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TMI Blog2012 (4) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... - disallowance u/s. 40(a)(ia) - assessee contended that since the person to whom the payment was made has already offered the same for taxation, hence provisions of sec.40(a)(ia) cannot be invoked. - applicability of decisions in the case of Hindustan Coca Cola (2007 -TMI - 1676 - SUPREME COURT OF INDIA ) and Mahindra & Mahindra (2009 -TMI - 59571 - ITAT BOMBAY-H ) held that:- the principles laid down in these two decisions cannot be adopted for the purpose of interpreting sec.40[a][ia]. Further, we find that sec.201 deals with the mode of recovery of taxes and once tax due has already been paid then the same demand cannot be enforced again. However, sec.40[a][ia] deals with the disallowance of expenditure itself. Therefore, merely by invok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia by way of contractual obligation in respect of its employees all of whom are on deputation from Reserve Bank of India. The Corporation utilizes the services of staff of RBI in terms of HRD circular No.5/99-00 dated 01.03.2000 and HRD circular No.11/00-01 dated 29.05.2001 issued by the RBI [enclosed]. Accordingly, gratuity liability for the staff deputed to the Corporation has to be reimbursed to the RBI. Since there is a time lag between such liabilities accruing to the Corporation and being passed on to the RBI owing to the time of transfers/retirement of the concerned employees as also the difference between the accounting year of DICGC (viz. April-March) and the RBI (viz. July-June. In terms of the section 31 of the DICGC Act, 1961, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A), on appeal, deleted the addition following the order of his predecessor in earlier year. 5. Before us, the ld. DR strongly relied on the order of AO. 6. On the other hand, the ld. counsel of the assessee submitted that similar disallowance was deleted by CIT(A) in earlier year and when the matter came before the Tribunal, the deletion was confirmed by the Tribunal and, in this regard, he referred to the order of Tribunal in ITA Nos.7950 7951/Mum/2003. 7. We have considered the rival submissions and find that the Tribunal has confirmed the deletion of disallowance on account of provision for gratuity in assessment years 1999-2000 and 2000-01 and 2002-03 in ITA Nos.7950, 7951/Mum/2003 1738/Mum/2005. Therefore, following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that in that case tax was not deductible and accordingly there was no justification for invocation of sec. 40(a)(ia). In the case before us also, for many years, the Revenue never raised objection for deduction of VSAT charges and transaction charges. Therefore, now, all of a sudden, the provisions of sec. 40(a)(ia) cannot be invoked. Secondly, he submitted that since the payee has already paid tax, therefore, non-deduction of tax by the assessee will not alter the situation. In this regard, he referred to page 5 of the paper book, which is copy of the Certificate issued by the Clearing Corporation of India which certifies that transaction charges and VSAT charges have already been offered to tax by the Clearing Corporation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invited our attention to the explanatory memorandum explaining the provisions of the Finance Bill (No.2) 2004 (268 ITR 174) (Statutes) wherein at page 190 it is clearly mentioned that section 40(a)(ia) is being introduced to augment the compliance of TDS provisions. Therefore, it is not a levy of separate taxation and the only idea is that TDS provisions should be strictly followed. Therefore, as per the existing law, there was no provision for disallowing the expenditure if TDS was not deducted and the mischief was in many cases tax was not being deducted and some people going scot free. Therefore, through the Amending Act i.e. Finance Bill (No.2) 2004, an amendment was proposed that in the case of residents also, if some category of paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me for taxation, hence provisions of sec.40(a)(ia) cannot be invoked. This is not correct. Because the decision in the case of Hindustan Coca Cola Beverage (P.) Ltd. vs. CIT [supra] was rendered under the provisions of sec.201. Secondly, the Hon'ble Supreme Court vide para-10 has clearly mentioned that in view of Circular No.275/201/95-IT(Clause (b) of Explanation 1 to sec.115JB) dated 29-1-1997 no demand u/s.201[1] could be enforced after the deductor has satisfied the officer that taxes due have been paid by the deductee assessee. There is no such circular in case of disallowances to be made u/s.40[a][ia]. Similarly, the decision in the case of Mahindra Mahindra Ltd. vs. DCIT [supra] was also rendered u/s.201[1]. Therefore the principle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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