Asst. Commissioner of Income Tax, Circle-1, Nashik V. Vishwash Cooperative Bank Ltd, Nashik

ITA 951/PUN/2013

• Counselvise Citation: 95124514 RSA 2013
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: N O N E
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 951 / P N/ 20 1 3 ASSESSMENT YEAR : 200 9 - 10 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1, NASHIK VS. VISHWASH COOPERATIVE BANK LTD., VISHWA - VISHWAS PARK, DATYE NAGAR, NEAR NAVRACHANA SCHOOL, GANGAPUR ROAD, NASHIK (APPELLANT) (RESPONDENT) PAN NO. AAAAV0793L APPELLANT BY: SHRI S.P. WALIMBE RESPONDENT BY: N O N E DATE OF HEARING : 01 - 05 - 2014 DATE OF PRONOUNCEMENT : 29 - 05 - 2014 ORDER PER R.S . PADVEKAR , JM : - THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDERS OF THE LD. CIT(A) - I, NASHIK DATED 05 - 02 - 2013 FOR THE A.Y. 200 9 - 10. THE REVENUE HAS TAKEN T HE FOLLOWING GROUNDS IN THE APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - I, NASHIK WAS JUSTIFIED IN DELETING THE ADDITION OF RS.5,15,000/ - MADE ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE CLAIMED TOWARDS AMORTIZATION OF PREMIUM ON GOVT. SECURITIES BEING INVESTMENT HELD TILL MATURITY. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - I, NASHIK WAS JUSTIFIED IN DELETING THE ADDITION OF RS.5,17,000/ - MADE ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE CLA IMING ON ACCOUNT OF DIMINUTION IN THE MARKET VALUE OF MSRDC BONDS. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - I, NASHIK WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF 2 ITA NO. 951/PN/2013, VISHWASH COOPERATIVE BANK LTD., NASHIK RS.6,39,435/ - MADE U/S. 40(A)(IA) OF THE ACT IN SPITE OF TH E FACT THAT ASSESSEE HAD NOT DEDUCTED TDS ON THE PAYMENTS WHICH ATTRACTS THE PROVISION LAID DOWN UNDER CHAPTER XVII B OF THE ACT. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - I, NASHIK WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF EDUCATION FUND OF RS.30,000/ - . 5. THE APPELLANT PRAYS THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 2. THE FIRST ISSUE IS IN RESPECT OF THE DISALLOWANCE OF EXPENDITURE CLAIMED TOWARDS AMORTIZATION OF PREMIUM ON GOVT. SECURITIES. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS A CO - OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF BANKING. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2009 - 10 DECLARING TOTAL INCOME OF RS.23,54,740/ - . THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT HAS BEEN COMPLETED U/S. 143(3) OF THE INCOME - TAX ACT. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS DEBITED RS.10,32,000/ - UNDER THE HEAD INVESTMENT PREMIUM AMORTIZATION. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING O FFICER THAT THE SAID AMOUNT OF RS.10,32,000/ - HAS BEEN CLAIMED AS A DEDUCTION FOR AMORTIZATION OF THE GOVT. SECURITIES PREMIUM WHICH HAS BEEN HELD UNDER THE CATEGORY HELD TO MATURITY (HTM). THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. CIT(A) AND LD. CIT(A) FOLLOWING THE DECISION OF THE ITAT, MUMBAI BENCH, MUMBAI IN THE CASE OF ACIT, VS. BANK OF RAJASTHAN LTD. (2011) TIOL 35 ITAT (MUM.) ALLOWED THE CLAIM OF THE ASSESSEE . THE LD. CIT(A) ALSO FO LLOWED THE DECISION OF THE ITAT, PUNE IN THE CASE OF LATUR URBAN CO - OP. BANK LIMITED, LATUR VS. DY. CIT, CIRCLE - 3, NANDED, ITA NOS. 778 & 792/PN/2011 ORDER DATED 31 - 08 - 2012 . 3 ITA NO. 951/PN/2013, VISHWASH COOPERATIVE BANK LTD., NASHIK 3. WE HAVE HEARD THE PARTIES. WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAV OUR OF THE ASSESSEE BY THE DECISION OF THE ITAT, PUNE IN THE CASE OF LATUR URBAN CO - OP. BANK LIMITED, LATUR (SUPRA). THE OPERATIVE PART OF THE DECISION IN THE CASE OF LATUR URBAN CO - OP. BANK LIMITED, LATUR (SUPRA) IS AS UNDER: 14. WE HAVE HEARD THE PARTIE S. THE LD COUNSEL PLACED HIS HEAVY RELIANCE ON THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BANK OF BARODA AND IN THE CASE OF UCO BANK VS. CIT, 240 ITR 355 (SC). IN THE CASE OF BANK OF BARODA (SUPRA), THE ISSUE BEFORE THEIR LOR DSHIP WAS WHETHER THE ASSESSEE WAS ENTITLED FOR DEDUCTION ON ACCOUNT OF DEPRECIATION IN THE VALUE OF INVESTMENTS. THE METHOD OF VALUATION FOLLOWED BY THE ASSESSEE BANK WAS TO VALUE INVESTMENTS AT COST OR MARKET VALUE WHICHEVER WAS LOWER. THE ASSESSEE HAD CLAIMED THE DEPRECIATION TO THE TUNE OF RS. 11,82,35,007/ - AND THE SAID DEPRECIATION WAS CLAIMED AS A DEDUCTION WHICH WAS DISALLOWED BY THE A.O, BUT THE ASSESSEE BANK SUCCEEDED BEFORE THE CIT(A). THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT(A). THE REVEN UE CARRIED THE ISSUE BEFORE THE HONBLE HIGH COURT. THE CORE ISSUE WAS THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE BANK FOR VALUING THE STOCK OF THE SECURITIES. THE HONBLE HIGH COURT FOLLOWED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF UNIT ED COMMERCIAL BANK (SUPRA). 15. IN THE CASE OF UNITED COMMERCIAL BANK (SUPRA), EVEN THE ISSUE OF VALUATION OF THE STOCK IN TRADE OF THE INVESTMENT WAS BEFORE THE HONBLE SUPREME COURT. IN THE CASE OF THE ASSESSEE, THE ISSUE IS REGARDING ALLOWABILITY OF THE LOSS ON THE SALE OF THE SECURITIES. MERELY BECAUSE THE SECURITIES ARE KEPT UNDER THE HEAD TILL THE MATURITY, THE SAID SECURITY CANNOT BE TREATED AS A PURELY INVESTMENT. LAW IS WELL SETTLED THAT THE SECURITIES HELD BY THE BANK ARE IN THE NATURE OF ST OCK - IN - TRADE. WE MAY LIKE TO QUOTE HERE THE DECISION OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF CIT VS. NEDUNGADI BANK LTD., 264 ITR 545. IN THE SAID CASE, THE HONBLE HIGH COURT HAS HELD THAT THE SECURITIES HELD BY THE BANK ARE IN THE NATURE OF STOCK - IN - TRADE. BOTH THE AUTHORITIES BELOW HAS MERELY GONE ON THE NOMENCLATURE OF THE HEAD UNDER WHICH THE SECURITIES ARE HELD. IN OUR CONSIDERED VIEW, NOMENCLATURE CANNOT BE 4 ITA NO. 951/PN/2013, VISHWASH COOPERATIVE BANK LTD., NASHIK DECISIVE FOR THE ASSESSEE BANK. WE, THEREFORE, HOLD THAT THE LOSS ON THE SALE O F THE SECURITIES IS REVENUE IN NATURE AND SAME IS ALLOWABLE. ACCORDINGLY, GROUND NO. 2 IS ALLOWED. 4. WE, THEREFORE, FIND NO REASON TO TAKE THE DIFFERENT VIEW. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS CONFIRMED. ACCORDINGLY, THE GRO UND NOS. 1 & 2 ARE DISMISSED. 5. THE NEXT ISSUE IS DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE (TDS) IN RESPECT OF THE PAYMENT OF RENT, PAYMENT OF SECURITY GUARD AND PAYM ENT OF PROFESSIONAL CHARGES IN RESPECT OF AUDITOR FEES AND CHARTERED ACCOUNTANT FIRM TO AGGREGATING OF RS.8,49,435/ - . THE ASSESSING OFFICER, THEREFORE, INVOKED THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT AND MADE THE DISALLOWANCE. THE ASSESSEE CHALLENGED THE DISALLOWANCE BEFORE THE LD. CIT(A) AND LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE ACCEPTING THE PLEA OF THE ASSESSEE THAT ONLY AMOUNT PAYABLE AT THE YEAR - END CAN BE DISALLOWED. THE LD. CIT(A) RELIED ON THE DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ACIT, 70 DTR 81 (SB) (VISAKHA) . THE LD. CIT(A) PARTLY ALLOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF THE PAYMENTS MADE DURING THE FINANCIAL YEAR AND CONFIRMED THE ADDITION TO THE EXTENT OF RS.2,10,000/ - WHICH WAS OUTSTANDING AT THE END OF THE FINANCIAL YEAR. NOW THE REVENUE IS IN APPEAL BEFORE US. WE HAVE HEARD THE LD. DR. 6. WE FIND THAT THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE ITAT, PUNE IN THE CASE OF ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 2, KOLHAPUR VS. SHRI BHARAT DHANPA L PATIL, ITA NO. 600/PN/2012 AND CO NO. 18/PN/2013 ORDER DATED 30 - 07 - 2013. THE OPERATIVE PART OF THE FINDING OF THE TRIBUNAL IS AS UNDER: 3.1 ADMITTEDLY, ALL THE PAYMENTS ARE MADE ON ONE DATE I.E. 30 - 05 - 2007 THAT IS ALMOST AFTER TWO MONTHS FROM THE END O F THE FINANCIAL 5 ITA NO. 951/PN/2013, VISHWASH COOPERATIVE BANK LTD., NASHIK YEAR I.E. 31 - 03 - 2007, THE DATE OF THE BILLS ARE PRIOR TO MARCH 2007. NOW THE ISSUE STANDS COVERED AGAINST THE ASSESSEE BY THE FOLLOWING TWO DECISIONS (I) CIT VS. SIKANDARKHAN N TUNVAR (2013) 33 TAXMANN.COM 133 (GUJARAT) AND (II) CIT, KOLKA TA VS. CRESCENT EXPORT SYNDICATE (2013) 33 TAXMANN.COM 250 (KOLKATA). IN THE CASE OF CRESCENT EXPORT SYNDICATE (SUPRA) THE DECISION OF THE HON'BLE SPECIAL BENCH OF THE ITAT IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS 136 ITD 23 (SB) (VISAKHA) HAS COME FOR THE JUDICIAL SCRUTINY IN WHICH IT WAS HELD THAT THE DISALLOWANCE U/S. 40(A)(IA) APPLIES ONLY TO AMOUNTS PAYABLE AS ON 31 ST MARCH OF THE PREVIOUS YEAR ON WHICH THE TDS HAS NOT BEEN DEDUCTED AND NO DISALLOWANCE TO BE MADE IN RESPECT OF SUMS PAID DURING T HE PREVIOUS YEAR WITHOUT DEDUCTING TDS. THE HON'BLE HIGH COURT REVERSED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORT (SUPRA). THE OPERATIVE PART OF THE JUDGMENT IS AS UNDER: IN VIEW OF ABOVE DISCUSSION, WE ANSWER THE Q UESTION AS UNDER: - THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961, ARE APPLICABLE NOT ONLY TO THE AMOUNT WHICH IS SHOWN AS PAYABLE ON THE DATE OF BALANCE - SHEET, BUT IT IS APPLICABLE TO SUCH EXPENDITURE, WHICH BECOME PAYABLE AT ANY TIME DUR ING THE RELEVANT PREVIOUS YEAR AND WAS ACTUALLY PAID WITHIN THE PREVIOUS YEAR. IN THE RESULT THE QUESTION IS DECIDED IN FAVOUR OF REVENUE AND AGAINST THE ASSESSEE.' BEFORE DEALING WITH THE SUBMISSIONS OF THE LEARNED COUNSEL APPEARING FOR THE ASSESSEES IN B OTH 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 AFORESAID CASE. THE MAIN THRUST OF THE MAJORITY VIEW IS B ASED ON THE FACT 'THAT THE LEGISLATURE HAS REPLACED THE EXPRESSION 'AMOUNTS CREDITED OR PAID' WITH THE EXPRESSION 'PAYABLE' IN THE FINAL ENACTMENT. COMPARISON BETWEEN THE PRE - AMENDMENT AND POST AMENDMENT LAW IS PERMISSIBLE FOR THE PURPOSE OF ASCERTAINING T HE MISCHIEF SOUGHT TO BE REMEDIED OR THE OBJECT SOUGHT TO BE ACHIEVED BY AN AMENDMENT. THIS IS PRECISELY WHAT WAS DONE 6 ITA NO. 951/PN/2013, VISHWASH COOPERATIVE BANK LTD., NASHIK BY THE APEX COURT IN THE CASE OF CIT VS. KELVINATOR REPORTED IN 2010(2) SCC 723. BUT THE SAME COMPARISON BETWEEN THE DRAFT AND THE ENACTE D LAW IS NOT PERMISSIBLE. NOR CAN THE DRAFT OR THE BILL BE USED FOR THE PURPOSE OF REGULATING THE MEANING AND PURPORT OF 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 REA LIZING 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 ANY COMPA RISON BETWEEN THE DRAFT AND THE SECTION ACTUALLY ENACTED NOR WAS IT OPEN TO SPECULATE AS TO THE EFFECT 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 WHICH 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 SEEK T O JUSTIFY THAT 'THIS FICTION CANNOT BE EXTENDED ANY FURTHER AND, THEREFORE, CANNOT BE INVOKED BY ASSESSING OFFICER 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 MIND THAT THE LEARNED TRIBUNAL REALIZED THE MEANING AND PURPORT OF SECTION 40(A)(IA) CORRECTLY WHEN IT HELD THAT IN CASE OF OMISSION TO DEDUCT TAX EVEN THE GENUINE AND ADMISSIBLE EX PENSES ARE TO BE DISALLOWED. BUT THEY SOUGHT TO REMOVE THE RIGOUR OF THE LAW BY HOLDING THAT THE DISALLOWANCE SHALL BE RESTRICTED TO THE MONEY WHICH IS YET TO BE PAID. WHAT THE TRIBUNAL BY MAJORITY DID WAS TO SUPPLY THE CASUS OMISSUS WHICH WAS NOT PERMISSI BLE AND COULD ONLY HAVE BEEN DONE BY THE SUPREME COURT IN AN APPROPRIATE CASE. REFERENCE IN THIS REGARD MAY BE MADE TO THE JUDGMENT IN THE CASE OF BHUWALKA STEEL INDUSTRIES VS. 7 ITA NO. 951/PN/2013, VISHWASH COOPERATIVE BANK LTD., NASHIK BOMBAY IRON & STEEL LABOUR BOARD REPORTED IN 2010 (2) SCC 273. 