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TMI Blog2017 (1) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... res. If the intention of the legislature was to make the payment directly to the railway authorities, then the exception provided in the Explanation should not have been introduced in Section 194C of the Act. Thus, on a conspectus of the matter, we are of the view that even if payment is made to an Agent so long as the payment is meant for meeting the expenditure in the form of payment to the railways, it stands excluded from the provisions of Section 194C of the Act. Under these circumstances, we accept the plea of the assessee by holding that there was no need to deduct tax at source with respect to the impugned payment to the contractor. - As in the case of ACIT, Central Circle-2, Hyderabad vs., M/s. Janapriya Properties Pvt. Ltd., H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o clearing and forwarding agents are held not allowable u/s.40(a)(ia) as no TDS need be made on actual reimbursement and therefore erred in confirming the disallowance. 5. Without prejudice to the above, the Ld. CIT(A) ought to have appreciated the fact that the amounts were already paid and were not payable and further the A.O. cannot hold the assessee as assessee in default u/s.201 and hence the provisions of section 40(a)(ia) are not attracted and thereby ought to have allowed the appeal on that count. 6. Any other ground that may be urged at the time of hearing. 2. Before going into the issue on hand it is necessary to refer to the brief facts of the case. The assessee-company is engaged in the business of manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rves out an exception and thereby, there is no need for the assessee to deduct tax at source on payments made to the contractors. (b) In the alternative, it was submitted that the payment having already been made by the assessee Section 40(a)(ia) do not come into play since it applies only when an amount is payable . On this aspect the Learned Counsel appearing on behalf of the assessee, relied upon the decision of the ITAT, Special Bench in the case of M/s. Merilyn Shipping Transport, Visakhapatnam 136 ITD 23 as well as the decision of the jurisdictional High Court in the case of CIT-II, Hyderabad vs., M/s. Janapriya Engineers Syndicate 371 ITR 439] which was, inturn, referred to by the ITAT B Bench, Hyderabad in the case of ACIT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowed the decision of the Special Bench in the case of Merylin Shipping and Transport (supra). 7. Upon hearing the rival submissions, we are of the view that the decision of the ITAT Special Bench is binding on the Tribunal, particularly in view of the clarificatory order passed by the Hon'ble High Court of judicature at Hyderabad in the instant case, and thus, we respectfully follow the decision of Special Bench in the case of Merylin Shipping and Transports (supra), and hold that the provisions of S.40(a)(ia) cannot be invoked where the payments were already made by the assessee. We direct the Assessing Officer accordingly. In the result, appeals of the revenue insofar as the above issue is concerned, are hereby dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption to the payments made to such contractors if that amount has to be utilised for payment of rail fares. If the intention of the legislature was to make the payment directly to the railway authorities, then the exception provided in the Explanation should not have been introduced in Section 194C of the Act. Thus, on a conspectus of the matter, we are of the view that even if payment is made to an Agent so long as the payment is meant for meeting the expenditure in the form of payment to the railways, it stands excluded from the provisions of Section 194C of the Act. Under these circumstances, we accept the plea of the assessee by holding that there was no need to deduct tax at source with respect to the impugned payment to the contractor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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