Govindram Shobaram & Co., Sangli V. Assistant Commissioner of Income-tax,

CO 100/PUN/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9476 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 10-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S V DESH
• Assessee Lawyers: S P WALIMBE
• Keywords: Depreciation
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO . 23 48 /PN/20 1 2 ASSESSMENT YEAR : 200 8 - 09 THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 1 , SANGLI VS. M/S. GOVINDRAM SHOBHARAM & COMPANY, 672, G.S. HOUSE, GANPATI PETH, SANGLI (APPELLANT) (RESPONDENT) PAN NO. AACFG4761C CO NO. 100/PN/2013 ASSESSMENT YEAR : 2008 - 09 M/S. GOVINDRAM SHOBHARAM & COMPANY, 672, G.S. HOUS E, GANPATI PETH, SANGLI VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 1, SANGLI (APPELLANT) (RESPONDENT) PAN NO. AACFG4761C APPELLANT BY: SHRI S.P. WALIMBE RESPONDENT BY: SHRI S.V. DESHPANDE DATE OF HEARING : 04 - 03 - 2014 DATE OF PRO NOUNCEMENT : 25 - 03 - 2014 ORDER P ER R.S. PADVEKAR , JM : - TH IS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A) , KOLHAPUR DATED 1 8 - 09 - 2012 FOR THE A.Y . 2008 - 09. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN HOLING THAT THE COST OF NEW WIND MILL WILL INCLUDE ALONGWITH THE COST OF THE WIND TURBINE GENERATOR, THE COMPONENTS FOR GENERATION FOR ELECTRIC SUPPLY AND E LECTRICAL ITEMS AND COMPONENTS OF RE - DEVICE AND TUBULAR TOWERS FOR THE PURPOSE OF ALLOWING DEPRECIATION AT SPECIAL RATES AS THESE ITEMS ARE NOT WIND MILL OR SPECIALLY DESIGNED DEVICES, WHICH RUN ON THE WIND MILL. 2 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI 2. ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN HOLING THAT LABOUR WORK RELATED TO INSTALLATION OF WIND TURBINE GENERATOR WAS REQUIRED TO BE INCLUDED IN THE COST OF THE WIND MILL FOR ALLOWANCE OF DEPRECATION AT SPECIAL RATE WHEN THE SAID EXPENSES WAS REQUIRED TO BE SPREAD OVER IN THE PROPORTION OF COST OF CIVIL WORK, COST OF WIND MILL AND COST OF PLANT AND MACHINERY AND THE DEPRECIATION WAS TO BE ALLOWED AS APPLICABLE RATES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (APPEALS) ERRED IN APPLYING THE DECISION OF THE ITAT, PUNE BENCH IN THE CASE OF POONAWALA FINVEST AND AGRO PVT. LTD. ( 118 TTJ 68) AS THE DECISION IS DISTINGUISHABLE ON FACTS AND DOES NOT CONSIDER THE RATE SCHEDULE OF DEPRECIATION U/S. 32C WHICH PROVIDES FOR DEPRECIATION @ 80% ONLY ON WIND MILLS AND DEVICES SPECIALLY DESIGNED TO RUN ON WIND MILLS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(APPEALS) ERRED IN ALLOWING DEPRECIATION @ 80% ON PROPORTIONATE COST IN PROCESSING CHARGES AS THE SAME DOES NOT FORM PART OF COST OF WINDMILL OR ANY SPECIALLY DESIGNED DEVICE TO RUN ON WINDMILL. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(APPEALS) ERRED IN REPLYING UPON THE ITAT'S DECISION IN THE CASE OF RATNASHI KHEMJI & CO., SAN GLI, WHILE ALLOWING RELIEF TO THE ASSESSEE ON THE ADDITION MADE BY THE AO IN RESPECT OF PAYMENTS MADE TO MATHADI BOARD WITHOUT DEDUCTION OF TAX. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(APPEALS) ERRED IN NOT APPRECIATING THAT THE AS SESSEE WAS OBLIGED TO DEDUCT TAX AT SOURCE IN TERMS OF DECISION GIVEN BY THE APEX COURT IN THE CASE OF ASSOCIATED CEMENT CO. LTD. VS. CIT 201 ITR 435, WHEREIN IT IS LAID DOWN THAT ' A PERSON WHO CREDITS TO THE ACCOUNTS OR PAYS TO A CONTRACTOR ANY SUM PAYAB LE BY ANY OF THE ORGANIZATION SPECIFIED IN SECTION 194C (1) FOR CARRYING OUT ANY WORK ( INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK). IN PURSUANCE OF A CONTRACT BETWEEN CONTRACTOR AND SPECIFIED ORGANIZATION, IS LIABLE TO DEDUCT 2% OF SUCH SUM AS I NCOME TAX AS REQUIRED UNDER THE SUB - SECTION.' 3 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI 2. THE FIRST ISSUE IS IN RESPECT OF THE RATE OF DEPRECIATION ON THE COST OF NEW WINDMILL AND THIS ISSUE ARISES FROM GROUNDS NOS. 2 TO 4. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSESSEE IS A PARTNERSHIP FI RM CARRYING ON THE BUSINESS AS GENERAL MERCHANT AND COMMISSION AGENT. THE ASSESSEE CARRIES ON WHOLESALE BUSINESS IN TEA AND GROCERY. FOR THE A.Y. 2008 - 09 THE ASSESSEE FILED THE RETURN OF INCOME ON 18 - 09 - 2008 WHICH WAS SUBSEQUENTLY REVISED DECLARING TOTAL INCOME OF RS. 1,53,07,690/ - . THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT HAS BEEN COMPLETED U/S. 143(3) OF THE INCOME - TAX ACT. IN RESPECT OF ISSUE OF THE RATE OF DEPRECIATION ON THE COST OF WINDMILL, THE ASSESSING OFFICER HAS OBSERVED TH AT THE ASSESSEE HAS INSTALLED NEW WINDMILL WITH THE TOTAL COST OF RS.9,16,19,390/ - . IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD CLAIMED DEPRECIATION @ 80% ON THE ENTIRE EXPENDITURE/COST WHICH ALSO INCLUDED THE COST OF CIVIL WORK, ERECTIO N AND COMMISSIONING, INSTALLATION OF WINDMILL ETC. 2.1. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE DEPRECIATION RATE APPLICABLE TO THE WINDMILL CANNOT BE APPLIED TO THE CIVIL WORK AND EXPENDITURE ON ERECTION AND COMMISSIONING OF THE WINDMILL. THE ASSESSING OFFICER RELIED ON THE DECISION OF THE ITAT, PUNE IN THE CASE OF POONAWALA FINVEST & AGRO PRIVATE LTD. VS. ACIT 118 TTJ (PUNE) 68 AND ALSO ON THE DECISION IN THE CASE OF CIT VS. KARNATAK POWER CORPORATION 247 ITR 268 (SC) IN WHICH CASE THE HON'BL E SUPREME COURT HAS LAID DOWN THE CRITERIA AS TO WHEN A BUILDING CAN BE TREATED AS A PLANT AND MACHINERY. AS PER THE WORKING MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THE TOTAL COST OF THE WINDMILL IS BIFURCAT ED AS UNDER: (I) COST O N NEW TU RBINE : RS.8,43,50,635/ - (II) CIVIL WORK : RS.35,47,709/ - (III) ERECTION AND COMMISSION : RS.37,21,046/ - 4 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI