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Income Tax Appellate Tribunal - Vizag
Merilyn Shipping & Transports, ... vs Assessee on 13 April, 2012

ITA No.250/Vizag/2009

M/s Merilyn Shipping & Transports

IN THE INCOME TAX APPELLATE TRIBUNAL

VISAKHAPATNAM BENCH, VISAKHAPATNAM

BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND

SHRI BR BASKARAN, ACCOUNTANT MEMBER

ITA No.250/Vizag/2009

Assessment Year: 2006-07

M/s Merilyn Shipping & Asstt CIT, Circle-1(1), Transports, Visakhapatnam. Visakhapatnam. Vs.

(Appellant) (Respondent) PAN No: AABFM9472B

Appellant By: Shri C Subramanyam, CA

Respondent By: Shri RAVI SHANKAR NARAYAN, Sr DR

Date of Hearing: 11.04.2012

Date of Pronouncement: 13.04.2012

ORDER

Per Shri B. R. BASKARAN, Accountant Member: The appeal of the assessee is directed against the order dated 06.03.2009 passed by learned CIT(A)-I, Visakhapatnam and it relates to the assessment year 2006 - 07.

2. The assessee is assailing the decision of Learned CIT(A) in confirming the addition made under section 40(a)(ia) of the Act for non-deduction of tax at source from Transport charges and Commission.

3. The Learned A.R submitted that the assessee has incurred a sum of Rs.2,86,587/- towards Commission expenses and a sum of Rs.20,48,884/- towards transport charges. Both the amounts were disallowed by the Assessing Officer as the assessee did not deduct tax at source on the said payments. He further submitted that both the amounts have been fully paid during the course of year and nothing remains payable as at the end of

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ITA No.250/Vizag/2009

M/s Merilyn Shipping & Transports

the financial year. He relied upon the decision of Visakhapatnam Special bench of Tribunal in the assessee's own case relating to the assessment year 2005-06 which was pronounced on 09-04-2012, to submit that the provisions of sec.40(a)(ia) cannot be invoked to disallow the amounts which have already been paid during the previous year without deducting tax at source.

4. On the contrary, the Learned D.R submitted that the provisions of sec. 40(a)(ia) of the Act shall apply to all payments covered by sec. 194C of the Act whether they have already been paid or remain as payable as at the end of the relevant financial year. He drew support from the following case law:-

(a) Dey's Medicals (UP) (P) Ltd (216 ITR 83 (All)) (b) Sree Chaudhry Transport (225 CTR 125 (Raj)) (c) CIT Vs. Orient Goa (P) Ltd (325 ITR 554 (Bom))

5. We have heard the rival contentions. The issue viz., whether the provisions of sec.40(a)(ia) would apply to all payments made during the course of the year or it would apply only to the expenditure which remain payable as at the end of relevant year was considered by the Visakhapatnam Special Bench in the case of Merilyn Shipping & Transports, referred (Supra) and the Special bench, by majority view, has held that the provisions of section 40(a)(ia) of the Act would apply only to the expenditure which is payable as on 31st March of every year and cannot be invoked to disallow the amounts which have already been paid during the previous year without deducting tax at source. With regard to the decisions relied upon by the Learned D.R, it was specifically observed at paragraph 11 of the Judicial Member's order that the specific issue regarding "paid", "credited" or "payable" has not been considered in those decisions and even it was not argued. Accordingly it was held by the Judicial Member that these judgments will in no way affect the issue before them. Accordingly, by following the decision rendered by the Special bench referred (Supra),

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ITA No.250/Vizag/2009

M/s Merilyn Shipping & Transports

we hold that the provisions of sec.40(a)(ia) would apply only to the expenditure which remain payable as at the end of the relevant financial year. In the instant case, the entire expenditure has been paid during the course of the previous year and no amount remains payable as at the year end. Accordingly, we set aside the order of Learned CIT(A) on this issue and direct the Assessing Officer to delete both the additions referred (Supra).

6. In the result, the appeal of the assessee is allowed.

Pronounced in the open Court on 13.04.2012.

Sd/- Sd/- (SUNIL KUMAR YADAV) (B R BASKARAN) Judicial Member Accountant Member

Visakhapatnam,

Date: 13th Apr'12

Copy to

1 M/s Merilyn Shipping & Transports, 403 Doctors Plaza, Nr Zilla Parishad, Maharanipeta,Visakhapatnam.

2 The Assistant Commissioner of Income Tax, Circle-1(1), Visakhapatnam.

3 The CIT - 1, Visakhapatnam

4. The CIT(A)-1, Visakhapatnam

5 The DR, ITAT, Visakhapatnam.

6 Guard file.

By Order

Senior Private Secretary

INCOME TAX APPELLATE TRIBUNAL

VISAKHAPATNAM

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