUDGMENT OF THE ALL AHABAD HIGH COURT IN COMMISSIONER OF INCOME TAX V. VECTOR SHIPPI NG SERVICES (P) [(2013) 357 ITR 642 (ALL)]. PRIMARILY, THIS CONTENTION SHOULD BE ANSWERED WITH REFERENCE TO THE LANGUAGE USED IN THE STATUTORY PROVISION. SECTION 40(A)(IA) MAKES IT CLEAR THAT THE CONSEQUENCE OF DISALLOWANCE IS ATTRACTED WHEN AN INDIVIDUAL, WHO I S LIABLE TO DEDUCT TAX ON ANY INTEREST PAYABLE TO A RESIDENT ON WHICH T AX IS DEDUCTIBLE AT SOURCE, COMMITS DEFAULT. THE LANGUAGE OF THE SE CTION DOES NOT WARRANT AN INTERPRETATION THAT IT IS ATTRACTED ONLY IF THE INTEREST REMAINS PAYABLE ON THE LAST DAY OF THE FINANCIAL YE AR. IF THIS CONTENTION IS TO BE ACCEPTED, THIS COURT WILL HAVE TO ALTER THE LANGUAGE OF SECTION 40(A)(IA) AND SUCH AN INTERPRETAT ION IS NOT PERMISSIBLE. THIS VIEW THAT WE HAVE TAKEN IS SUPPO RTED BY JUDGMENTS OF THE CALCUTTA HIGH COURT IN CRESCENT EX PORTS SYNDICATE AND ANOTHER [ITAT 20 OF 2013] AND THE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V. SIKANDADARKHAN N. TUNVAR [ITA NOS.905 OF 2012 & CONNECTE D CASES], WHICH HAVE BEEN RELIED ON BY THE TRIBUNAL. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE JUDGMENT OF ALLAHABAD HIGH COURT IN VECTOR SHIP PING SERVICES (P) LTD. (SUPRA) MAY NOT BE APPLICABLE TO THE FACTS OF THE CASE. BY RESPECTFULLY FOLLOWING THE JUDGMENTS OF CALCUTTA HI GH COURT IN CRESCENT EXPORT SYNDICATE (SUPRA), GUJARAT HIGH COU RT IN SIKANDARKHAN N. TUNVAR (SUPRA) AND KERALA HIGH COUR T IN SHRI GEORGE MUTHOOT (SUPRA), THE ORDERS OF THE LOWER AUT HORITIES ARE CONFIRMED. 19 I.T.A. NO.2554/MDS/14 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 7 TH APRIL, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 7 TH APRIL, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-II, COIMBATORE 4. 1 92 /CIT-III, COIMBATORE 5. 7: -2 /DR 6. ( ; /GF.