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TMI Blog2012 (8) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... in a fair and reasonable manner, order of Commissioner (Appeals) confirming Assessing Officer's order was to be upheld Disallowance under section 40(a)(ia) of the Act – Held that:- assessee is entitled to claim deduction of expenses if the TDS deducted there on is remitted before the due date for filing the return of income - assessee paid the entire amount of expenditure subjected to disallowance under section 40(a)(ia) of the Act before the end of the financial year and hence the provisions of sec.40(a)(ia) cannot be invoked on them - claim is not borne out of the orders of tax authorities - matter remanded to the file of the Assessing Officer - ITA No.352/Vizag/2008 - - - Dated:- 13-4-2012 - Sunil Kumar Yadav, B R Baskaran, JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduct tax on the balance amount of ₹ 5.00 lakhs. Hence the Assessing Officer disallowed the above said aggregate amount of ₹ 52,26,577/- u/s 40(a)(ia) of the Act. The Learned CIT(A) confirmed both the additions. The Learned CIT(A) also enhanced the income by making further disallowance of ₹ 1,40,000/- u/s 40(a)(ia) of the Act. Aggrieved, the assessee is in appeal before us. 4. The Learned Authorised Representative first addressed the issue of disallowance made under section 40(a)(ia) of the Act. He submitted that the Assessing Officer disallowed a sum of ₹ 47,26,577/- for the reason that the assessee has failed to remit the tax deducted at source in time. He submitted that though there was delay in remitting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low the same. 6. On the contrary, the Learned D.R submitted that the provisions of sec. 40(a)(ia) of the Act shall apply to all payments covered by sec. 194C of the Act whether they have already been paid or remain as payable as at the end of the relevant financial year. He drew support from the following case law:- (a) Dey s Medicals (UP) (P) Ltd (216 ITR 83 (All)) (b) Sree Chaudhry Transport (225 CTR 125 (Raj)) (c) CIT Vs. Orient Goa (P) Ltd (325 ITR 554 (Bom)) With regard to the amendment brought out by the Finance Act, 2010 in sec. 40(a)(ia) of the Act, the Learned D.R submitted that the same shall not have retrospective effect and for that proposition he placed reliance on the decision of Mumbai Special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh not the jurisdictional High Court. A simple answer would be that the judgment of a High Court, though not of the jurisdictional High Court, prevails over an order of the Special Bench even though it is from the jurisdictional Bench (of the Tribunal) on the basis of the view that the High Court is above the Tribunal in the judicial hierarchy. But this simple view is subject to some exceptions. It can work efficiently when there is only one judgment of a High Court on the issue and no contrary view has been expressed by any other High Court. But when there are several decisions of non-jurisdictional High Courts expressing contrary views, it has been recognized that the Tribunal is free to choose to adopt that view which appeals to it. In k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the provisions of sec.40(a)(ia) would apply to all payments made during the course of the year or it would apply only to the expenditure which remain payable as at the end of relevant year was considered by the Visakhapatnam Special Bench in the case of Merilyn Shipping Transports, referred (Supra) and the Special bench, by majority view, has held that the provisions of section 40(a)(ia) of the Act would apply only to the expenditure which is payable as on 31st March of every year and cannot be invoked to disallow the amounts which have already been paid during the previous year without deducting tax at source. With regard to the decisions relied upon by the Learned D.R, it was specifically observed at paragraph 11 of the Judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to those amount which remain payable as at the end of the relevant financial year in respect of those items of expenditure on which the TDS was not deducted at all or in respect of those cases where the TDS was remitted after the due date for filing the return of income. 12. The next issue pertains to the allocation of common expenditure between the shipping business and other business. The Learned A.R contended that the Managing Director is exclusively looking after the shipping business and hence the salary paid to him amounting to ₹ 4,20,000/- should not have been taken as common expenditure. He also submitted that the assessee has allocated the common expenses in a fair and reasonable manner and accordingly prayed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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