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TMI Blog2016 (8) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in fairly interpreting the provisions of Section 40(A)(3) and read the said provisions in isolation. The provisions of the Section 40(A)(3) are also controlled and conditioned by the spirit and letter of the provisions of Section 40A of the IT Act, which bestows on the Assessing officer, a well reasoned discretion to allow the expenses if the said officer is of the opinion that such expenses are reasonable and not excessive or when the services or facilities for which the payment is made is due to legitimate needs of the business of the Assessee. The Learned Commissioner of Income Tax (Appeals), Hubballi, has overlooked the application of this provision also to the cases falling under Section 40A(3) of the IT Act. Therefore, the conclusion arrived is erroneous." ' 3. Nobody has appeared when this appeal was called for hearing repeatedly. We further note that on the last date of hearing, the matter was adjourned at the request of the ld. AR of the assessee. Despite the adjournment granted to the assessee, the assessee did not choose to cause appearance to represent and prosecute its appeal. 4. We have heard the ld. DR and carefully perused the impugned orders of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sportation of sugarcane and the harvester has been admittedly paid harvesting and transportation charges by the assessee. This leads to an irresistible inference that the produce namely the sugarcane has been harvested and transported by the contractor. Harvesting and transportation can be effected only with consent of the owner of the sugarcane namely farmer. 28. One other ground pressed into service by the assessee in support of its case is that, assessee is a co- operative sugar factory established for the benefit of its members and therefore, the view taken by the Assessing Authority would adversely effect the profit margin to the members of the society as the society will have to pay tax, interest and penalty for non-compliance of section 194C, 194I and 194J of the Act. This would create additional burden of tax, penalty and interest and the same would run counter to the interest of co-operative movement. 29. We are afraid, we may not be able to persuade ourselves to accept the aforesaid argument seeking concession or waiver from compliance of statutory obligations on the part of a co-operative entity. In our view, it is hardly any legal ground for consideration. Non-com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1472 at p. 994 that for a "waiver to be effectual it is essential that the person granting it should be fully informed as to his rights" and Isaacs, J. delivering the judgment of the High Court of Australia in Craine v. Colonial Mutual Fire Insurance Co. Ltd. [(1920) 28 CLR 305 (Aus)] has also emphasised that waiver "must be with knowledge, an essential supported by many authorities". Now in the present case there is nothing to show that at the date when the appellant addressed the letter dated June 25, 1970, it had full knowledge of its right to exemption under the assurance given by Respondent 4 and that it intentionally abandoned such right. It is difficult to speculate what was the reason why the appellant addressed the letter dated June 25, 1970 stating that it would avail of the concessional rates of Sales Tax granted under the letter dated January 20, 1970. It is possible that the appellant might have thought that since no notification exempting the appellant from Sales Tax had been issued by the State Government under Section 4-A, the appellant was legally not entitled to exemption and that is why the appellant might have chosen to accept whatever concession was being grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Supreme Court has held as follows:- '14. In Lim Chin Aik v. Reginam [(1963) 1 All ER 223, 226 : 1963 AC 160 : (1963) 2 WLR 42 (PC)] , the Privy Council also observed: "It was said on the respondent's part that the order made by the minister under the powers conferred by Section 9 of the Ordinance was an instance of the exercise of delegated legislation and therefore that the order, once made, became part of the law of Singapore of which ignorance could provide no excuse on a charge of contravention of the section. Their Lordships are unable to accept this contention. In their Lordships' opinion, even if the making of the order by the minister be regarded as an exercise of the legislative as distinct from the executive or administrative function (as they do not concede), the maxim cannot apply to such a case as the present where it appears that there is in the State of Singapore no provision, corresponding, for example, to that contained in Section 3(2) of the English Statutory Instruments Act, 1946, for the publication in any form of an order of the kind made in the present case or any other provision designed to enable a man by appropriate inquiry to find ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate, demands compliance, those that are governed must be notified directly and reliably of the law and all changes and additions made to it by various processes. Whether law is viewed from the standpoint of the 'conscientious good man' seeking to abide by the law or from the standpoint of Justice Holmes's 'unconscientious bad man' seeking to avoid the law, law must be known, that is to say, it must be so made that it can be known. We know that delegated or subordinate legislation is all pervasive and that there is hardly any field of activity where governance by delegated or subordinate legislative powers is not as important if not more important, than governance by parliamentary legislation. But unlike parliamentary legislation which is publicly made, delegated or subordinate legislation is often made unobtrusively in the chambers of a Minister, a Secretary to the Government or other official dignitary. It is, therefore, necessary that subordinate legislation, in order to take effect, must be published or promulgated in some suitable manner, whether such publication or promulgation is prescribed by the parent statute or not. It will then take effect from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50. But we are in agreement with the High Court on the other two grounds. As mentioned earlier, the impugned assessments were made in 1949. The writ petition was filed in 1956. The explanation given by the petitioner for this long delay is that he did not know the correct legal position and he came to know about the same after the decision of the Allahabad High Court in the Commissioner of Sales Tax, U.P. v. Modi Food Products Ltd. [(1955) 6 STC 287]. Every individual is deemed to know the law of the land. The courts merely interpret the law and do not make law. Ignorance of law is not an excuse for not taking appropriate steps within limitation. Therefore the argument that the appellant did not know the true legal position is not one that can be accepted in law. That apart, even after the High Court rendered its decision in Modi Food Products' case [(1955) 6 STC 287] the petitioner did not move the High Court for over several months. There is no satisfactory explanation for that delay. That being so, the High Court was fully justified in refusing to exercise its discretion under Article 226 of the Constitution in favour of the appellant." (Underlining is by us) State of A.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of disallowance is attracted when an individual, who is liable to deduct tax on any interest payable to a resident on which tax deductible at source commit default. (ii) In the case of Sikandarkhan N. Tunvar (supra) It is held by the Hon'ble High Court of Gujarat that: "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 as advanced by the assessees is accepted, it would lead to a situation where the assessee who 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 alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Revenue are allowed by answering the following substantial question of law in its favour and it is held that in the facts and circumstances of this case, the Tribunal was not correct in interpreting the language of section 40(a)(ia) to mean that the consequence of disallowance is attracted only in respect of amounts which remain payable on the last day of the financial year." 6. We further note that the CIT(Appeals) has given the details of the payment made by the assessee towards hiring of the vehicles and therefore the CIT(Appeals) has found that the claim of the assessee that the expenditure was incurred for the assessee's own vehicle was not correct so far as the details have been reproduced by the CIT(Appeals) in the impugned order. Accordingly the order of the CIT(Appeals) qua this issue is upheld. 7. The next issue is regarding disallowance made u/s. 40A(3) of the Act for payment made in cash. We find that the CIT(Appeals) has given the full details of the payment in the impugned order, which is more than the minimum limit of exemption provided under the provisions of section 40A(3). Therefore, in the absence of any contrary fact or material, we find no reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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