'UNPROTECTED WOR KER' WAS FINALLY DEFINED IN SECTION 2 (II) 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 TO WHAT WAS THERE IN THE BILL WAS REJEC TED BY THE SUPREME COURT BY HOLDING AS FOLLOWS: - 'IT MUST, AT THIS JUNCTURE, BE NOTED THAT IN SPITE OF SECTION 2(11), WHICH INCLUDED THE WORDS 'BUT FOR THE PROVISIONS OF THIS ACT IS NOT ADEQUATELY PROTECTED BY LEGISLATION FOR WELFARE AND BENEFITS OF THE L ABOUR FORCE IN THE STATE', THESE PRECISE WORDS WERE REMOVED BY THE LEGISLATURE AND THE DEFINITION WAS MADE LIMITED AS IT HAS BEEN FINALLY LEGISLATED UPON. IT IS TO BE NOTED THAT WHEN THE BILL CAME TO BE PASSED AND RECEIVED THE ASSENT OF THE VICE - PRESIDENT ON 05 - 06 - 1969 AND WAS FIRST PUBLISHED IN THE MAHARASHTRA GOVERNMENT GAZETTE EXTRAORDINARY, PART IV ON 13 - 06 - 1969, THE AFOREMENTIONED WORDS WERE OMITTED. THEREFORE, THIS WOULD BE A CLEAR POINTER TO THE LEGISLATIVE INTENT THAT THE LEGISLATURE BEING CONSCIOU S OF THE FACT AND BEING ARMED WITH ALL THE COMMITTEE REPORTS AND ALSO BEING ARMED WITH THE FACTUAL DATA, DELIBERATELY AVOIDED THOSE WORDS. WHAT THE APPELLANTS ARE ASKING WAS TO READ IN THAT DEFINITION, THESE PRECISE WORDS, WHICH WERE CONSCIOUSLY AND DELIBE RATELY OMITTED FROM THE DEFINITION. THAT WOULD AMOUNT TO SUPPLYING THE CASUS OMISSUS AND WE DO NOT THINK THAT IT IS POSSIBLE, PARTICULARLY, IN THIS CASE. THE LAW OF SUPPLYING THE CASUS OMISSUS BY THE COURTS IS EXTREMELY CLEAR AND SETTLED THAT THOUGH THIS C OURT MAY SUPPLY THE CASUS OMISSUS, IT WOULD BE IN THE RAREST OF THE RARE CASE AND THUS SUPPLYING OF THIS CASUS OMISSUS WOULD BE EXTREMELY NECESSARY DUE TO THE INADVERTENT OMISSION ON THE PART OF THE LEGISLATURE. BUT, THAT IS CERTAINLY NOT THE CASE HERE'. W E SHALL NOW ENDEAVOUR TO SHOW THAT NO OTHER INTERPRETATION IS POSSIBLE. 8 ITA NO. 951/PN/2013, VISHWASH COOPERATIVE BANK LTD., NASHIK 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 EXPENSES ARE SOUGHT TO BE DISALLOW ED?' THE ANSWER IS BOUND TO BE 'THOSE EXPENSES ON WHICH TAX IS DEDUCTIBLE AT SOURCE 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 AMOU NT IS PAYABLE, IT CAN NEITHER BE PAID NOR CREDITED. IF AN AMOUNT HAS NEITHER BEEN PAID NOR CREDITED, THERE CAN BE NO OCCASION FOR CLAIMING ANY DEDUCTION. THE LANGUAGE USED IN THE DRAFT WAS UNCLEAR AND SUSCEPTIBLE TO GIVING MORE THAN ONE MEANING. BY LOOKING AT THE DRAFT IT COULD BE SAID THAT THE LEGISLATURE WANTED TO TREAT THE PAYMENTS MADE OR CREDITED IN FAVOUR OF A CONTRACTOR OR SUB - CONTRACTOR DIFFERENTLY THAN THE PAYMENTS ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESSIONAL SERVICES OR F EES FOR TECHNICAL SERVICES BECAUSE THE WORDS 'AMOUNTS CREDITED OR PAID' WERE USED ONLY IN RELATION TO A CONTRACTOR OR SUB - CONTRACTOR. THIS DIFFERENTIAL TREATMENT WAS NOT INTENDED. THEREFORE, THE LEGISLATURE PROVIDED THAT THE AMOUNTS, ON WHICH TAX IS DEDUCT IBLE AT SOURCE UNDER CHAPTER XVII - B PAYABLE ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES OR TO A CONTRACTOR OR SUB - CONTRACTOR SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME OF AN ASSESSEE IN CASE HE HAS NOT DEDUCED, OR AFTER DEDUCTION HAS NOT PAID WITHIN THE SPECIFIED TIME. THE LANGUAGE USED BY THE LEGISLATURE IN THE FINALLY ENACTED LAW IS CLEAR AND UNAMBIGUOUS WHEREAS 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. THERE 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 ANSWER TO THE SUBMISSION OF MR. BAGCHI. THE SUBMISSION OF MS. ROYCHOWDHURI THAT THE SECOND PROVISO SOUGHT TO BECOME EFFECTIVE FROM 1ST APRIL, 2013 SHOULD BE HELD TO HAVE ALREADY BECOME OPERATIVE PRIOR TO THE APPOINTED DATE CANNOT ALSO BE ACCEDED TO FOR THE SAME R EASON 9 ITA NO. 951/PN/2013, VISHWASH COOPERATIVE BANK LTD., NASHIK INDICATED ABOVE. THE LAW WAS DELIBERATELY MADE HARSH TO SECURE COMPLIANCE OF THE PROVISIONS REQUIRING DEDUCTIONS OF 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 VI EWS EXPRESSED IN THE CASE OF MERILYN SHIPPING & TRANSPORTS ARE NOT ACCEPTABLE. THE SUBMISSIONS ADVANCED BY LEARNED ADVOCATES HAVE ALREADY BEEN DEALT WITH AND REJECTED. THE APPEAL IS, THUS, ALLOWED IN FAVOUR OF THE REVENUE. 4. WE, THEREFORE, REVERSE OF ORD ER OF THE LD. CIT(A) AND RESTORE THE ORDER OF THE ASSESSING OFFICER AND ALLOW THE GROUNDS TAKEN BY THE REVENUE. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED. 7. WE, THEREFORE, FOLLOWING THE DECISION OF THIS TRIBUNAL IN THE CASE OF SHRI BHARAT DHANPAL PATIL (SUPRA) REVERSE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE ORDER OF THE ASSESSING OFFICER. IN THE RESULT, THE GROUND NO. 3 IS ALLOWED. 8. THE NEXT ISSUE IS THE DISALLOWANCE OF EDUCATION FUND. IT WAS NOTICED BY THE ASSESSING OFFICE R THAT THE ASSESSEE HAS SHOWN THE AMOUNT OF RS.30,000/ - AS PAYABLE ON ACCOUNT OF EDUCATION FUND. AS OBSERVED BY THE ASSESSING OFFICER THE EXPENDITURE CLAIMED ON ACCOUNT OF EXPENDITURE FUND IS NOT RELATED TO THE BUSINESS OF THE ASSESSEE BANK. THE ASSESSEE CONTENTED THAT THE EDUCATION FUND IS SOUGHT OF CONTRIBUTION WHICH IS TO BE COMPULSORILY TO BEAR BY THE ASSESSEE. THE ASSESSING OFFICER MADE THE DISALLOWANCE OF RS.30,000/ - . THE ASSESSEE CHALLENGED THE DISALLOWANCE BEFORE THE LD. CIT(A) BUT ALLOWED THE C LAIM OF THE ASSESSEE. BEFORE THE LD. CIT(A) , THE ASSESSEE EXPLAINED THAT THE EXPENDITURE ON ACCOUNT OF EDUCATION FUND IS TO BE COMPULSORILY INCURRED BY THE CO - OP. BANK AS PER THE PROVISIONS OF MAHARASHTRA STATE CO - OP. SOCIETIES ACT AND HENCE, THE SAME IS ALLOWABLE EXPENDITURE. THE ASSESSEE ALSO RELIED ON THE DECISION IN THE CASE OF KRISHNA SSK LTD. VS. CIT 229 ITR 577 (BOM). THE LD. 10 ITA NO. 951/PN/2013, VISHWASH COOPERATIVE BANK LTD., NASHIK CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION IN THE CASE OF KRISHNA SSK LTD. (SUPRA). WE FIND THAT T HE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION IN THE CASE OF KRISHNA SSK LTD. (SUPRA). WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND SAME IS CONFIRMED. 9. IN THE RESULT, THE REVEN UES APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29 - 05 - 20 1 4 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 29 TH MAY, 20 1 4 COPY TO 1 ASSE SSEE 2 DEPARTMENT 3 THE CIT(A) - I, NASHIK 4 THE CIT - I, NASHIK 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE