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TMI Blog2015 (3) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... onal High Court and ITAT Special Bench, as discussed above we do not find any infirmity in the order of the ld. CIT(A) for deleting the addition made u/s 2(22)(e) of the Act. - Decided in favour of assessee. Disallowance of hiring charges u/s 40(i)(a) - CIT(A) deleted addition - Held that:- Since the amount was already paid and the taxes are paid by the recipient, in our opinion, the decision of the Special Bench in the case of Merilyn Shipping & Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) is applicable and by following the decision of the ITAT, Mumbai Benches (supra) we hold that the Tax Authorities have wrongly invoked provisions of section 40(a)(ia) in the instant case. No infirmity in the order of the ld. CIT(A) deleting the disallowance u/s 40(a)(ia) of the Act. - Decided in favour of assessee. - I.T.A. No.1919/Mum/2013 - - - Dated:- 13-2-2015 - Shri R.C. Sharma And Shri Vivek Varma JJ. For the Appellant Shri Jeetendra Kumar For the RespondentShri K.P. Dewani ORDER PER R.C. SHARMA, A.M. : This is an appeal filed by the Revenue and Cross Objection filed by the assessee is directed against the order of Ld. CIT(A) -4, Mumbai dated 14-12- 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mr. Hari Bhambhani because that is not the issue in appeal before me. The only issue to be decided whether such loan can be assessed in the hands of the assessee company despite the fact that assessee is not the shareholder of M/s Bhambhani Shipping Pvt. Ltd. The assessee in this regard has relied on the decision of Hon'ble ITAT, Special Bench decision in the case of ACIT vs. Bhaumik Colours Pvt. Ltd. 118 ITD 1. In this case Hon'ble ITAT has clearly held that addition in such cases u/s. 2(22)(e) can be made only in the hands of the beneficial and registered shareholder of the company, which has given loan. Similar is the finding of Hon'ble Rajasthan High Court in the case of CIT vs. Hotel Hilltop 313 ITR 116. Therefore, in the case of the assessee, no addition u/s. 2(22)(e) can be made in the hands of the assessee on account of loan taken from M/s. Bhambhani Shipping Pvt. Ltd. because assessee is not the registered and beneficial shareholder of M/s Bhambhani Shipping Pvt. Ltd. Therefore, respectfully following the decision of Hon'ble ITAT in the case of Bhaumik Colours Pvt. Ltd. (supra) and the decision of Hon'ble Rajasthan High Court in the case of Hotel Hil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yn Shipping and Transports (supra), the relevant portion is reproduced below :- In view of the above judicial pronouncements of Hon'ble Supreme Court and Hon'ble High Courts, materials placed before us, arguments made by both the sides and in view of the provisions of section 40(a}(ia) of the Act, on comparison between the proposed and enacted provisions, the only conclusion which I can reach is that the Legislature consciously replaced the words amounts credited or paid with the word payable in the final enactment. By changing the words from credited or paid to payable the legislative intent has been made clear that only outstanding amounts or the provisions for expenses liable for TDS under chapter XVII-B of the Act is sought to be disallowed in the event there is a default in following the obligations casted upon the assessee under chapter XVII-B of the Act. I agree with the arguments made by ld. Counsel for the assessee and other Counsels for the Interveners that while interpreting the word payable in this provisions, the word of astatute must be understood in its natural ordinary or popular sense and construed according to its grammatical meaning in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olling stake in the lending company, the Tribunal found that Section 2(22) (e) of the I.T. Act is not attracted and this finding raises a substantial question of law. 2. It was then contended that the Income Tax Appellate Tribunal has- applied the ratio of its own special bench decision in the case of Assistant Commissioner of Income Tax v/s Bhaumik Colour Pvt. Ltd reported in 2009 (313) ITR (AT) 146(Mumbai) (SB), equally the Income Tax Appellate Tribunal has proceeded on the footing that the view taken in the case of Bhaumik Colour Pvt Ltd(supra) has been approved by the Division Bench of this Court in the case of Commissioner of Income Tax v/s Universal Medicare Pvt. Ltd. reported in 2010 (324) ITR 263 (Bom.). 