2013 (5) TMI 457 - GUJARAT HIGH COURT

Disallowance u/s 40(a)(ia) - as per AO assessee had admittedly not deducted TDS though payments were made to transporters which exceeded to ₹ 20,000/- in a single trip and aggregated above ₹ 50,000/- in the year - assessee had obtained Form No.15-I from such contractors but were not furnished along with necessary particulars in Form-15J to the CIT before due date - ITAT allowed the appeal of assessee putting reliance on decision in case of Merliyn Shipping & Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) - Whether decision of ITAT in the case of Merilyn Shipping & Transports lays down the correct law in respect of interpretation of section 40(a)(ia)? - whether disallowance confined only to those cases where the amount remains payable till the end of the previous year or would include all amounts which became payable during the entire previous year? - Whether the principle of conscious omission can be applied in case there is a doubt regarding the draft presented in Parliament and the final legislation passed.

Held that:- No hesitation in accepting the contention that the provision must be construed strictly. The terms “payable” and “paid” are not synonymous. Word “paid” has been defined in Section 43(2) of the Act to mean actually paid or incurred according to the method of accounting, upon the basis of which profits and gains are computed under the head “Profits and Gains of Business or Profession”. In contrast, term “payable” has not been defined. The word “payable” has been described in Webster’s Third New International Unabridged Dictionary as requiring to be paid: capable of being paid: specifying payment to a particular payee at a specified time or occasion or any specified manner. In the context of section 40(a)(ia), the word “payable” would not include “paid”.

In the context of requirements of Section 40(a)(ia) no warrant in the said decision of the Supreme Court in Ashokbhai Chimanbhai case [1964 (10) TMI 11 - SUPREME Court] to apply the test of payability only as on 31st March of the year under consideration. Merely 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 31st March.

The position prevailing prior to the amendment introduced in Section 40(a) would certainly be a relevant factor. However, the proceedings in the Parliament, its debates and even the speeches made by the proposer of a bill are ordinarily not considered as relevant or safe tools for interpretation of a statute. The Tribunal committed an error in applying the principle of conscious omission in the present case as already observed having a serious doubt whether such principle can be applied by comparing the draft presented in Parliament and ultimate legislation which may be passed. Secondly, the statutory provision is amply clear.

The principle of deliberate or conscious omission is applied mainly when an existing provision is amended and a change is brought about. While interpreting such an amended provision, the Courts would immediately inquire what was the statutory provision before and what changes the legislature brought about and compare the effect of the two. The other occasion for applying the principle, has been when the language of the legislature is compared with some other analogous statute or other provisions of the same statute or with expression which could apparently or obviously been used if the legislature had different intention in mind, while framing the provision.

In the result Section 40(a) (ia) would cover not only to the amounts which are payable as on 31th March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirements of the said provision exist. In that context, in our opinion the decision of the Tribunal in the case of M/s. Merilyn Shipping & Transports vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM), does not lay down correct law - in favour of the Revenue.