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TMI Blog2023 (10) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... not only in respect of payments outstanding at end of year but also in respect of payments which have been paid during year without making TDS. The Calcutta High Court decision was also approved by the Hon'ble Supreme Court in the case of Palam Gas Service [ 2017 (5) TMI 242 - SUPREME COURT] which held that word 'payable' occurring in section 40(a)(ia) not only covers cases where amount is yet to be paid but also those cases where amount has actually been paid. Accordingly, in view of the above, reliance on the decision of Merilyn shipping supra would be of no assistance to the assessee. Alternate arguments of assessee which are to the effect that the assessee firm did not take any loans in the instant facts, and it was the partners of the assessee firm who had taken loans in their individual capacity and thereafter, introduced the same as capital in the assessee firm and secondly, the payees/recipients of interest had offered the aforesaid amount interest as income in their respective returns of income, we observe that the above arguments were never taken before the Department/Revenue Authority at any stage of the proceedings, and therefore, the Department n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 40(a)(ia) of the Act on the ground that appellant was liable to deduct the tax at source under section 194A and it failed to do so. 1.2 That learned CIT (Appeals) was ought to have consider the fact that appellant had paid the finance charges / interest to the non-banking finance companies and at the end of the year there was no amount remained outstanding towards finance charges/interest. Hence, provisions of section 40(a)(ia) was not applicable as per ratio laid down by Honourable ITAT Special bench of Vishakhapatnam in the case of M/s. Merilyn Shipping Transport Vs ACIT. ITA No. 477/Viz/2008 . Hence, disallowance of Rs. 5,85,582 under section 40(a)(ia) is not sustainable as per law and same is requested to be deleted. Ground No. 2 2.1 That on the facts and in the circumstances of the case and as per law, learned CIT (Appeals) erred in sustaining disallowance of Rs. 57,000 under section 40(a)(a) on the ground that appellant was liable to deduct the tax at source under section 194C of the Act and it failed to deduct the same. 2.2 That learned CIT (Appeals) was ought to have consider the fact that appellant had paid the transportation charges of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) where the special bench decision was followed With due regards to the Hon'ble ITAT, I am not inclined to accept such contention because Hon'ble Andhra Pradesh high court vide order dt 08/10/2012 in this case on appeal from department ( ITTA MP No 908 of 2012 in ITTA No 384 of 2012 ) granted the interim suspension for the operation of ratio of special bench order. It is therefore with the undisputed and uncontroverted facts that appellant was liable to deduct the TDS u/s 194A of the Act out of such interest payment and he was in default for which provisions of section 40(a)(a) of the Act are clearly applicable and also that appellant is not covered in any of exclusion clause including ratio of case law relied on not applicable, the disallowance and addition so made by A.O. are upheld and confirmed. 5. Before us, the counsel for the assessee submitted that no tax is deductible in respect of such payments Firstly, for the reason that the assessee, being a partnership firm, never took any loan from any of the aforesaid parties to whom the interest was paid. It was the partners of the said firm, who had taken loan in their personal names, and thereafter introduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken new sets of arguments which had not been taken before the Revenue Authorities during the course of assessment/appellate proceedings, which have been reproduced in the earlier part of the order. So far as the decision of Merilyn shipping is concerned, the same has been overruled by the Calcutta High Court in the case of Crescent Export Syndicate 33 taxmann.com 250 (Calcutta) which held that the provisions of section 40(a)(ia) are applicable not only in respect of payments outstanding at end of year but also in respect of payments which have been paid during year without making TDS. The Calcutta High Court decision was also approved by the Hon'ble Supreme Court in the case of Palam Gas Service 81 taxmann.com 43 (SC), which held that word 'payable' occurring in section 40(a)(ia) not only covers cases where amount is yet to be paid but also those cases where amount has actually been paid. Accordingly, in view of the above, reliance on the decision of Merilyn shipping supra would be of no assistance to the assessee. 9. So far as the alternate arguments of the counsel for the assessee are concerned, which are to the effect that the assessee firm did not take ..... X X X X Extracts X X X X X X X X Extracts X X X X
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