7. It was held by the Hon ble Bombay High Court that insofar as the assessee company which is not a shareholder in any of the entities which have advanced and lent sums, no addition is required to be made u/s 2(22)(e) of the Act. In the instant case, the ld. CIT(A) recorded a categorical finding to the effect that the assessee is not a shareholder of M/s Bhambhani Shipping Pvt. Ltd., therefore, the amount received by the assessee is not liable to be taxed u/s 2(22)(e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as erred in law in holding that for disallowance of expenses on the ground that YDS has not been deducted the amount should be payable and not which has been that the word payable in the section means the amount which was payable at any time during the year. (ii) Whether on the facts and circumstances of the case the Hon ble High Court has erred in law in holding that for disallowing expenses on the ground that TDS has not been deducted the amount should be payable and not which has been paid by the end of the year ignoring the decision of different Hon ble High Courts in CIT v. Crescent Export Syndicate (GA No. 319 of 2013) of the Hon ble Calcutta High Court as also CIT vs. Sikandarkhan N. Tunvar 2013 (5) TMI of the Hon ble Gujarat High Court. Leave to appeal by Special Leave is sought for on the followings grounds: (i) That the Hon ble High Court erred in law and in the facts and circumstances of the case in dismissing the appeal of the Department and deciding the issue in favour of the assesse, the Respondent herein. (ii) That the Hon ble High Court erred in law and in the facts and circumstances of the case in dismissing the appeal filed by the Department and uphold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipping Transports (supra)has been kept in abeyance of the Hon'ble Andhra Pradesh High Court, that the Hon'ble Gujarat High Court had taken a different view. Authorised Representative (AR) supported the order of the FAA. We have heard the rival submissions and perused the material before us. 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 (1. T. T.A. No. 352 of 2014- dt. 24.06.2014) the Hon'ble Andhra Pradesh High Court has clarified the issue of interim stay granted by it in the case of Merilyn Shipping Transports (supra). We will like to reproduce the relevant part of the said order and same reads as under: 4. We are of the view that until and unless the decision of the Special Bench is upset by this Court, it binds smaller Bench and coordinate Bench of the Tribunal. Under the circumstances, it is not open to the Tribunal, as rightly contended by Mr. Narasimha Sarma, learned counsel, to remand on the ground o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shaik in ITA No. 13/Mum/2013 for A.Y. 2009-10 orders dated 17-09-2014 wherein similar disallowance was deleted by the Tribunal. 12. Order of the co-ordinate Bench of this Tribunal in the case of ACIT vs. Amit Naresh Sinha in ITA No. 4154/Mum/2013 dated 10-09-2014 was also placed on record wherein exactly similar issue has been decided by the Tribunal in favour of the assesee. 13. The ld. Counsel for the assesse has also placed on record the following Tribunal orders in support of his contention that on the similar facts, the issue has been decided in favour of the assessee: 1. Decision of ITAT Jodhpur Bench in the case of ACIT vs. Shri Amol Agarwal in ITA No. 412 413/JU/2014 for AYs. 2008-09 2010-11 dated 25-09-2014. 2. Decision of ITAT Ahmedabad Bench in the case of M/s Frohberg Reality Pvt. Ltd. vs. ACIT in ITA No. 2066/Ahd/2014 for A.Y. 2010- 11 dated 12-12-2014 3. Decision of ITAT Nagpur Bench in the case of Gopal Dineshchandra Tulshan vs. ITO in ITA No. 161/Nag/2011 for A.Y. 2006-07 dated 8-09-2014. 3. Decision in the case of ITAT Agra Bench in the case of Rajeev Kumar Agarwal vs. ACIT in ITA No. 337/Agra/2013 for A.Y. 2006-07 dated 29-5-2013. 4. Decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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