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2014 (9) TMI 1000 - AT - Income TaxDisallowance u/s.40(a(ia) - CIT(A) deleted the addition as relying on Merilyn Shipping & Transports 2012 (4) TMI 290 - ITAT VISAKHAPATNAM - Held that - We find that expenses related to professional fees, advertisement and management were debited in P&L Account, that same were paid. Therefore, in our view, no disallowance u/s 40(a)(ia) of the Act should be made. We further find that while deciding the appeal in the case of Janapriya Engineers Syndicate (2015 (5) TMI 309 - ANDHRA PRADESH HIGH COURT ) the Hon ble Andhra Pradesh High Court has clarified the issue of interim stay granted by it in the case of Merilyn Shipping & Transports 2012 (4) TMI 290 - ITAT VISAKHAPATNAM . From the clarification issued by the Hon ble High Court, it is clear that until and unless the decision of Marilyn Shipping & Transport(supra)is reversed by the Court,it is binding on all the benches of the Tribunal. We find that Hon ble Court has held that judicial discipline mandates that the decision of the special bench has to be followed by other benches. As on today,the stay order granted by the Hon ble Court has been vacated and the order of the special bench is binding on other benches of the Tribunal.Therefore, respectfully following the same,we hold that the FAA was justified in following the order of Marilyn Shipping & Transport (supra). - Decided in favour of assessee
Issues:
1. Disallowance of expenses under section 40(a)(ia) for non-deduction of TDS. 2. Interpretation of the decision of the Special Bench in the case of Merilyn Shipping Agency Pvt. Ltd. 3. Applicability of the decision of the Hon'ble Andhra Pradesh High Court on the interim stay of the Special Bench decision. Issue 1: Disallowance of expenses under section 40(a)(ia) for non-deduction of TDS: The Assessing Officer (AO) disallowed an amount of Rs. 1.30 Crores for non-deduction of Tax Deducted at Source (TDS) under sections 194C and 194J of the Act. The First Appellate Authority (FAA) considered additional evidence provided by the assessee and reduced the disallowance to Rs. 1.81 Lakhs. The FAA analyzed outstanding liabilities and upheld the disallowance only for a specific amount under section 194C. The Income Tax Appellate Tribunal (ITAT) concurred with the FAA's decision, stating that no disallowance should be made as the expenses were debited and paid, thereby rejecting the AO's disallowance under section 40(a)(ia). Issue 2: Interpretation of the decision of the Special Bench in the case of Merilyn Shipping Agency Pvt. Ltd.: The AO relied on the decision of the Special Bench in the case of Merilyn Shipping Agency Pvt. Ltd. to disallow the expenses. The FAA also referenced this decision and the interim suspension by the Hon'ble Andhra Pradesh High Court. However, the ITAT highlighted that the Hon'ble Andhra Pradesh High Court clarified that the decision of the Special Bench remains binding until overturned by the Court. The ITAT emphasized the judicial discipline to follow the Special Bench decision until any reversal by the Court, ultimately supporting the FAA's decision based on the Merilyn Shipping Agency Pvt. Ltd. case. Issue 3: Applicability of the decision of the Hon'ble Andhra Pradesh High Court on the interim stay of the Special Bench decision: The ITAT considered the clarification issued by the Hon'ble Andhra Pradesh High Court regarding the interim stay on the Special Bench decision. The High Court's clarification emphasized that until the decision is overturned by the Court, it remains binding on all benches of the Tribunal. The ITAT upheld the FAA's decision in line with the clarification, confirming that the decision of the Special Bench in the Merilyn Shipping Agency Pvt. Ltd. case should be followed. Consequently, the ITAT allowed the appeal filed by the assessee based on the interpretation of the High Court's clarification and the binding nature of the Special Bench decision on all Tribunal benches.
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