S. 40(a)(ia): Argument that the disallowance for
want of TDS can be made only for amounts "payable" as of 31st March
and not for those already "paid" is not correct. In Liminie dismissal
of SLP in Vector Shipping does not mean Supreme Court has confirmed the view of
the HC. However, ITAT to consider whether payees have already paid tax.
(i) The introduction of Section
40(a)(ia) had achieved the objective of augmenting the TDS to a substantial
extent. When the provisions and procedures relating to TDS are scrupulously
applied, it also ensured the identification of the payees thereby confirming
the network of assessees and that once the assessees are identified it would
enable the tax collection machinery to bring within its fold all such persons
who are liable to come within the network of tax payers. These objects also
indicate the legislative intent that the requirement of deducting tax at source
is mandatory.
(ii) The argument that
section 40(a)(ia) relates only to assessees who follow the mercantile system
and does not pertain to the assessees who follow the cash system is not
acceptable. The purpose of the section is to ensure the recovery of tax. We see
no indication in the section that this object was confined to the recovery of
tax from a particular type of assessee following a particular accounting
practice.
(iii) The argument that
section 40(a)(ia) applies only to amounts which are “payable” and not to
amounts that are already “paid” is also not acceptable (Commissioner of Income Tax vs. Crescent Export Syndicate (2013)
216 Taxman 258 (Cal) and Commissioner of Income Tax vs.
Sikandar Khan N. Tunwar (2013) 357 ITR 312 (Guj) followed)
(iv) Though in Commissioner of Income Tax vs. M/s Vector Shipping Services (P)
Ltd (2013)262 CTR (All) 545, 357 ITR 642 it was held that no
disallowance could be made u/s 40(a)(ia) as no amount remained payable at the
year end and the Special Bench decision of the Tribunal in Merilyn Shipping & Transports, 136 ITD 23 (SB)
(Vishakhapatnam) was noted, this cannot be agreed with as there is no reasoning
for the finding. The dismissal of the department’s petition for special
leave to appeal (SLP) was in limine. The dismissal of the SLP, therefore,
does not confirm the view of the Allahabad High Court. As held by the Supreme
Court inV.M. Salgaocar & Bros. (P) Ltd., etc. Vs. Commissioner of
Income Tax, etc. (2000) 243 ITR 383 (SC) and in Supreme Court Employees Welfare Association vs. Union of India (1989)
4 SCC 187, when an SLP is summarily dismissed under Article 136 of the
Constitution, the Court does not lay down any law and that the dismissal of an
SLP in limine by a non speaking order does not justify any inference that the
contentions raised on the merits of the case have been rejected.
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