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TMI Blog2005 (2) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... the "Act"). The necessary facts are that the assessee filed the return of income on November 29, 1994, declaring a total income of Rs. 33,75,58,470. An order under section 143(1)(a) of the Act was passed on January 12, 1995. However, the case was taken up for scrutiny under section 143(2) of the Act. Notices were issued to the assessee on February 2, 1995 in response to which the representative of the assessee appeared. The Assessing Officer upon scrutiny found that the amount of Rs. 2,50,81,308 could not be permitted to be deducted and he disallowed the deduction of the entire amount in terms of the provisions of section 40(a)(i). There was not much dispute with regard to other matters but on this particular aspect the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94 on royalty payment. I agree with the A.Rs of the assessee that section 40(a)(i) uses the word 'or' in contradistinction to the word 'and'. Therefore, if it is found that the assessee had deducted TDS from the royalty payment by a book entry and subsequently has paid the amount to the company's account as per the time-limit prescribed under the Act (rule 30 of the Income-tax Rules), then the royalty payment is to be allowed in the hands of the appellant during this year. As the payment particulars have not been examined properly, I restore the issue to the file of the Assessing Officer to be examined in the lines suggested by me." The Commissioner of Income-tax held that the conditions of section 40(a)(i) were fully satisfied as the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should deduct or pay the tax deducted at source. This provision does not say that the tax should be deducted and paid. The undisputed facts of this ground are that the appellant had deducted the tax but paid the same within the time allowed under Chapter XVII-B read with rule 30 of the Income-tax Rules. If the assessee fails to comply this requirement, then recourse to charging of interest penalising the assessee or prosecuting are prescribed under the Income-tax Act. We, therefore, feel that non-allowing the claim of expenditure, once the assessee has complied with the requirements of section 40(a)(i) is unjustified. This addition is therefore deleted." The Commissioner of Income-tax has challenged this order of the Tribunal in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s laid down by the Constitution Bench in Chunilal V. Mehta and Sons Ltd. (Sir) v. Century Spinning and Manufacturing Co. Ltd., AIR 1962 SC 1314, still hold good. The five tests so laid are: whether (i) it is of general public importance; or (ii) it directly or substantially affects the rights of the parties; or (iii) it is an open question in the sense that it is not finally settled by the Supreme Court; or (iv) it is not free from difficulty; and (v) it calls for discussion of alternative views." The bare reading of the above enunciated principles of law clearly shows that for the court to determine the fact that the appeal before the court involves a substantial question of law the case should essentially fall within either of the afore- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Explanation.- For the purposes of this sub-clause.- (A) 'royalty' shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;" It is a settled canon of interpretation of law that wherever a provision uses plain and simple language free of ambiguity such provision should be given its plain meaning without addition or subtraction of any expression into the language of the provisions. The scope of section 40 spells out what amounts are not deductible from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. This apparently is compliance with the statutory provisions of the Act and the view taken partially by the Commissioner of Income-tax as well as the Tribunal had called for no interference. Upon the interpretation of these provisions, the Tribunal has taken a view which is permissible and is not perverse. Merely because another view is possible would not give rise to a substantial question of law. Once two interpretations are possible, the one which deals in favour of the assessee would be given precedence over the other view. The argument raised on behalf of the respondent-Department that the deduction should be allowed in the year of actual deposit of tax per se does not appear to be having any merit. Once the time of deposit is sp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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