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TMI Blog2012 (9) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012 - Shri Joginder Singh and Shri R.C. Sharma, JJ. Appellant by Shri A.K. Padlia Respondents by Shri Arun Dewan ORDER PER SHRI R.C. SHARMA, AM These are the appeals filed by the assessee against the order of the CIT(A) for the assessment years 2007-08 and 2008-09. 2. Common grounds have been raised in both the assessment years. The grounds raised for the assessment year 2007-08 are as under :- 1. (a). On the facts and in the circumstances of the case learned CIT(A) erred in holding that S. 124 of the IT Act and not S. 127 of the IT Act is applicable to the act of direct transfer of the case by the DC IT Chittorgarh to the ITO Mandsaur. (b). The CIT(A) erred in not holding that the transfer of the case was illegal, since made without reference to the superiors (of DCIT) namely the Chief Commissioner, Udaipur and Chief Commissioner, Indore and without recording reasons for transfer and without giving opportunity to the assessee. (c). The CIT(A) erred in not holding that the transfer of the pending case on the ground that in the return of income for A.Y. 2009-10 address of Mandsaur was given (when in this year also address of Mandsaur wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed in limine. 5. The facts, in brief, are that the assessee was carrying on the business of transport, having its office at Pratapgarh. The assessee took on lease vehicles belonging to son, wife, daughter and sonin- law and paid lease money thereon as detailed below :- S.no. Name of the person whom lease money payable A.Y. 2007-08 Amount of lease money A.Y. 2008-09 Amount of Lease money 1. Smt. Vanmala Doshi 960,000 1,034,000 2 Shri Nitesh Kumar Doshi 1,756,000 3,318,000 3. Naresh Kumar Doshi (HUF) 395,000 615,000 4. Shri Bharat Raj Doshi 2,433,000 3,813,000 5. Shri Manoj Kumar Jain 860,000 1,050,000 6. Smt. Dimple Jain 120,000 60,000 7. Total (Rs.) 6,524,000 9,890,000 6. As per the Assessing Officer, lease money given for vehicles amounts to rent within the meaning of section 194-I and, therefore, the assessee should have deducted TDS from the lease money shown as payable to them. Accordingly, the Assessing Officer made disallowance by invoking the provisions of section 40(a)(ia) of the Act 7. By the impugned order, the learned Commissioner of Income Tax (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance to the extent of Rs.14,93,000j- was not called for. It has also been pointed to me that the payment of lease rent to Smt Dimple Jain amounted to Rs.1,20,000/- (Rs.30,000 prior to 13.07.2006 and Rs.90,000 afterwards). Since the payment does not exceed Rs.1,20,000/-, the TDS was not required to be made as per the first proviso to section 1941. The amount of Rs.30,000j- paid to Smt Dimple Jain prior to 13.07.2006 is already included in the total figure of Rs.14,93,000/-. Thus, assessee would get further relief of Rs.30,000/-. In view thereof, the total relief would amount to Rs.15,23,OOO/- (Rs.14,93,000 + Rs.30,000). The balance amount of Rs.50,O1,000/- (Rs.65,24,000 - Rs.15,23,000) stands confirmed. The disallowance made in A.Y.2008-09, however deserves to be confirmed in toto 8. Against this order, the assessee is in further appeal before us. 9. We have considered the rival submissions of the parties, gone through the orders of the authorities below and find from record that the Assessing Officer has disallowed expenses of Rs. 65,24,000/- u/s 40(a)(ia) of the Act in respect of the lease expenses on hiring of lorries/vehicles by observing that the word plant r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) 488 : (2010) 34 OTR (SC) 49 : (2010) 320 ITR 561 (SC) applied. (Para 6) The Revenue s argument does not have any merit that payment of earlier years outstanding expenses cannot be allowed in subsequent year unless specifically provided in the statute. Proviso to s. 40(a)(ia) lays down that earlier year s provision can be allowed in subsequent years only if TDS is deducted and deposited. Hence, Revenue s fear is unfounded and the provision of s. 40(a)(ia) covers the situation. The Income-tax Act, 1961, already has a precedent in s. 43B which allows expenses only on payment basis and therefore, the argument of the Revenue that s. 40(a)(ia) would become otiose in cash system of accounting, was without any basis. (Para 7) The legislature by consciously replacing the words from "credited" or "paid" to "payable': the intent has been made clear that only the outstanding amount or the provision for expenses which are liable for TOS are to be disallowed in the event there is default in not following the TOS provisions under Chapter XVII-B. No doubt the object of s. 40(a)(ia) is to ensure that the TOS provision as provided in Chapter XVII-B is implemented without any defa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded any further and, therefore, cannot be invoked by AO to disallow the genuine and reasonable expenditure on the amounts of expenditure already paid. While interpreting the word "payable" in." this provision, the word of a statute must be understood in its natural, ordinary or popular sense and construed according to its grammatical meaning. Such construction would not lead to absurdity because there is nothing in this context or in the object of this statute to suggest to the contrary. It is a cardinal principle of interpretation that the words of a statute must be prima facie given their ordinary meaning; when the words of the statute are clear, plain and unambiguous then the Courts are bound to give effect to that meaning. The literal rule of interpretation really means that there should be no interpretation of the statute, rather in other words, one should read the statute as it is without doing any violence to the language. The word "payable" used in s. 40(a)(ia) is to be assigned strict interpretation, in view of the object of legislation, which is intended from the replacement of the words in the proposed and enacted provisions from the words "amount credited or paid" to " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, the learned Commissioner of Income Tax (Appeals) confirmed the addition after having the following observations:- In the facts of the case, the assessee s claim of loss on account of sale of the plot cannot be accepted more so when A.O. has brought on record the registered deed and calculated the capital gain in accordance with provisions of section 50C(1) adopting the sale value as considered by state Government authorities for stamp valuation. This is a case where original return was accepted u/s 143(1) and as such no view was formed earlier on this issue. Therefore, in my considered view that the Assessing Officer was well within his powers to compute the capital gain during the 147 proceedings. Having considered the facts of the case, the addition of Rs.3,34,910/- made by the A.O. stands confirmed. 17. The finding recorded by the learned Commissioner of Income Tax (Appeals) has not been controverted by the assessee by bringing any positive material on record. Accordingly, we confirm the action of the learned Commissioner of Income Tax (Appeals) on this ground. 18. In the assessment year 2008-09, the ground taken by the assessee with regard to power of the Chief ..... X X X X Extracts X X X X X X X X Extracts X X X X
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