In this case ITAT Mumbai distinguished the Allahabad High Court’s ruling in the case of CIT v. Vector Shipping Services (P) Ltd. (ITA No.122 of 2013) and held that the issue of ‘paid and payable’ was not subject of reference before the Allahabad High Court. The issue therein was decided on basis that tax has already been deducted, hence no disallowance under Section 40(a)(ia) of the Act was made in that case.
However, the Calcutta High Court in the case of CIT v. Crescent Export Syndicate  33 taxmann.com 250 (Cal), and Gujarat High Court in the case of Sikandarkhan N. Tunvar  33 taxmann.com 133 (Guj) has specifically examined the correctness of the majority view of Merilyn Shipping & Transports v. ACIT  20 taxmann.com 244 (Visakhapatnam) (SB) and disapproved the same. Thus, the decision of the Calcutta High Court and the Gujarat High Court constitutes ratio decidendi which should prevail on this issue.
In this case it was held by the ITAT that disallowance has to be made irrespective of the fact that whether payment is made during the year or not.