ACIT, Circle-1, Kurnool, Kurnool V. T.Satyanarayana, Kurnool Dist., Kurnool

ITA 319/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2479 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 18-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S PRAVEENA
• Keywords: Recovery proceedings; Retrospective amendment; Question of law; Non-deduction of tax
• Section: 143(3); 194C

Judgement Text

ITA NO 31 9 OF 2016 T SATYANARAYANA KURNOOL PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI K. NARSIMHA CHARRY, JUDICIAL MEMBER ITA NO.319/HYD/2016 (ASSESSMENT YEAR: 2010-11) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1 KURNOOL (APPELLANT) VS SRI T. SATYANARAYANA VELDURTHY, KURNOOL PAN: ADKPT 8887D (RESPONDENT) FOR REVENUE : SMT. S. PRAVEENA FOR ASSESSEE : NONE O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER. THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER OF THE LEARNED CIT (A) KURNOOL FOR THE A. Y 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.WHETHER CIT(A) IS RIGHT IN DELETING THE ADDITION OF RS.1,19,15,3501- HOLDING THAT THE AMENDMENT MADE BY FINANCE ACT, 2012, IN RESPECT OF THE PROVISIONS OF SEC.40(A)(IA) WHICH IS EFFECTIVE FROM 01.04.2013 IS RETROSPECTIVE IN NATURE? 2. CIT(A) FAILED TO APPRECIATE THAT THE SUPREME COURT IN THE CASE OF GEM GRANITE VS. CIT REPORTED IN 271 ITR 322 HELD THAT NO RETROSPECTIVITY UNLESS EXPRESSL Y STATED OR CLEARLY IMPLIED. 3. CIT(A) ERRED IN NOT APPRECIATING THAT THE BENEFIC IAL PROVISION DOES NOT NECESSARILY IMPLY THAT THE AMENDMENT IS TO BE GIVEN RETROSPECTIVE EFFECT, UNLE SS DATE OF HEARING : 30.05.2017 DATE OF PRONOUNCEMENT : 02.06.2017 ITA NO 31 9 OF 2016 T SATYANARAYANA KURNOOL PAGE 2 OF 8 SPECIFICALLY MADE RETROSPECTIVE IN OPERATION AS HEL D BY THE MADRAS HIGH COURT IN CASES OF CIT VS. POOSHYA EXPORTS (P) LTD., REPORTED IN 262 ITR 417, CWT VS. RELIANCE MOTOR CO. LTD., REPORTED IN 260 ITR 571 AND CWT VS. B.R. THEATRES & INDUSTRIAL CONCERNS (P) LTD., REPORTED IN 272 ITR 177. 4. CIT(A) ERRED IN DELETING THE ADDITION MADE 1 PROPOSED BY THE AO U/S 40(A)(2) WITHOUT PROVING THE REASONABLENESS OF THE PAYMENT TO RELATIVES BY THE ASSESSEE AS HELD BY THE SUPREME COURT IN THE CASE OF NUND & SAMONTA CO.PVT LTD., VS. CIT, REPORTED IN 78 ITR 268. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE RESPONDENT ASSESSEE IS AN INDIVIDUAL AND IS IN THE BUSINESS OF EXCAVATI ON & SALE OF IRON OREFIELD. HE FILED RETURN OF INCOME FOR THE A .Y 2010-11 ON 22.11.2010 ADMITTING INCOME OF RS.22,52,468. AGAINS T THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY T HE LEARNED INCOME TAX OFFICER WARD-1 KURNOOL VIDE ORDER DATED 28.3.2013 PASSED U/S 143(3) OF THE ACT AT A TOTAL INCOME OF R S.1,78,52,818. WHILE DOING SO, THE LEARNED AO DISALLOWED A SUM OF RS.1,19,15,350 UNDER THE PROVISIONS OF SECTION 40(A )(IA) OF THE I.T. ACT ON THE GROUND THAT NO TDS WAS DEDUCTED IN RESPE CT OF THE EXPENDITURE INCURRED ON MINING AND PROCESSING CHARG ES. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE CIT (A) WHO VIDE THE IMP UGNED ORDER HAD DELETED THE ADDITION FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE INCOME TAX APPELLATE TRIBUNAL IN THE C ASE OF MERILYN SHIPPING & TRANSPORT (146 TTJ (1) AND THE HON'BLE A LLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING S ERVICES LTD REPORTED IN 357 ITR 647 WHICH HAS APPROVED THE ABOV E DECISION OF ITA NO 31 9 OF 2016 T SATYANARAYANA KURNOOL PAGE 3 OF 8 THE SPECIAL BENCH AND SUBMITTED THAT THE HON'BLE SU PREME COURT HAS DISMISSED THE SLP(2013)262 CTR (ALL)545 REPORTE D IN 357 ITR 642. BEING AGGRIEVED, THE REVENUE IS IN APPEAL. 3. THE LEARNED DR VEHEMENTLY CONTESTED THAT THE DEC ISION OF THE SPECIAL BENCH OF THE INCOME TAX APPELLATE TR IBUNAL VISAKHAPATNAM BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORT (146 TTJ (1) AND THE HON'BLE ALLAHABAD HI GH COURT DECISION CIT VS. VECTOR SHIPPING SERVICES LTD REPOR TED IN 357 ITR 647 HAD BEEN REVERSED BY THE HON'BLE SUPREME COURT IN THE CASE OF M/S. PALAM GAS SERVICE VS. CIT IN CIVIL APPEAL N O.5512 OF 2017 DATED 3 RD MAY, 2017 AND A COPY OF THE JUDGMENT WAS FILED BEF ORE US. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE DUE SERVICE OF NOTICE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THIS APPEAL IS COV ERED IN FAVOUR OF THE REVENUE BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF PALAM GAS SERVICE VS. CIT (CITED SUPRA) WHE REIN THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MERILY N SHIPPING & TRANSPORT (146 TTJ (1) AND THE HON'BLE ALLAHABAD HI GH COURT DECISION CIT VS. VECTOR SHIPPING SERVICES LTD REPOR TED IN 357 ITR 647 HAD BEEN REVERSED. THE RELEVANT PARAGRAPHS OF T HE JUDGMENT ARE REPRODUCED BELOW: 14. IN THE AFORESAID BACKDROP, LET US NOW DEAL WITH TH E ISSUE, NAMELY, THE WORD PAYABLE IN SECTION 40(A)(IA) WOULD MEAN ONLY WHEN THE AMOUNT IS PAYABLE AND NOT WHEN IT IS ACTUA LLY PAID. GRAMMATICALLY, IT MAY BE ACCEPTED THAT THE TWO WORD S, I.E. PAYABLE AND PAID , DENOTE DIFFERENT MEANINGS. THE PUNJAB & HARYANA HIGH COURT, IN P.M.S. DIESELS & ORS. , REFERRED TO ABOVE, RIGHTLY REMARKED THAT THE WORD PAYABLE IS, IN FACT, AN ITA NO 31 9 OF 2016 T SATYANARAYANA KURNOOL PAGE 4 OF 8 ANTONYM OF THE WORD PAID . AT THE SAME TIME, IT TOOK THE VIEW THAT IT WAS NOT SIGNIFICANT TO THE INTERPRETATION OF SEC TION 40(A)(IA). DISCUSSING THIS ASPECT FURTHER, THE PUNJAB & HARYAN A HIGH COURT FIRST DEALT WITH THE CONTENTION OF THE ASSESSEE THA T SECTION 40(A)(IA) RELATES ONLY TO THOSE ASSESSEES WHO FOLLO W THE MERCANTILE SYSTEM AND DOES NOT COVER THE CASES WHER E THE ASSESSEES FOLLOW THE CASH SYSTEM. THOSE CONTENTION WAS REJECTED IN THE FOLLOWING MANNER: 19. THERE IS NOTHING THAT PERSUADES US TO ACCEPT T HIS SUBMISSION. THE PURPOSE OF THE SECTION IS TO ENSURE THE RECOVERY OF TAX. WE SEE NO INDICATION IN THE SECTION THAT THIS OBJECT WAS CONF INED TO THE RECOVERY OF TAX FROM A PARTICULAR TYPE OF ASSESSEE OR ASSESSEES FOLLOWING A PARTICULAR ACCOUNTING PRACTICE. AS FAR AS THIS PROV ISION IS CONCERNED, IT APPEARS TO MAKE NO DIFFERENCE TO THE GOVERNMENT AS TO THE ACCOUNTING SYSTEM FOLLOWED BY THE ASSESSEES. THE GOVERNMENT IS INTERESTED IN THE RECOVERY OF TAXES. IF FOR SOME REASON, THE GOVERNME NT WAS INTERESTED IN ENSURING THE RECOVERY OF TAXES ONLY FROM ASSESSEES FOLLOWING THE MERCANTILE SYSTEM, WE WOULD HAVE EXPECTED THE PROVI SION TO SO STIPULATE CLEARLY, IF NOT EXPRESSLY. IT IS NOT SUGGESTED THAT ASSESSEES FOLLOWING THE CASH SYSTEM ARE NOT LIABLE TO DEDUCT TAX AT SOURCE. IT IS NOT SUGGESTED THAT THE PROVISIONS OF CHAPTER XVII-B DO NOT APPLY TO ASSESSEES FOLLOWING THE CASH SYSTEM. THERE IS NOTHING IN CHAP TER XVII-B EITHER THAT SUGGESTS OTHERWISE. 20. OUR VIEW IS FORTIFIED BY THE EXPLANATORY NOTE TO FINANCE BILL (NO. 2) OF 2004. SUB-CLAUSE (IA) OF CLAUSE (A) OF SECTIO N 40 WAS INTRODUCED BY THE FINANCE BILL (NO. 2) OF 2004 WITH EFFECT FRO M 01.04.2005. THE EXPLANATORY NOTE TO FINANCE BILL-2004 STATED: .. .. .. .. .. WITH A VIEW TO AUGMENT COMPLIANCE OF TDS PROVISIO NS, IT IS PROPOSED TO EXTEND THE PROVISIONS OF SECTION 40(A)(I) TO PAY MENTS OF INTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESSIONAL SERV ICES OR FEES FOR TECHNICAL SERVICES TO RESIDENTS, AND PAYMENTS TO A RESIDENT CONTRACTOR OR SUB-CONTRACTOR FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX HAS NOT BE EN DEDUCTED OR AFTER DEDUCTION, HAS NOT BEEN PAID BEFORE THE EXPIRY OF T HE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200 AND IN ACCORDA NCE WITH THE OTHER PROVISIONS OF CHAPTER XVII-B. 21. THE ADHERENCE TO THE PROVISIONS ENSURES NOT M ERELY THE COLLECTION OF TAX BUT ALSO ENABLES THE AUTHORITIES TO BRING WI THIN THEIR FOLD ALL SUCH PERSONS WHO ARE LIABLE TO COME WITHIN THE NETWORK O F TAX PAYERS. THE INTENTION WAS TO ENSURE THE COLLECTION OF TAX IRRES PECTIVE OF THE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEES. WE DO NOT SEE HOW THIS DUAL PURPOSE OF AUGMENTING THE COMPLIANCE OF CHAPTER XVI I AND BRINGING WITHIN THE DEPARTMENTS FOLD TAX PAYERS IS SERVED B Y CONFINING THE PROVISIONS OF SECTION 40(A)(IA) TO ASSESSEES WHO FO LLOW THE MERCANTILE ITA NO 31 9 OF 2016 T SATYANARAYANA KURNOOL PAGE 5 OF 8 SYSTEM. NOR DO WE FIND ANYTHING THAT INDICATES THAT FOR SOME REASON THE LEGISLATURE INTENDED ACHIEVING THESE OBJECTIVES ONL Y BY CONFINING THE OPERATION OF SECTION 40(A)(IA) TO ASSESSEES WHO FOL LOW THE MERCANTILE SYSTEM. 22. THE SAME VIEW WAS TAKEN BY A DIVISION BENCH O F THE CALCUTTA HIGH COURT IN COMMISSIONER OF INCOME TAX V. CRESCENT EXPORT SYNDICATE (SUPRA). IT WAS HELD: 12.3. IT IS NOTICEABLE THAT SECTION 40(A) IS APP LICABLE IRRESPECTIVE OF THE METHOD OF ACCOUNTING FOLLOWED BY AN ASSESSEE. T HEREFORE, BY USING THE TERM PAYABLE LEGISLATURE INCLUDED THE ENTIRE ACCRUED LIABILITY. IF ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNT ING, THEN THE MOMENT AMOUNT WAS CREDITED TO THE ACCOUNT OF PAYEE ON ACCRUAL OF LIABILITY, TDS WAS REQUIRED TO BE MADE BUT IF ASSES SEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING, THEN ON MAKING PAYMENT T DS WAS TO BE MADE AS THE LIABILITY WAS DISCHARGED BY MAKING PAYM ENT. THE TDS PROVISIONS ARE APPLICABLE BOTH IN THE SITUATION OF ACTUAL PAYMENT AS WELL OF THE CREDIT OF THE AMOUNT. IT BECOMES VERY CLEAR FROM THE FACT THAT THE PHRASE, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B, WAS NOT THERE IN THE BILL BUT INCORPORATED IN THE A CT. THIS WAS NOT WITHOUT ANY PURPOSE. 15. WE APPROVE THE AFORESAID VIEW AS WELL. AS A FORTIORARI , IT FOLLOWS THAT SECTION 40(A)(IA) COVERS NOT ONLY THOS E CASES WHERE THE AMOUNT IS PAYABLE BUT ALSO WHEN IT IS PAID. IN THIS BEHALF, ONE HAS TO KEEP IN MIND THE PURPOSE WITH WHICH SECTION 40 WAS ENACTED AND THAT HAS ALREADY BEEN NOTED ABOVE. WE H AVE ALSO TO KEEP IN MIND THE PROVISIONS OF SECTIONS 194C AND 20 0. ONCE IT IS FOUND THAT THE AFORESAID SECTIONS MANDATE A PERSON TO DEDUCT TAX AT SOURCE NOT ONLY ON THE AMOUNTS PAYABLE BUT A LSO WHEN THE SUMS ARE ACTUALLY PAID TO THE CONTRACTOR, ANY PERSO N WHO DOES NOT ADHERE TO THIS STATUTORY OBLIGATION HAS TO SUFF ER THE CONSEQUENCES WHICH ARE STIPULATED IN THE ACT ITSELF . CERTAIN CONSEQUENCES OF FAILURE TO DEDUCT TAX AT SOURCE FRO M THE PAYMENTS MADE, WHERE TAX WAS TO BE DEDUCTED AT SOUR CE OR FAILURE TO PAY THE SAME TO THE CREDIT OF THE CENTRA L GOVERNMENT, ARE STIPULATED IN SECTION 201 OF THE ACT. THIS SECT ION PROVIDES THAT IN THAT CONTINGENCY, SUCH A PERSON WOULD BE DE EMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX. WHIL E STIPULATING THIS CONSEQUENCE, SECTION 201 CATEGORICALLY STATES THAT THE AFORESAID SECTIONS WOULD BE WITHOUT PREJUDICE TO AN Y OTHER CONSEQUENCES WHICH THAT DEFAULTER MAY INCUR. OTHER CONSEQUENCES ARE PROVIDED UNDER SECTION 40(A)(IA) O F THE ACT, NAMELY, PAYMENTS MADE BY SUCH A PERSON TO A CONTRAC TOR SHALL NOT BE TREATED AS DEDUCTIBLE EXPENDITURE. WHEN READ IN THIS CONTEXT, IT IS CLEAR THAT SECTION 40(A)(IA) DEALS W ITH THE NATURE OF DEFAULT AND THE CONSEQUENCES THEREOF. DEFAULT IS RE LATABLE TO ITA NO 31 9 OF 2016 T SATYANARAYANA KURNOOL PAGE 6 OF 8 CHAPTER XVIIB (IN THE INSTANT CASE SECTIONS 194C AN D 200, WHICH PROVISIONS ARE IN THE AFORESAID CHAPTER). WHEN THE ENTIRE SCHEME OF OBLIGATION TO DEDUCT THE TAX AT SOURCE AND PAYIN G IT OVER TO THE CENTRAL GOVERNMENT IS READ HOLISTICALLY, IT CANNOT BE HELD THAT THE WORD PAYABLE OCCURRING IN SECTION 40(A)(IA) REFERS TO ONLY THOSE CASES WHERE THE AMOUNT IS YET TO BE PAID AND DOES N OT COVER THE CASES WHERE THE AMOUNT IS ACTUALLY PAID. IF THE PRO VISION IS INTERPRETED IN THE MANNER SUGGESTED BY THE APPELLAN T HEREIN, THEN EVEN WHEN IT IS FOUND THAT A PERSON, LIKE THE APPELLANT, HAS VIOLATED THE PROVISIONS OF CHAPTER XVIIB (OR SPECIF ICALLY SECTIONS 194C AND 200 IN THE INSTANT CASE), HE WOULD STILL G O SCOT FREE, WITHOUT SUFFERING THE CONSEQUENCES OF SUCH MONETARY DEFAULT IN SPITE OF SPECIFIC PROVISIONS LAYING DOWN THESE CONS EQUENCES. THE PUNJAB & HARYANA HIGH COURT HAS EXHAUSTIVELY INTERP RETED SECTION 40(A(IA) KEEPING IN MIND DIFFERENT ASPECTS. WE WOULD AGAIN QUOTE THE FOLLOWING PARAGRAPHS FROM THE SAID JUDGMENT, WITH OUR COMPLETE APPROVAL THERETO: 26. FURTHER, THE MERE INCURRING OF A LIABILITY DOE S NOT REQUIRE AN ASSESSEE TO DEDUCT THE TAX AT SOURCE EVEN IF SUCH P AYMENTS, IF MADE, WOULD REQUIRE AN ASSESSEE TO DEDUCT THE TAX AT SOUR CE. THE LIABILITY TO DEDUCT TAX AT SOURCE UNDER CHAPTER XVII-B ARISES ON LY UPON PAYMENTS BEING MADE OR WHERE SO SPECIFIED UNDER THE SECTIONS IN CHAPTER XVII, THE AMOUNT IS CREDITED TO THE ACCOUNT OF THE PAYEE. IN OTHER WORDS, THE LIABILITY TO DEDUCT TAX AT SOURCE ARISES NOT ON ACC OUNT OF THE ASSESSEE BEING LIABLE TO THE PAYEE BUT ONLY UPON THE LIABILI TY BEING DISCHARGED IN THE CASE OF AN ASSESSEE FOLLOWING THE CASH SYSTEM A ND UPON CREDIT BEING GIVEN BY AN ASSESSEE FOLLOWING THE MERCANTILE SYSTE M. THIS IS CLEAR FROM EVERY SECTION IN CHAPTER XVII. 27. TAKE FOR INSTANCE, THE CASE OF AN ASSESSEE, W HO FOLLOWS THE CASH SYSTEM OF ACCOUNTING AND WHERE THE ASSESSEE WHO THO UGH LIABLE TO PAY THE CONTRACTOR, FAILS TO DO SO FOR ANY REASON. THE ASSESSEE IS NOT THEN LIABLE TO DEDUCT TAX AT SOURCE. TAKE ALSO THE CASE OF AN ASSESSEE, WHO FOLLOWS THE MERCANTILE SYSTEM. SUCH AN ASSESSEE MAY HAVE INCURRED THE LIABILITY TO PAY AMOUNTS TO A PARTY. SUCH AN ASSESS EE IS ALSO NOT BOUND TO DEDUCT TAX AT SOURCE UNLESS HE CREDITS SUCH SUMS TO THE ACCOUNT OF THE PARTY/PAYEE, SUCH AS, A CONTRACTOR. THIS IS CLEAR F ROM SECTION 194C SET OUT EARLIER. THE LIABILITY TO DEDUCT TAX AT SOURCE, IN THE CASE OF AN ASSESSEE FOLLOWING THE CASH SYSTEM, ARISES ONLY WHE N THE PAYMENT IS MADE AND IN THE CASE OF AN ASSESSEE FOLLOWING THE M ERCANTILE SYSTEM, WHEN HE CREDITS SUCH SUM TO THE ACCOUNT OF THE PART Y ENTITLED TO RECEIVE THE PAYMENT. 28. THE GOVERNMENT HAS NOTHING TO DO WITH THE DIS PUTE BETWEEN THE ASSESSEE AND THE PAYEE SUCH AS A CONTRACTOR. THE PR OVISIONS OF THE ACT INCLUDING SECTION 40 AND THE PROVISIONS OF CHAPTER XVII DO NOT ENTITLE THE TAX AUTHORITIES TO ADJUDICATE THE LIABILITY OF AN ASSESSEE TO MAKE ITA NO 31 9 OF 2016 T SATYANARAYANA KURNOOL PAGE 7 OF 8 PAYMENT TO THE PAYEE/OTHER CONTRACTING PARTY. THE A PPELLANTS SUBMISSION, IF ACCEPTED, WOULD REQUIRE AN ADJUDICAT ION BY THE TAX AUTHORITIES AS TO THE LIABILITY OF THE ASSESSEE TO MAKE PAYMENT. THEY WOULD THEN BE REQUIRED TO INVESTIGATE ALL THE RECOR DS OF AN ASSESSEE TO ASCERTAIN ITS LIABILITY TO THIRD PARTIES. THIS COUL D IN MANY CASES BE AN EXTREMELY COMPLICATED TASK ESPECIALLY IN THE ABSENC E OF THE THIRD PARTY. THE THIRD PARTY MAY NOT PRESS THE CLAIM. THE PARTIE S MAY SETTLE THE DISPUTE, IF ANY. THIS IS AN EXERCISE NOT EVEN REMOT ELY REQUIRED OR EVEN CONTEMPLATED BY THE SECTION. 16. AS MENTIONED ABOVE, THE PUNJAB & HARYANA HIGH COUR T FOUND SUPPORT FROM THE JUDGMENTS OF THE MADRAS AND CALCUTTA HIGH COURTS TAKING IDENTICAL VIEW AND BY EXTENSIVEL Y QUOTING FROM THE SAID JUDGMENTS. 17. INSOFAR AS JUDGMENT OF THE ALLAHABAD HIGH COURT IS CONCERNED, READING THEREOF WOULD REFLECT THAT THE H IGH COURT, AFTER NOTICING THE FACT THAT SINCE THE AMOUNTS HAD ALREADY BEEN PAID, IT STRAIGHTAWAY CONCLUDED, WITHOUT ANY DISCUS SION, THAT SECTION 40(A)(IA) WOULD APPLY ONLY WHEN THE AMOUNT IS PAYABLE AND DISMISSED THE APPEAL OF THE DEPARTMENT STATING THAT THE QUESTION OF LAW FRAMED DID NOT ARISE FOR C ONSIDERATION. NO DOUBT, THE SPECIAL LEAVE PETITION THERE AGAINST WAS DISMISSED BY THIS COURT IN LIMINE . HOWEVER, THAT WOULD NOT AMOUNT TO CONFIRMING THE VIEW OF THE ALLAHABAD HIGH COURT (SE E V.M. SALGAOCAR & BROS. (P) LTD. V. COMMISSIONER OF INCOM E TAX [2000 (243) ITR 383] AND SUPREME COURT EMPLOYEES WELFARE ASSOCIATION V. UNION OF INDIA [JT 1989 (3) SC 188]. 18. IN VIEW OF THE AFORESAID DISCUSSION, WE HOLD THAT THE VIEW TAKEN BY THE HIGH COURTS OF PUNJAB & HARYANA, MADRA S AND CALCUTTA IS THE CORRECT VIEW AND THE JUDGMENT OF TH E ALLAHABAD HIGH COURT IN CIT V. VECTOR SHIPPING SERVICES (P) LTD. [2013 (357) ITR 642] DID NOT DECIDE THE QUESTION OF LAW C ORRECTLY. THUS, INSOFAR AS THE JUDGMENT OF THE ALLAHABAD HIGH COURT IS CONCERNED, WE OVERRULE THE SAME. CONSEQUENCES OF TH E AFORESAID DISCUSSION WILL BE TO ANSWER THE QUESTION AGAINST THE APPELLANT/ASSESSEE THEREBY APPROVING THE VIEW TAKEN BY THE HIGH COURT. 5. EVEN IN THE PRESENT CASE, THE LEARNED CIT (A) GR ANTED RELIEF FOLLOWING THE RATIO LAID DOWN BY THE DECISIO N OF THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORT ( 146 TTJ (1) AS THERE WAS NO AMOUNT OF OUTSTANDING AS AT THE END OF THE ITA NO 31 9 OF 2016 T SATYANARAYANA KURNOOL PAGE 8 OF 8 ACCOUNTING YEAR. SINCE THE DECISION HAD BEEN REVERS ED BY THE HON'BLE SUPREME COURT, THE ORDER OF THE CIT (A) CAN NOT BE SUSTAINED IN THE EYES OF LAW AND THE APPEAL FILED B Y THE REVENUE IS ALLOWED. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JUNE, 2017. SD/- SD/- (K. NARSIMHA CHARRY) JUDICIAL MEMBER (INTURI RAMA RAO) ACCOUNTANT MEMBER HYDERABAD, DATED 2 ND JUNE, 2017. VINODAN/SPS COPY TO: 1 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1 KURNO OL 2 SRI T. SATYANARAYANA, H.NO.7-62, NEAR ELEMENTARY SCHOOL, VELDURTHY, KURNOOL 3 CIT (A)-KURNOOL 4 PR. CIT - KURNOOL 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER