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TMI Blog2012 (12) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... a) is not voluntarily and the addition as made and confirmed is to be deleted. 03. The brief facts of the case are that the assessee is a partnership firm engaged in the business of textiles. For the assessment year 2005-06 the assessee filed return of income on 31.10.2005 declaring total income of Rs.1,13,729/-. The return was processed u/s.143(1) and later the case was selected for scrutiny and after detailed discussions an order u/s.143(3) dt.14.09.2007 was passed assessing the total income at Rs.1,42,550/- making an addition of Rs.28,815/- towards inadmissible expenses. Later on the AO invoked section 154 and sent a notice to the assessee. After hearing the assessee, order u/s.154 of the Act was passed, wherein addition of Rs.6,46,690/- was made as disallowance u/s.40(a)(ia) of the Act. During the previous year relevant to the assessment year, the assessee had made payment to various parties for job works on which tax was deducted at source in the month of March, 2005 only. The tax that was deducted on 31.03.2005 was remitted to Government account on 10.05.2005. However, the AO has disallowed payments totaling to Rs.6,46,690/- u/s.40(a)(ia), citing reference to the amount repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 302 of 2011, judgment dated 23.11.2011, copy of which is placed at pages 15 and 16 of the assessee's compilation, by observing as under:- "The learned Tribunal on fact found that the assessee had deducted tax at source from the paid charges between the period April 1, 2005 and April 28, 2006 and the same were paid by the assessee in July and August 2006, i.e. well before the due date of filing of the return of income for the year under consideration. This factual position was undisputed." 12. Although the aforesaid judgment was relating to the issue as to whether the amendment in section 40(a)(ia) was having retrospective effect or not, but from the ratio laid down in the said case, it is clear that addition u/s. 40(a)(ia) of the Act cannot be made if the payment of tax deducted at source has been made before the due date of filing the return of income for the year under consideration. In the present case, payment of the TDS has been made before the due date for filing of the return u/s. 139(1) of the Act, therefore the ld. CIT(A) was fully justified in deleting the addition made by the AO by following the decision of the ITAT Mumbai Bench in the case of Bapusaheb Nanasaheb Dhuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of tax on payment. Once, the nature of payment is falling under the provisions of Chapter XVII/VII-B then disallowance under section 40(a)(ia) shall be as per condition as provided under this section itself. The proviso to section 40(a)(ia) makes it further clear that even in the case when the tax has been deductible as per the provisions of Chapter XVII but deducted in the subsequent year or deducted during the last month of previous year but paid after the due date under section 139(1) or deducted during the other month of the previous year except last month but paid after the end of the said previous year, then the said sum shall not be allowed as deduction in computing the income of the previous year but allowed in the previous year in which the said tax has been paid. If the condition of deduction and payment prescribed under Chapter XVII/XVII-B are applicable for disallowance of the deduction under section 40(a)(ia) then the provisions of section 40(a)(ia) will be rendered as meaningless, absurd and etiose. As per the provisions of section 40(a)(ia), the deduction is disallowed only in the case when either no tax was deducted or it was not paid after deduction. But when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the revenue. Therefore considering the precedent in the judicial hierarchy, we are bound to follow the decision of the Hon'ble Calcutta High Court because it is the only judgment of any High Court which is brought to our notice. 15. Similar view has been taken in the Third Member decision in the case of Kanel Oil & Export Inds. Ltd. v. JCIT [2009] 121 ITD 596 (Ahd)(TM) wherein it has been held as under:- "In the instant case, question that came up for consideration was as to whether the order of the Special Bench upholding the levy of interest in the light of sub-section (4) of section 115JA should be followed or the judgment of the Bombay High Court in Snowcem India Ltd.'s case (supra), also rendered in the context of section 115JA, had to be applied. Both the decisions were under section 115JA. One was of a Special Bench of the Tribunal, Ahmedabad and the other was of a High Court, though not a jurisdictional High Court. A simple answer would be that the judgment of a High Court, though not of a 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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