Mr. Pradeep Chhabra, Prop., Chandigarh V. Addl. CIT, Chandigarh

ITA 275/CHANDI/2010

• Counselvise Citation: 27521514 RSA 2010
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 17-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: HARRY RICKY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.275/CHD/2010 ASSESSMENT YEAR: 2006-07 SHRI PRADEEP CHHABRA, V ADDL.CIT, RANGE III PROP. M/S EXHIBITION MOVERS, CHANDIGARH. # 1712, SECTOR 22-B, CHANDIGARH. PAN: AAPPC-1114Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI HARRY RICKY RESPONDENT BY : SMT.JAISHREE SHARMA DATE OF HEARING : 24.05.2012 DATE OF PRONOUNCEMENT : 28.05.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 15.12.2009 PASSED BY THE LD . CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'TH E ACT'). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS DEFECTIVE BOTH IN LAW AND FACTS OF THE CASE 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 28,23,465/- U/S 40(A) (IA) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF ADVERTISEMENT EXPENSES ON WHICH TDS HAS NOT BEEN DEDUCTED BY THE APPELLANT. THE SAID SUM AS PAID TO AN ADVERTISING AGENCY WHICH HAS DULY REFLECTED THIS 2 AMOUNT AS INCOME RECEIPTS AND DULY PAID THE TAX THEREON. 3. ANY OTHER GROUND WHICH THE APPELLANT MAY TAKE AT THE TIME OF HEARING, WITH KIND PERMISSION. 3. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS B EFORE US, LD. 'AR' REFERRED TO THE ADDITIONAL GROUND OF A PPEAL RAISED IN THE CASE, VIDE LETTER DATED 24.05.2010. THE RELEVANT EXTRACTS OF THE GROUND OF APPEAL IS REPROD UCED HEREUNDER : THAT THE LD. CIT(A) CHANDIGARH IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS.28,23,465/- U/S 40(A)(IA)OF THE INCOME-TAX ACT,1961 ON ACCOUNT OF ADVERTISEMENT EXPENSES AS OUT OF THE ABOVESAID AMOUNT AN AMOUNT OF RS.21,69,081/- HAS ACTUALLY BEEN PAID BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION AND THE PROVISIONS OF SECTION 40(A)(IA)OF THE INCOME-TAX ACT,1961 ARE NOT APPLICABLE ON THE AMOUNTS PAID. 4. LD. 'AR', SUBMITTED THAT IN VIEW OF PLETHORA OF DECISIONS OF THE HON'BLE SUPREME COURT AND VARIOUS HIGH COURTS, THE ISSUE RAISED IN THE GROUND OF APPEAL IS LEGAL IN NATURE AND DESERVES TO BE ADMITTED. 5. LD. 'DR', ON THE OTHER HAND, DID NOT SERIOUSLY DISPUTED THE ISSUE. A BARE PERUSAL, OF THE CONTENT S OF THE ADDITIONAL GROUND OF APPEAL REVEALS THAT IT PERTAIN S TO INTERPRETATION OF THE STATUTORY PROVISIONS OF SECTI ON 40(A)(IA) OF THE ACT. THE ISSUE INVOLVED IN THE GR OUND OF APPEAL HAS BEEN DEALT WITH BY THE SPECIAL BENCH OF VISHAKHAPATNAM TRIBUNAL IN ACIT VS. MERILYN SHIPPIN G & TRANSPORTS 136 ITD 23 (VISHAKHAPATNAM). THE ISSU E RAISED IN THE GROUND OF APPEAL IS LEGAL ONE AND HEN CE, 3 THE SAME IS ADMITTED. AS CONTENDED BY THE LD. 'AR' , THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE SP ECIAL BENCH OF ITAT, VISHAKHAPATNAM BENCH (SUPRA). 6. LD. 'AR' CONTENDED THAT ONLY A SMALL AMOUNT OF RS.6,54,384/- IS PAYABLE AS ON 31.3.2006 OUT OF THE TOTAL DISALLOWANCE OF RS.28,23,464/- MADE BY THE AO U/S 40(A)(IA) OF THE ACT, ON ACCOUNT OF ADVERTISEMENT EXPENSES AND OUT OF THE ABOVESAID AMOUNT, AN AMOUNT OF RS.21,69,081/- HAS ACTUALLY BEEN PAID BY THE ASS ESSEE APPELLANT DURING THE YEAR UNDER CONSIDERATION. THEREFORE, ISSUE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE. THE RELEVANT PART OF THE SPECIAL BENCH DECISION IS REPRODUCED HEREUNDER : 12. IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENTS OF HON'BLE SUPREME COURT AND HON'BLE HIGH COURTS, MATERIALS PLACED BEFORE US, ARGUMENTS MADE BY BOTH THE SIDES AND IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, ON COMPARISON BETWEEN THE PROPOSED AND ENACTED PROVISION, THE ONLY CONCLUSION WHICH I CAN REACH IS THAT THE LEGISLATURE CONSCIOUSLY REPLACED THE WORDS 'AMOUNTS CREDITED OR PAID' WITH THE WORD 'PAYABLE' IN THE FINAL ENACTMENT. BY CHANGING THE WORDS FROM 'CREDITED' OR 'PAID' TO 'PAYABLE', THE LEGISLATIVE INTENT HAS BEEN MADE CLEAR THAT ONLY OUTSTANDING AMOUNTS OR THE PROVISIONS FOR EXPENSES LIABLE FOR TDS UNDER CHAPTER XVII-B OF THE ACT IS SOUGHT TO BE DISALLOWED IN THE EVENT THERE IS A DEFAULT IN FOLLOWING THE OBLIGATIONS CASTED UPON THE ASSESSEE UNDER CHAPTER XVII-B OF THE ACT. I AGREE WITH THE ARGUMENTS MADE BY ID. COUNSEL FOR THE ASSESSEE AND OTHER COUNSELS 4 FOR THE INTERVENES THAT WHILE INTERPRETING THE WORD 'PAYABLE' IN THIS PROVISION, THE WORD OF A STATUTE MUST BE UNDERSTOOD IN ITS NATURAL, ORDINARY OR POPULAR SENSE AND CONSTRUED ACCORDING TO ITS GRAMMATICAL MEANING. ACCORDING TO ME, SUCH CONSTRUCTION WOULD NOT LEAD TO ABSURDITY BECAUSE THERE IS NOTHING IN THIS CONTEXT OR IN THE OBJECT OF THIS STATUTE TO SUGGEST TO THE CONTRARY. IT IS A CARDINAL PRINCIPLE OF INTERPRETATION THAT THE WORDS OF A STATUTE MUST BE PRIMA FACIE GIVEN THEIR ORDINARY MEANING, WHEN THE WORDS OF THE STATUTE ARE CLEAR, PLAIN AND UNAMBIGUOUS THEN THE COURTS ARE BOUND TO GIVE EFFECT TO THAT MEANING. THE LITERAL RULE OF INTERPRETATION REALLY MEANS THAT THERE SHOULD BE NO INTERPRETATION OF THE STATUTE, RATHER IN OTHER WORDS, WE SHOULD READ THE STATUTE AS IT IS WITHOUT DOING ANY VIOLENCE TO THE LANGUAGE. IN THE PRESENT DISPUTE BEFORE US, THE WORD 'PAYABLE' USED IN SECTION 40(A)(IA) OF THE ACT IS T O BE ASSIGNED STRICT INTERPRETATION, IN VIEW OF THE OBJECT OF LEGISLATION, WHICH IS INTENDED FROM THE REPLACEMENT OF THE WORDS IN THE PROPOSED AND ENACTED PROVISION FROM THE WORDS 'AMOUNT CREDITED OR PAID' TO 'PAYABLE'. HENCE, IN MY VIEW, MY ANSWER TO THE QUESTION REFERRED BY HON'BLE PRESIDENT TO THE SPECIAL BENCH IS AS UNDER: THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY TO THE AMOUNTS OF EXPENDITURE WHICH ARE PAYABLE AS ON THE DATE 31 ST MARCH OF EVERY YEAR AND IT CANNOT BE INVOKED TO DISALLOW WHICH HAD BEEN ACTUALLY PAID DURING THE PREVIOUS YEAR, WITHOUT DEDUCTION OF TDS. 7. IN VIEW OF THE ABOVE DISCUSSIONS, IT IS EVIDENT THAT THE ISSUE RAISED BY THE ASSESSEE IS SQUARELY COVERED BY THE 5 DECISION OF THE SPECIAL BENCH OF VISHAKHAPATNAM BEN CH IN THE CASE OF MERILYN SHIPPING &TRANSPORTS V ADDL. CI T (SUPRA). THEREFORE, WE RESTORE THE ISSUE TO THE FI LE OF THE AO, WITH A VIEW TO FOLLOW THE RATIO OF THE SPECIAL BENCH DECISION AND DELETE THE DISALLOWANCE, IN RESPECT OF SUCH AMOUNT, WHICH HAS ACTUALLY BEEN PAID AND ADJUDICATE AFRESH, THE ISSUE IN QUESTION, AS PER RELEVANT PROV ISIONS OF THE ACT AND IN TERMS OF THE DECISION OF THE SPECIAL BENCH (SUPRA). THE ISSUE IS RESTORED TO THE FILE OF THE A O, FOR FRESH ADJUDICATION AFTER VERIFICATION OF THE ACTUAL PAID AMOUNT FROM THE RELEVANT RECORD, AND AFTER PROVIDIN G REASONABLE AND PROPER OPPORTUNITY TO THE ASSESSEE. 8. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MAY,2012. SD/- SD/- (H.L.KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 28 TH MAY,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH