M/s Merilyn Shipping & Transports., Visakhapatnam V. The Ad CIT, Range-1., Visakhapatnam

ITA 477/VIZ/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62824 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 12-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y S RAO

Judgement Text

ITA NO477/VIZ/2008 MERILYN SHIPPING & TRANSPORTS, V ISAKHAPATNAM. 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 477 /VIZAG/ 20 08 ASSESSMENT YEAR : 2005 - 06 MERILYN SHIPPING & TRANSPORTS VISAKHAPATNAM VS. ADDL. CIT, RANGE - 1 VISAKHAPATNAM (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI C. SUBRAHMANYAM, CA SHRI G.V.N. HARI, CA & SHRI Y.S. RAO, CA RESPONDENT BY: SHRI T. LUCAS PETER, SR. DR SMT. D. KOMALI KRISHNA, SR.DR DAT E OF HEAR I NG: 09.04.2012 DATE OF PRONOUNCEMENT: 09.04.2012 ORDER (U/S 254(1) OF THE INCOME-TAX ACT) PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) PERTAINING TO THE ASSESSMENT YEAR 2005-06. A REFERENCE U/S 255(3) OF THE INCOME-TAX ACT HAS BEEN MADE TO THE HONBLE PRE SIDENT TO CONSTITUTE A SPECIAL BENCH TO ADJUDICATE AN ISSUE WHETHER SECTIO N 40A(IA) OF THE INCOME- TAX ACT CAN BE INVOKED ONLY TO DISALLOW EXPENDITURE OF THE NATURE REFERRED TO THEREIN WHICH IS SHOWN AS PAYABLE AS ON THE DATE OF BALANCE SHEET OR IT CAN BE INVOKED ALSO TO DISALLOW SUCH EXPENDITURE WHICH BECOMES PAYABLE AT ANY TIME DURING THE RELEVANT PREVIOUS YEAR AND WAS ACTU ALLY PAID WITHIN THE PREVIOUS YEAR? CONSEQUENTLY, SPECIAL BENCH WAS CON STITUTED AND THE AFORESAID QUESTION WAS ANSWERED IN FAVOUR OF THE AS SESSEE. ACCORDING TO THE MAJORITY VIEW, IT WAS HELD THAT SECTION 40A(IA) OF THE ACT IS APPLICABLE ONLY TO EXPENDITURE WHICH IS PAYABLE AS ON 31 ST MARCH OF EVERY YEAR AND CANNOT BE INVOKED TO DISALLOW THE AMOUNTS WHICH HAVE ALREADY BEEN PAID DURING THE YEAR WITHOUT DEDUCTING TAX AT SOURCE. ITA NO477/VIZ/2008 MERILYN SHIPPING & TRANSPORTS, V ISAKHAPATNAM. 2 2. ISSUE INVOLVED IN THIS APPEAL IS WITH REGARD TO THE DISALLOWANCE OF PAYMENTS OF ` . 38,75,000/- TOWARDS BROKERAGE AND ` . 2,43,253/- TOWARDS COMMISSION ON NON-DEDUCTION OF TDS BY INVOKING THE PROVISIONS OF SECTION 40A(IA) OF THE ACT. THE ASSESSEES CASE WAS THAT T HE ENTIRE BROKERAGE IN COMMISSION PAYMENTS WERE ACTUALLY PAID DURING THE F INANCIAL YEAR EXCEPTING AN AMOUNT OF ` . 1,78,025/- WHICH REMAINED PAYABLE AS ON 31.3.2005 . THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE REVENUE R ESULTING IN AN APPEAL BEFORE US BY THE ASSESSEE. FOLLOWING THE MAJORITY VIEW OF THE SPECIAL BENCH, THE PROVISIONS OF SECTION 40A(IA) CANNOT BE INVOKED WITH RESPECT TO THE AFORESAID PAYMENTS WHICH WERE ACTUALLY PAID DURING THE FINANCIAL YEAR BUT IT CAN BE INVOKED WITH RESPECT TO ` . 1,78,025/- WHICH REMAINED PAYABLE AS ON 31.3.2005. THEREFORE, THE DISALLOWANCE IS REDUCED TO ` . 1,78,025/- ONLY. ACCORDINGLY, THE ORDER OF THE CIT(A) IS MODIFIED. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 09.04.2012 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 9 TH APRIL, 2012 COPY TO 1 M/S. MERILYN SHIPPING & TRANSPORTS, VISAKHAPATNAM 2 ADD. CIT, RANGE - 1, VISAKHAPATNAM 3 THE CI T, VISAKHAPATNAM 4 THE CIT (A) , VISAKHAPATNAM 5 THE DR, ITAT, VIS AKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM