Income Tax Appellate Tribunal - Pune
Panalal Shriram Malu, Sangli vs Assessee on 7 August, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
Before Shri Shailendra Kumar Yadav, Judicial Member,
and Shri R.K.Panda, Accountant Member.
ITA.No.1061/PN/2010
(Asstt. Year : 2007-08)
M/s.Panalal Shriram Malu
High School Road, Vakhar Bhag,
Sangli. .. Appellant
Vs.
ITO, Ward-1(2),
Sangli. .. Respondent
AND
ITA.No.1063/PN/2010
(Asstt. Year : 2007-08)
M/s.Shah Ratanshi Khimji & Co.,
92, Market Yard,
Sangli. .. Appellant
Vs.
ITO, Ward-1(2),
Sangli. .. Respondent
AND
ITA.No.1065/PN/2010
(Asstt. Year : 2007-08)
M/s.Rameshwarlal Shankarlal Malu,
181, Malu Investment, Vakhar Bhag,
Sangli. .. Appellant
Vs.
ITO, Ward-1(2),
Sangli. .. Respondent
Appellant by : Shri S.V.Deshpande
Respondent by : Shri Y.K.Bhaskar
Date of Hearing : 07.08.2012
Date of Pronouncement : 28.08.2012
ORDER
PER SHAILENDRA KUMAR YADAV, JM:
All these 3 appeals filed by assessees are arising from respective orders of CIT(A) on similar issues. So they are 2 being disposed of by this common order for the sake of convenience.
2. The issue in these appeals is with regard to disallowance u/s. 40(a)(ia) of the Income Tax Act, 1961, of Rs.7,01,687/-, Rs.2,70,216/- and Rs.3,16,593/- respectively, paid to Sangli Miraj Kamgar Mathadi Board. This issue is claimed to be covered by decision of the Special Bench in the case of Merilyn Shipping & Transports reported in 70 DTR (Visakha)(SB) (Trib) 81, wherein Tribunal has observed as under:
"The legislature by consciously replacing the words from "credited" or "paid" to "payable", the intent has been made clear that only the outstanding amount or the provision for expenses which are liable for TDS are to be disallowed in the event there is default in not following the TDS provisions under Chapter XVII-B. No doubt the object of s. 40(a)(ia) is to ensure that the TDS provision as provided in Chapter XVII-B is implemented without any default. The sub-section speaks of the amount 'payable' on which the tax is not deducted and therefore it should apply only if any amount is 'payable', but if the amount is already paid the provisions of this section should not apply. The crucial word is 'payable'. If one looks into the TDS provisions from ss. 194A to 194K, it will be apparent that as per the language of those sections, tax is to be deducted at the time the amount is paid or at the time when the mount is credited, i.e. when the liability is admitted and it becomes payable. Therefore, wherever the payment is covered by aforesaid sections whether paid or credited, tax has to be deducted. Sections 194L and 194LA may also be looked into which say that tax has to be deducted only at the time of payment. The language in these sections therefore shows that the legislature has used different language in different sections. It is trite law that each and every word of the section has its own meaning and while drafting s. 40(a)(ia) the legislature was conscious of the fact that there may be a case where the amount is paid and there may be a case where the amount is payable and has used appropriate words so that the language maybe clear and clear meaning may be given. One may look into the language contained in Finance Bill, 2004 wherein this provision was introduced. In the Finance Bill both the words paid and payable were used. However the word paid was subsequently dropped which shows that s. 40(a)(ia) was meant to be applicable only if the amount covered therein 3 was "payable" at the end of the year. Reference may be made for the scope and effect of s. 40(a)(ia) as clarified by CBDT in Circular No 5 of 2005, dt 15th July, 2005 to show that the intention to introduce this provision was brought to curb bogus payments by creating bogus liability. - CIT v. Upnishad Investment (P)Ltd & Ors (2002) 177 CTR (Guj) 176: (2003) 260 ITR 532 (Guj) applied."
The facts being claimed to be similar, so in the interest of justice the matter is restored to the Assessing Officer to decide the same in light of the legal proposition laid down by Special Bench decision in Merilyn Shipping & Transports (supra) after providing due opportunity of hearing to the assessees.
3. In the result, the appeals are allowed for statistical purposes.
Sd/- Sd/-
( R.K.PANDA ) ( SHAILENDRA KUMAR YADAV )
ACCOUNTANT MEMBER JUDICIAL MEMBER
gsps
Pune, dated the 28th August, 2012.
Copy of the order is forwarded to:
1. The Assessee
2. The ITO, Ward-1(2), Sangli.
3. The CIT(A), Kolhapur.
4. The CIT concerned.
5. The DR "B" Bench, Pune.
6. Guard File.
By Order
//TRUE COPY//
Private Secretary,
Income Tax Appellate Tribunal,
Pune.