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TMI Blog2016 (8) TMI 1569X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerns of the assessee-company. Merely because some of the Directors are common in both the companies, that cannot be a reason to hold that the companies in which the assessee invested are subsidiary/holding companies. Tribunal is of the considered opinion that the shareholding pattern of the assessee-company and the companies in which investments were made has to be examined to decide whether the investment was made by the assessee in the subsidiary/holding companies. These facts were not apparently examined by the lower authorities. Moreover, the availability of liquid funds with the assessee on the date of the investment also needs to be examined. Since these factual aspects are not examined by any of the lower authorities, this Tribunal is of the considered opinion that the matter needs to be reexamined. Accordingly, the orders of the lower authorities are set aside and the entire disallowance made by the Assessing Officer u/s 14A r.w. Rule 8D is remitted back to the file of the Assessing Officer. TDS u/s 194C - Addition u/s 40(a)(ia) - Proof of recipient/deductee disclosing the receipt in the return of income and paid taxes thereon - HELD THAT:- Under the scheme of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the Assessing Officer found that the assessee itself disallowed a sum of ₹ 8,000/- u/s 14A of the Act, therefore, disallowance has to be computed u/s 14A r.w.r 8D. The Assessing Officer has also placed his reliance on the judgment of the Delhi High Court in the case of Maxopp Investment Ltd vs CIT, 15 taxmann.com 390. According to the ld. Counsel, the assessee has not invested the money for the purpose of earning the exempted income. The investments were made for acquiring the shares of the subsidiary companies with an intention to consolidate its long term solvency requirements, therefore, sec. 14A is not at all applicable. According to the ld. Counsel, since the investments were made in the subsidiary companies for acquiring controlling interest over the subsidiary companies, the same cannot be disallowed by applying sec. 14A of the Act. 4. On the contrary, Dr. U. Anjaneyalu, ld. Departmental Representative submitted that the assessee claims that the investments were made in subsidiary companies for acquiring controlling interest. The assessee also claimed before the Assessing Officer that the investments were made to consolidate long term business needs and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed to be investment in the subsidiary companies. It is not known how Shriram Transport Finance Company Ltd and Shriram City Union Finance Ltd. are sister concerns of the assessee-company. Merely because some of the Directors are common in both the companies, that cannot be a reason to hold that the companies in which the assessee invested are subsidiary/holding companies. This Tribunal is of the considered opinion that the shareholding pattern of the assessee-company and the companies in which investments were made has to be examined to decide whether the investment was made by the assessee in the subsidiary/holding companies. These facts were not apparently examined by the lower authorities. Moreover, the availability of liquid funds with the assessee on the date of the investment also needs to be examined. Since these factual aspects are not examined by any of the lower authorities, this Tribunal is of the considered opinion that the matter needs to be reexamined. Accordingly, the orders of the lower authorities are set aside and the entire disallowance made by the Assessing Officer u/s 14A r.w. Rule 8D is remitted back to the file of the Assessing Officer. The Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Dr. U. Anjaneyalu, ld. DR submitted that admittedly the assessee paid ₹ 33 crores in pursuance of an agreement for acquiring right to get services/information. According to the ld. DR, the transaction is nothing but a contractual service, therefore, the assessee has to deduct tax u/s 194C of the Act. Since tax was not deducted, the Assessing Officer disallowed the claim of the assessee u/s 40(a)(ia) of the Act. However, on appeal by the assessee, the CIT(A) found that since the assessee has already paid the amount and nothing is outstanding as on 31.3.2009, there cannot be any disallowance. The CIT(A) placed his reliance on the decision of this Bench of the Tribunal in assessee s own case in I.T.A. No. 512/Mds/2015 dated 26.6.2015. This Bench of the Tribunal in fact placed its reliance on the decision of the Vishakapatnam Special Bench in Merilyn Shipping and Transports vs Addl. CIT, 16 ITR (Trib) 1. Referring to the judgment of the Gujarat High Court in the case of CIT vs Sikandarkhan N. Tunvar, 33 taxmann.com 133, Calcutta High Court in the case of CIT vs Crescent Export Syndicates dated 3.4.2013 in I.T.A.No.20 of 2013 the ld. DR submitted that all the two High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns payable on the last day of the financial year relevant to the assessment year under consideration. The ld. Counsel mainly placed his reliance on the decision of the Special Bench in Merilyn Shipping and Transports (supra). We find that the decision of the Special Bench was examined by the Calcutta High Court in the case of Cresent Export Syndicates (supra) and found that the decision of the Special Bench is no longer a good law. Similar view was taken by the Gujarat High Court in the case of Sikandarkhan N. Tunvar (supra). In view of these judgments, this Tribunal is of the considered opinion that the decision of the Special Bench may not be applicable to the facts of this case. 14. We have gone through the judgment of the Allahabad High Court in the case of Vector Shipping Company Pvt. Ltd (supra). The Allahabad High Court after referring to the decision of the Special Bench in the case of Merilyn Shipping and Transports confirmed the order of the Delhi Bench of this Tribunal. The Allahabad High Court has no occasion to consider the Special Bench decision in the case of Merilyn Shipping and Transports(supra). Moreover, a passing reference was made about the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal under Article 141 of the Constitution of India. It is also equally settled principle that a dismissal of SLP without any discussion is not the law declared by the Apex Court. The Apex Court thought it fit that it was not a fit case to be admitted for consideration. Therefore, while dismissing the SLP, the Apex Court did not declare any law. Hence, we cannot say that the Apex Court has declared the law declaring that section 40(a)(ia) is applicable only in respect of the amounts remains to be payable at the last day of the financial year. 12. We have also carefully gone through the judgment of the Allahabad High Court in CIT vs M/s Vector Shipping Services (P) Ltd (supra), copy of which is filed by the assessee. The Allahabad High Court, after reproducing the relevant paragraph from the order of CIT(A) and referring to the decision of the Special Bench of this Tribunal in Merilyn Shipping Transports (supra) found that the Tribunal has not committed an error. It is obvious that there is no discussion about the correctness or otherwise of the decision rendered by the Special Bench of this Tribunal in Merilyn Shipping Transports (supra). However, we find that the Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thrust of the majority view is based on the fact that the Legislature has replaced the expression amounts credited or paid with the expression payable in the final enactment. Comparison between the pre-amendment and post amendment law is permissible for the purpose of ascertaining the mischief sought to be remedied or the object sought to be achieved by an amendment. This is precisely what was done by the Apex Court in the case of CIT Vs. Kelvinator reported in 2010(2) SCC 723. But the same comparison between the draft and the enacted law is not permissible. Nor can the draft or the bill be used for the purpose of regulating the meaning and purport of the enacted law. It is the finally enacted law which is the will of the legislature. The Learned Tribunal fell into an error in not realizing this aspect of the matter. The Learned Tribunal held that where language is clear the intention of the legislature is to be gathered from the language used . Having held so, it was not open to seek to interpret the section on the basis of any comparison between the draft and the section actually enacted nor was it open to speculate as to the effect of the so-called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, this would be a clear pointer to the legislative intent that the legislature being conscious of the fact and being armed with all the Committee reports and also being armed with the factual data, deliberately avoided those words. What the appellants are asking was to read in that definition, these precise words, which were consciously and deliberately omitted from the definition. That would amount to supplying the casus omissus and we do not think that it is possible, particularly, in this case. The law of supplying the casus omissus by the courts is extremely clear and settled that though this Court may supply the casus omissus, it would be in the rarest of the rate case and thus supplying of this casus omissus would be extremely necessary due to the inadvertent omission on the part of the legislature. But, that is certainly not the case here. We shall now endeavour to show that no other interpretation is possible. The key words used in Section 40(a)(ia), according to us, are on which tax is deductible at source under Chapter XVII-B . If the question is which expenses are sought to be disallowed? The answer is bound to be those expenses on which tax is dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt with and rejected. Gujarat High Court in Sikandarkhan N Tunvar(supra) 23. Despite this narrow interpretation of section 40(a)(ia), the question still survives if the Tribunal in case of M/s Merilyn Shipping Transpors vs. ACIT (supra) was accurate in its opinion. In this context, we would like to examine two aspects. Firstly, what would be the correct interpretation of the said provision. Secondly, whether our such understanding of the language used by the legislature should waver on the premise that as propounded by the Tribunal, this was a case of conscious omission on the part of the Parliament. Both these aspects we would address one after another. If one looks closely to the provision, in question, adverse consequences of not being able to claim deduction on certain payments irrespective of the provisions contained in Sections 30 to 38 of the Act would flow if the following requirements are satisfied:- (a) There is interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to resident or amounts payable to a contractor or sub-contractor being resident for carrying out any work. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... language used by the Parliament conveyed such a meaning, we would not have hesitated in adopting such an interpretation. We only highlight that we would not readily accept that the legislature desired to bring about an incongruous and seemingly irreconcilable consequences. The decision of the Supreme Court in the case of Commissioner of Income-Tax, Gujarat vs. Ashokbhai Chimanbhai (supra), would not alter this situation. The said decision, of course, recognizes the concept of ascertaining the profit and loss from the business or profession with reference to a certain period i.e. the accounting year. In this context, last date of such accounting period would assume considerable significance. However, this decision nowhere indicates that the events which take place during the accounting period should be ignored and the ascertainment of fulfilling a certain condition provided under the statute must be judged with reference to last date of the accounting period. Particularly, in the context of requirements f Section 40(a)(ia) of the Act, we see no warrant in the said decision of the Supreme Court to apply the test of payability only as on 31st March of the year under consideration. Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) are squarely applicable to the facts of the case. Respectfully following the judgments of the Calcutta High Court in Crescent Export Syndicate (supra) and the Gujarat High Court in Sikandarkhan N Tunvar (supra), we do not see any infirmity in the orders of the lower authorities. Accordingly, the orders of the lower authorities are confirmed. 16. In fact, the assessee carried the matter before the Kerala High Court in Shri Thomas George Muthoot vs CIT in I.T.A.No.278 of 2014. The Kerala High Court by judgment dated 3.7.2015, confirmed the order of the Tribunal by placing reliance on the judgments of the Calcutta and Gujarat High Courts. In fact, the Kerala High Court observed as follows in para 17 of its judgment: 17. Another contention that was pressed into service was that the appellants had already paid the amount and therefore, the provisions of Section 40(a)(ia), applicable only in respect of the amount which remains to be payable on the last day of the 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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