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TMI Blog2015 (8) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal is of the considered opinion that the entire provisions of Income-tax Act which require the assessee to deduct tax would be meaningless. Section 40(a)(ia) would cover not only to the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirement of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s Merilyn Shipping & Transports vs ACIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM], does not lay down correct law. - Decided against assessee. - ITA No.2435/Mds/2014 - - - Dated:- 14-8-2015 - SHRI N.R.S. GANESAN AND SHRI A. MOHAN ALANKAMONY, JJ. For The Appellant : Shri S. Dasgupta, JCIT For The Respondent : Shri K. Balasubramanian, Advocate ORDER PER N.R.S. GANESAN, JUDICIAL MEMBER: This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-IV, Chennai, dated 30.04.2014 and pertains to assessment year 2008-09. The only issue arises for consideration is with regard to disallowance under Section 40(a)(ia) of the Income-tax Act, 1961 (in sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os.336 337/Mds/2015 in Shri V. Pandarinathan v. ITO dated 29.05.2015 and observed as follows:- 11. We have considered the rival submissions on either side and perused the relevant material on record. The first contention of the assessee is that the assessee had already paid on or before 31.03.2010 and nothing remained to be paid. The Ld. representative placed reliance on the judgment of Allahabad High Court in Vector Shipping Services (P) Ltd. (supra) and on the decision of this Bench of the Tribunal in Theekathir Press (supra). We have carefully gone through the judgment of Allahabad High Court in Vector Shipping Services (P) Ltd. (supra). The Allahabad High Court, while considering the decision of the Special Bench of this Tribunal in Merilyn Shipping and Transport (supra), made a passing reference about the decision taken by the Special Bench of this Tribunal. The Allahabad High Court had no occasion to examine the legality and otherwise of the Special Bench of this Tribunal. We find that that Calcutta High Court in CIT v. Crescent Export Syndicates and Gujarat High Court in CIT v. Sikandarkhan N. Tunvar had an occasion to examine the legality or otherwise of the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipping Transports (supra) and found that the decision rendered by the Special Bench of this Tribunal is not the correct law. It is well settled principles of law that when different High Courts expressed different opinions on a point of law, then, normally, the benefit of doubt under the taxation law would go to the assessee. It is also equally settled principles of law that the judgment which discusses the point in issue elaborately and gives an elaborate reasoning has to be preferred when compared to the judgment which has no reasoning and discussion. Admittedly, the Calcutta High Court and Gujarat High Court have discussed the issue elaborately and the specific reasoning has also been recorded as to why the Special Bench is not correct. Therefore, this Tribunal is of the considered opinion that the judgments of the Calcutta High Court Crescent Exports Syndicate Another (supra) and Gujarat High Court in Sikandarkhan N Tunvar (supra) have to be preferred when compared to the Allahabad High Court in M/s Vector Shipping Services (P) Ltd (supra). 13. For the purpose of convenience we reproducing below the observations made by the Calcutta High Court in Crescent Exports Syndica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Tribunal realized the meaning and purport of Section 40(a)(ia) correctly when it held that in case of omission to deduct tax even the genuine and admissible expenses are to be disallowed. But they sought to remove the rigour of the law by holding that the disallowance shall be restricted to the money which is yet to be paid. What the Tribunal by majority did was to supply the casus omissus which was not permissible and could only have been done by the Supreme Court in an appropriate case. Reference in this regard may be made to the judgment in the case of Bhuwalka Steel Industries vs. Bombay Iron Steel Labour Board reported in 2010(2) SCC 273. Unprotected worker was finally defined in Section 2(11) of the Mathadi Act as follows:- unprotected worker means a manual worker who is engaged or to be engaged in any scheduled employment. The contention raised with reference to what was there in the bill was rejected by the Supreme Court by holding as follows: It must, at this juncture, be noted that in spite of Section 2(11), which included the words but for the provisions of this Act is not adequately protected by legislation for welfare and benefits of the labour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a contractor of sub-contractor. This differential treatment was not intended. Therefore, the legislature provided that the amounts, on which tax is deductible at source under XVII-B payable on account of interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services or to a contractor of sub-contractor shall not be deducted in com putting the income of an assessee in case he has not deducted, or after deduction has not paid within the specified time. The language used by the legislature in the finally enacted law is clear and unambiguous whereas the language used in the bill was ambiguous. A few words are now necessary to deal with the submission of Mr. Bagchi and Ms. Roychowdhuri. There can be no denial that the provision in question is harsh. But that is no ground to read the same in a manner which was not intended by the legislature. This is our answer to the submission of Mr. Bagchi. The submission of Mr. Roychowdhuri that the second proviso sought to become effective from 1st April, 2013 should be held to have already become operative prior to the appointed date cannot also be acceded to for the same reason indicated above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We are prepared to and we are duty bound to interpret such requirements strictly. Such requirements, however, cannot be enlarged by any addition or subtraction of words not used by the legislature. The term used is interest, commission, brokerage etc. is payable to a resident or amounts payable to a contractor or sub-contractor for carrying out any work. The language used is not that such amount must continue to remain payable till the end of the accounting year. Any such interpretation would require reading words which the legislature has not used. No such interpretation would even otherwise be justified because in our opinion, the legislature could not have intended to bring about any such distinction nor the language used in the section brings about any such meaning. If the interpretation s advanced by the assessees is accepted, it would lead to a situation where the assessee though was required to deduct the tax at source but no such deduction was made or more flagrantly deduction though made is not paid to the Government, would escape the consequence only because the amount was already paid over before the end of the year in contrast to another assessee who would otherwise be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment sought to remedy and what was the effect of the changes. 27 to 36 .. 37. In our opinion, the Tribunal committed an error in applying the principle of conscious omission in the present case. Firstly, as already observed, we have serious doubt whether such principle can be applied by comparing the draft presented in Parliament and ultimate legislation which may be passed. Secondly, the statutory provisions is amply clear. 38. In the result, w are of the opinion that Section 40(a)(ia) would cover not only to the amounts which are payable as on 20 ITA No. 63 64m 83-85 7-72/Coch/2014 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirement of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s Merilyn Shipping Transports vs ACIT (supra), does not lay down correct law. 14. By following the judgments of the Calcutta High Court in Crescent Export Syndicate (supra) and the Gujarat High Court in Sikandarkhan N Tunvar (supra), this Tribunal is of the considered opinion that the decision of the Special Bench of this Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e financial year, is not attracted. Therefore, according to the appellants, disallowance cannot be sustained. This contention was sought to be substantiated by relying on the judgment of the Allahabad High Court in Commissioner of Income Tax v. Vector Shipping Services (P) [2013] 357 ITR 642 (All)]. Primarily, this contention should be answered with reference to the language used in the statutory provision. Section 40(a)(ia) makes it clear that the consequence of disallowance is attracted when an individual, who is liable to deduct tax on any interest payable to a resident on which tax is deductible at source, commits default. The language of the Section does not warrant an interpretation that it is attracted only if he in remains payable on the last day of the financial year. If this contention is to be accepted, this Court will have to alter the language of Section 40(a)(ia) and such an interpretation is not permissible. This view that we have taken is supported by judgments of the Calcutta High Court in Crescent Exports Syndicate and another [ITAT 20 of 2013] and the Gujarat High Court in the case of Commissioner of Income Tax v. Sikandadarkhan N. Tunvar [ITA Nos.905 of 2012 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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