THE ASSESSING OFFICER , ACCORDINGLY, RESTRICTED THE DEPRECIATION ON T HE EXPENDITURE ON CIVIL WORK OF FOUNDATION @ 10% AND ON THE COST OF ERECTION AND COMMISSIONING @ 15%. IT IS TO TAKE THE NOTE OF THE FACT THAT THE TOTAL COST OF THE WINDMILL ALSO INCLUDES THE COST OF THE LAND AT RS. 12,00,000/ - BUT ON WHICH NO DEPRECIATION WAS CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER HAS ALSO SHOWN THE COST O F RS.1,53,900/ - ON THE APPROACH ROAD ON WHICH THE DEPRECIATION @ 10% WAS ALLOWED. 3. IN SUM AND SUBSTANCE THE ASSESSING OFFICER RE - WOR K ED THE DEPRECIATION AS ABOVE WHICH WAS TO THE EXTENT OF RS.9,28,318/ - AS AGAINST RS.25,01,487/ - CLAIMED BY THE ASSESSEE . THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. CIT(A) AND LD. CIT(A) FOLLOWING THE DECISION IN THE CASE OF M/S. CHAPHALKAR BROTHERS, APPEAL NO. SLI/330/10 - 11 DATED 12 - 09 - 2011 DECIDED BY HIM ALLOWED PARTIAL RELIEF TO THE ASSESSEE AND DIRECTED THE ASSESSIN G OFFICER TO RE - WORK THE DEPRECIATION. THE OPERATIVE PARTS OF HIS FINDINGS ARE AS UNDER: 1 3 . THUS, SINCE THE ISSUE INVOLVED BEING IDENTICAL, THE DECISION GIVEN IN M/S . CHAPHALKAR BROTHERS, WILL APPLY TO THE INSTANT CASE AS WELL. 14. IN THE PRESENT CASE, THE APPELLANT HAS PROVIDED THE COSTS OF VARIOUS COMPONENTS WHICH HAVE BEEN INCLUDED BY IT IN THE COST OF WINDMILL AS DETAILED BELOW: SR. NO. PARTICULARS AMOUNT 1. COST OF WIND TURBINE GENERATOR RS. 5,23,85,300 2. A) C OST OF COMPONENT & ACCESSORY (COOP ER WOUND WITH ACCESSORIES) 13,91,000 B) COST OF COMPONENT FOR GENERAT ION OF ELECTRICITY SUPPLY OF ROTOR BLADE S 1,01,97,000 C) E LECTRICAL ITEMS, COMPONENTS OF RE DEVICE 15,60,000 RS. 1,31,48,000 3. COST OF TUBULAR TOWER 1,35,20,000 5 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI 4. COST OF WORK INCLUDING FOUNDATION WORK RS. 35,47,709 5 . LABOUR RELATED COST A) INSTALLATION ON WINDMILL 19,10,120 B) INSTALLATION OF ELECTRICAL LINE FOR POWER TRANSMISSION AND METER 16,98,566 C) FINAL TESTING AND COMMISSIONING 1,12,360 RS. 37,21,046 6 . REIMBURSEMENT OF POWER EVACUATION FACILITY AND CREATION OF INFRASTRUCTURE RS. 45,00,000 7 . MISCELLAN E OUS A) PROCESSING CHARGES 1,05,000 RS. 1,05,000 B ) INTEREST ON LOAN CAPITALIZED UPTO 17/01/2008 C ) PROFESSIONAL FEES D ) REGISTRATION FEES E ) SUBSTATION CHARGES F ) FRANKING CHARGES TOTAL RS. 9,09,27,055 1 5 . I FIND THAT THE APPELLANT HAS CLAIMED AN AMOUNT OF RS. 45,00,000/ - AS REIMBURSEMENT TOWARDS POWER EVACUATION FACILITY AND CREATION OF INFRASTRUCTUR E WHICH IS INCLUDED IN THE COST OF WTGS BY THE APPELLANT. THE BREAKUP OF POWER EVACUATION COST AND INFRASTRUCTURE CREATION COST IS NOT GIVEN. SINCE THE INFRASTRUCTURE CREATION COST WOULD INCLUDE THE COST OF MAKING OF ROADS PROVIDING FREE ACCESS AND KEEPING THE SURROUNDING AREA VACANT, THE SAME WOULD BE TREATED AS A BUILDING AND HENCE, DEPRECIATION @ 10% WOULD BE APPLICABLE. SINCE NOTHING HAS BEEN PROVIDED BY THE APPELLANT, IT WOULD ONLY BE FAIR TO ASSUME THAT 60% OF THIS COST IS INCURRED TOWARDS THESE EXPEN SES AND 40% TOWARDS POWER EVACUATION FACILITY. THEREFORE, DEPRECIATION ALLOWABLE ON CIVIL CONSTRUCTION WILL ONLY BE RS.27,00,000/ - . THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE DEPRECIATION ACCORDINGLY IN RESPECT OF THE NEW WINDMILL. 1 6 . IN RESPECT OF ITEM NO. 7 , BEING MISCELLANEOUS EXPENSES OF RS. 1,05,000/ - , THE EXPENSES WILL BE BIFURCATED ON PRORATA BASIS IN ACCORDANCE WITH THE RATIO OF THE COST OF WINDMILL AND COST OF OTHER CIVIL WORK. 1 7 . IN VIEW OF THE ABOVE DISCUSSION, I DIRECT THE ASSESSING O FFICER TO RE - COMPUTE THE DEPRECIATION ALLOWABLE ON NEW WINDMILL ON THE BASIS OF THE FOLLOWING: 6 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI I) COST OF NEW WINDMILL WILL BE INCLUSIVE OF ALL ITEMS MENTIONED AT 1 TO 5 ABOVE. II) COST OF POWER EVACUATION FACILITY AND INFRASTRUCTURE WILL BE AP PORTIONED BETWEEN THE RATES APPLICABLE TO BUILDING/ROADS AND WINDMILL IN 60 : 40 RATIO (SEE PARAGRAPH 1 5 ). III) COST OF OTHER MISCELLANEOUS EXPENSES WILL BE APPORTIONED ON PRORATA BASIS BETWEEN WINDMILL AND INFRASTRUCTURE FACILITIES. THE APPEAL O N THIS GROUND IS PARTLY ALLOWED. 4. IN SUM AND SUBSTANCE AS HELD IN THE CASE OF M/S. CHAPHALKAR BROTHERS (SUPRA) WHICH DECISION HAS BEEN APPROVED BY THE ITAT, PUNE IN THE CASE OF DY . CIT, CIRCLE - 1, SANGLI VS. AMINITY DEVELOPERS & BUILDERS ITA NO. 1505/PN /2011 , THE DEPARTMENT IS WORKED OUT ON THE COST OF THE CIVIL WORK AND COST ON THE ERECTION AND COMMISSIONING ON PERCENTAGE BASIS WHICH IS DISCUSSED IN PARA NO. 15 OF THE IMPUGNED ORDER. NOW THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES . WE FIND THAT THE DECISION IN THE CASE OF M/S. CHAPHALKAR BROTHERS (SUPRA) HAS BEEN APPROVED BY THE ITAT, PUNE IN THE CASE OF AMINITY DEVELOPERS & BUILDERS (SUPRA). MOREOVER, WE FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT - III, PUN E VS. COOPER FOUNDARY PVT. LTD. HAS HELD THAT THE EXPENDITURE INCURRED ON THE CEMENT FOUNDATION IS THE INTEGRAL PART OF THE WINDMILL AND RATE OF DEPRECIATION APPLICABLE TO THE WINDMILL IS TO BE APPLIED TO THE SAID COST. THE DECISION OF THE LD. CIT(A) IS I N CONFORMITY WITH THE JUDICIAL PRONOUNCEMENT. MOREOVER , SO FAR AS THE CIVIL WORK IS CONCERNED HE HAS ALREADY ALLOCATED SAID COST AT 60% AND 40% . I N OUR OPINION NO INTERFERENCE IS CALLED FOR THE ORDER OF THE LD. CIT(A). ACCORDINGLY, SAME IS CONFIRM. IN THE RESULT, THE GROUND NOS. 1 TO 4 ARE DISMISSED. 7 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI 6. THE NEXT ISSUE IS REGARDING THE ALLEGED NON - DEDUCTION OF TDS ON THE PAYMENT OF RS.7,87,222/ - WHICH WAS DEPOSITED WITH THE MATHADI. IN THE OPINION OF THE ASSESSING OFFICER THE ASSESSEE SHOULD HAVE DEDU CTED THE TAX AT SOURCE ON THE SAID AMOUNT U/S. 194C OF THE ACT . A S THE ASSESSEE DID NOT DEDUCT THE TAX AT SOURCE THE ENTIRE AMOUNT WAS DISALLOWED BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE INCOME - TAX ACT. THE LD. CIT(A) DELETED THE ADDITION BY G IVING THE FINDING THAT THE ENTIRE PAYMENT WAS PAID TO THE MATHADI BOARD BEFORE 31 - 03 - 2008 AND NO AMOUNT WAS PAYABLE. THE LD. CIT(A) FOLLOWED THE DECISION OF THE SPECIAL BENCH, ITAT IN THE CASE OF MEILYN SHIPPING AND TRANSPORTS 70 DTR 81 (VISAKHA) (SB) AND DELETED THE ENTIRE ADDITION. NOW THE REVENUE IS IN APPEAL BEFORE US. 7. THE LD. COUNSEL SUBMITS THAT ON MERIT ITSELF THE IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE ITAT , A BENCH, PUNE IN THE CASE OF M/S. GOKULDAS VIRJIBHAI & COMPANY, SANGLI VS. ITO, WA RD - 1(2), SANGLI ITA NOS. 1062 & 1064 /PN/2012 ORDER DATED 12 - 09 - 2012 AND IT IS HELD THAT THE PROVISIONS OF SEC. 194C HAS NO APPLICATION WHEN THE ASSESSEE REMITS THE PAYMENT IN RESPECT OF THE WAGES PAYABLE TO THE WORKERS OR THE LABOURERS ENGAGED THROUGH THE MATHADI BOARDS. THE OPERATIVE PART OF THE FINDING OF THE TRIBUNAL ON THIS ISSUE WHETHER THE PAYMENT DEPOSITED WITH THE MATHADI BOARD ATTRACTS THE PROVISIONS OF SEC. 194C(1) OF THE ACT IS AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE SHORT ISSUE IN CONTROVERSY IS WHETHER THE MATHADI BOARD IS LABOUR CONTRACTOR OF THE ASSESSEE WITHIN THE MEANING OF SEC. 194C(1) OF THE ACT WHICH READS AS UNDER : 194C (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESID ENT(HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR )FOR CARRYING OUT ANY WORK ( INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK ) IN PURSUANCE OF A CONTRACT 8 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH (A) THE CENTRAL GOVERNMENT OF ANY STATE GOVERNMENT; OR (B) ANY LOCAL AUTHORITY, OR (C)ANY CORPORATION ESTABLISHED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT, OR (D) ANY COMP ANY; OR (E)ANY CO - OPERATIVE SOCIETY;OR (F) ANY AUTHORITY, CONSTITUTED IN INDIA BY OR UNDER ANY LAW, ENGAGED EITHER FOR THE PURPOSE OF DEALING WITH AND SATISFYING THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURPOSE OF PLANNING, DEVELOPMENT OR IMPROVEMEN T OF CITIES, TOWNS AND VILLAGES, OR FOR BOTH; OR (G) ANY SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860(21 OF 1860) OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF INDIA; OR (H) ANY TRUST; OR (I) ANY UNIVERSITY ESTABLISHE D OR INCORPORATED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT AND AN INSTITUTION DECLARED TO BE A UNIVERSITY UNDER SECTION 3 OF THE UNIVERSITY GRANTS COMMISSION ACT, 1956 (3 OF 1956); OR (J) ANY FIRM, OR (K) ANY INDIVIDUAL OR A HINDU UNDIVIDED FAMILY O R AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS, WHETHER INCORPORATED OR NOT, OTHER THAN THOSE FALLING UNDER ANY OF THE PRECEDING CLAUSES, WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONE TARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR, SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO (I) ONE PER CENT IN CASE OF ADVERTISING 9 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI (II) IN ANY OTHER CASE TWO PER CENT, OF SUCH SUM AS INCOME - TAX ON INCOME COMPRISED THEREIN: 6. THE A.O HAS DISCUSSED PROVISIONS OF THE MAHARASHTRA MATHADI HAMAL AND OTHER MANNUAL WORKS (REGULATION OF EMPLOYMENT AND WELFARE ) ACT 1969, BUT THE CONCLUSION ARRIVED AT BY THE A.O THAT THERE IS A CONTRACTUAL RELATIONSHIP BETWEEN THE MATHADI BOARD AND THE ASSESSEE IS NOT CORRECT. IT IS NECESSARY TO EXAMINE THE SCHEME OF MAHARASHTRA MATHADI AND HAMAL AND OTHER MANUAL WORKERS (REGULATION OF EMPLOYMENT AND WELFARE) ACT 1969 (IN SHORT MAHARASHTRA MATHADI ACT). FROM THE PREAMBLE TO THE MAHARASHTRA MATHADI ACT, IT IS SEEN THAT THE OBJECT FOR ENACTMENT OF THIS ACT IS FOR REGULATING THE EMPLOYMENT OF UN - PROTECTED MANUAL WORKERS EMPLOYED IN SCHEDULED EMPLOYMENTS IN THE STATE OF MAHARASHTRA AND TO MAKE PROVISION FOR T HEIR ADEQUATE SUPPLY AND PROPER UTILIZATION IN SUCH EMPLOYMENT. IT IS ALSO MENTIONED IN THE PREAMBLE THAT THE SAID ACT IS ENACTED TO MAKE BETTER PROVISION FOR THEIR TERMS AND CONDITIONS OF EMPLOYMENT, TO PROVE FOR THEIR WELFARE AND FOR HEALTH AND SAFETY MEASURES AND TO PROVIDE FOR ESTABLISHMENT OF BOARDS IN THE DIFFERENT AREAS OF THE STATE ETC., 7. SEC. 2 OF THE ACT DEFINES THE DIFFERENT TERMS/PHRASES USED IN THE SAID ACT. TO UNDERSTAND THE SCHEME OF THE ACT, SECTION 3 IS USEFUL WHICH IS AS UNDER : 3. SCHEMES FOR ENSURING REGULAR EMPLOYMENT OF UNPROTECTED WORKERS. (1). FOR THE PURPOSE OF ENSURING AN ADEQUATE SUPPLY AND FULL AND PROPER UTILIZATION OF UNPROTECTED WORKERS IN SCHEDULED EMPLOYMENTS, AND GENERALLY FOR MAKING BETTER PROVISION FOR THE TERM S AND CONDITIONS OF EMPLOYMENT OF SUCH WORKERS THE STATE GOVERNMENT MAT BE MEANS OF SCHEME PROVIDE FOR THE REGISTRATION OF EMPLOYERS AND UNPROTECTED WORKERS IN ANY SCHEDULED EMPLOYMENT OR EMPLOYMENTS, AND PROVIDE FOR THE TERMS AND CONDITIONS OF WORK OF REGISTERED UNPROTECTED WORKERS, AND MAKE PROVISION FOR THE GENERAL WELFARE IN SUCH EMPLOYMENTS. (2). IN PARTICULAR, A SCHEME MAY PROVIDE FOR ALL OR ANY OF THE FOLLOWING MATTERS THAT IS TO SAY 10 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI (A). FOR THE APPLICATION OF THE SCHEME OF SUCH CLASSES OF RE GISTERED UNPROTECTED WORKERS AND EMPLOYERS, AS MAY BE SPECIFIED THEREIN; (B). FOR DEFINING THE OBLIGATIONS OF REGISTERED UNPROTECTED WORKERS AND EMPLOYERS SUBJECT TO THE FULFILLMENT OF WHICH THE SCHEME MAY APPLY TO THEM; (C). FOR REGULATING THE RECRUITM ENT AND ENTRY INTO THE SCHEME OF UNPROTECTED WORKERS, AND THE REGISTRATION OF UNPROTECTED WORKERS AND EMPLOYERS, INCLUDING THE MAINTENANCE OF REGISTERS, REMOVAL, EITHER TEMPORARILY OR PERMANENTLY, OF NAMES FROM THE REGISTERS, AND THE IMPOSITION OF FEES FOR REGISTRATION; (D). FOR REGULATING THE EMPLOYMENT OF REGISTERED UNPROTECTED WORKERS, AND THE TERMS AND CONDITIONS OF SUCH EMPLOYMENT, INCLUDING RATES OF WAGES, HOURS OF WORK, MATERNITY BENEFIT, OVERTIME PAYMENT, LEAVE WITH WAGES, PROVISION FOR GRATUITY AN D CONDITIONS AS TO WEEKLY AND OTHER HOLIDAYS AND PAY IN RESPECT THEREOF; (D - I)FOR PROVIDING THE TIME WITHIN WHICH REGISTERED EMPLOYERS SHOULD REMIT TO THE BOARD THE AMOUNT OF WAGES PAYABLE TO THE REGISTERED WORKERS FOR THE WORK DONE BY SUCH WORKERS; FOR RE QUIRING SUCH EMPLOYER WHO, IN THE OPINION OF THE BOARD, MAKE DEFAULT IN REMITTING THE AMOUNT OF WAGES IN TIME AS AFORESAID, TO DEPOSIT WITH THE BOARD, AN AMOUNT EQUAL TO THE MONTHLY AVERAGE OF THE WAGES TO BE REMITTED AS AFORESAID; IF AT ANY TIME THE AMOU NT OF SUCH DEPOSIT FALLS SHORT OF SUCH AVERAGE, FOR REQUIRING THE EMPLOYER TO MAKE GOOD THE AMOUNT OF SUCH AVERAGE, AND FOR REQUIRING SUCH EMPLOYERS WHO PERSISTENTLY MAKE DEFAULT IN MAKING SUCH REMITTANCE IN TIME TO PAY ALSO BY WAY OF PENALTY, A SURCHARGE OF SUCH AMOUNT NOT EXCEEDING 10 PER CENT OF THE AMOUNT TO BE REMITTED AS THE BOARD MAY DETERMINE; (E). FOR SECURING THAT, IN RESPECT OF PERIOD DURING WHICH EMPLOYMENT OR FULL EMPLOYMENT IS NOT AVAILABLE TO REGISTERED UNPROTECTED WORKERS THOUGH THEY ARE A VAILABLE FOR WORK, SUCH UNPROTECTED WORKERS WILL, SUBJECT TO THE CONDITIONS OF THE SCHEME, RECEIVE A MINIMUM WAGE; 11 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI (F). FOR PROHIBITING, RESTRICTING OR OTHERWISE CONTROLLING THE EMPLOYMENT OF UNPROTECTED WORKERS TO WHOM THE SCHEME DOES NOT APPLY, AND THE EMPLOYMENT OF UNPROTECTED WORKERS BY EMPLOYERS TO WHOM THE SCHEME DOES NOT APPLY. (G). FOR THE WELFARE OF REGISTERED UNPROTECTED WORKERS COVERED BY THE SCHEME IN SO FAR AS SATISFACTORY PROVISION THEREFOR, DOES NOT EXIST, APART FROM THE SCHEME. (H). FOR HEALTH AND SAFETY MEASURES IN PLACES WHERE THE REGISTERED UNPROTECTED WORKERS ARE ENGAGED, IN SO FAR AS SATISFACTORY PROVISION THEREFOR, IS REQUIRED BUT DOES NOT EXIST, APART FROM THE SCHEME; ( I ). FOR THE CONSTITUTION OF ANY FUND OR FUNDS INCLUDING PROVI DENT FUND FOR THE BENEFIT OF REGISTERED UNPROTECTED WORKERS, THE VESTING OF SUCH FUNDS, THE PAYMENT AND CONTRIBUTIONS TO BE MADE TO SUCH FUNDS, (PROVISION FOR PROVIDENT FUND AND RATES OF CONTRIBUTION BEING MADE AFTER TAKING INTO CONSIDERATION THE PROVISIO NS OF THE EMPLOYEES PROVIDENT FUNDS ACT, 1952, AND THE SCHEME FRAMED THEREUNDER WITH SUITABLE MODIFICATIONS, WHERE NECESSARY, TO SUIT THE CONDITIONS OF WORK OF SUCH REGISTERED UNPROTECTED WORKS) AND ALL MATTERS RELATING THERETO; ( J ). FOR THE MANNER IN W HICH, THE DAY FROM WHICH (EITHER PROSPECTIVE OR RETROSPECTIVE) AND THE PERSONS BY WHOM, THE COST OF OPERATING THE SCHEME IS TO BE DEFRAYED. (K). FOR CONSTITUTING THE PERSONS OR AUTHORITIES WHO ARE TO BE RESPONSIBLE FOR THE ADMINISTRATION OF THE SCHEME , AND FOR THE ADMINISTRATION OF FUNDS CONSTITUTED FOR THE PURPOSES AFORESAID; (K - I)FOR SPECIFYING THE POWERS AND DUTIES WHICH THE PERSONS OR AUTHORITIES REFERRED TO IN CLAUSE (K) MAY EXERCISE OR PERFORM, FOR PROVIDING APPEALS AND REVISION APPLICATIONS A GAINST THE DECISIONS OR ORDERS OF SUCH PERSONS AND AUTHORITIES; AND FOR DECIDING SUCH APPEALS AND APPLICATIONS AND FOR MATTERS INCIDENTAL THERETO; )L). FO R SUCH INCIDENTAL AND SUPPLEMENTARY MATTERS, AS MAY BE NECESSARY OR EXPEDIENT FOR GIVING EFFECT TO THE PURPOSES OF A SCHEME. 12 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI (3). THE SCHEME MAY FURTHER PROVIDE THAT A CONTRAVENTION OF ANY PROVISION THEREOF SHALL BE PUNISHED WITH IMPRISONMENT FOR SUCH TERM AS MAY BE SPECIFIED (BUT IN NO CASE EXCEEDING THREE MONTHS IN RESPECT OF A FIRST CONTRAVENTION O R SIX MONTHS IN RESPECT OF ANY SUBSEQUENT CONTRAVENTION) OR WITH FINE WHICH MAY EXTEND TO SUCH AMOUNT AS MAY BE SPECIFIED (BUT IN NO CASE EXCEEDING FIVE HUNDRED RUPEES IN RESPECT OF THE FIRST CONTRAVENTION, OR ONE THOUSAND RUPEES IN RESPECT OF ANY SUBSEQUE NT CONTRAVENTION) OR WITH BOTH IMPRISONMENT AND FINE AND IF THE CONTRAVENTION IS CONTINUED AFTER CONVICTION, WITH A FURTHER FINE WHICH MAY EXTEND TO ONE HUNDRED RUPEES FOR EACH DAY ON WHICH THE CONTRAVENTION IS SO CONTINUED. AS PER SEC. 6 OF THE ACT, THE STATE GOVERNMENT MAY BY NOTIFICATION IN THE OFFICIAL GAZETTE ESTABLISH A BOARD TO BE KNOWN BY SUCH NAME AS MAY BE SPECIFIED IN THE NOTIFICATION OF ANY SCHEDULED EMPLOYMENT IN ANY AREA. SUB - SECTION (2) PROVIDE THAT THE BOARD SHALL BE A BODY CORPORATE HAVING PERPETUAL SUCCESSION AND COMMON SEAL WITH POWER TO ACQUIRE, HOLD AND DISPOSE OF PROPERTY. 8. SECTION 4 OF THE MAHARASHTRA MATHADI ACT PROVIDE THAT AFTER CONSULTATION OF THE ADVISORY COMMITTEE, STATE GOVERNMENT MAY MAKE ONE OR MORE SCHEMES FOR ANY SCHEDULED EMPLOYMENT OR GROUP OF SCHEDULED EMPLOYMENT IN ONE OR MORE AREAS AND THE SAME MAY BE PUBLISHED IN OFFICIAL GAZETTE. SECTION 6 PROVIDES FOR CONSTITUTING OR ESTABLISHING A BOARD BY NOTIFICATION IN THE OFFICIAL GAZETTE FOR ANY SCHEDULED EMPLOYMEN T IN ANY AREA. SUB - SECTION 6(3) PROVIDES THAT THE GOVERNMENT WILL NOMINATE THE MEMBERS OF THE BOARD FROM TIME TO TIME REPRESENTING THE EMPLOYERS UN - PROTECTED WORKERS AND STATE GOVERNMENT. SECTION 6(4) PROVIDES THAT THERE WILL BE EQUAL REPRESENTATION FROM THE EMPLOYERS AND UN - PROTECTED WORKERS AND THE SECTION 6(5) PROVIDES THAT CHAIRMAN OF THE BOARD SHALL BE NOMINATED BY THE STATE GOVERNMENT. SECTION 7 PROVIDES FOR THE POWERS AND DUTIES OF THE BOARD AND SUB - SECTION (1) TO SEC. 7 PROVIDES THAT THE BOARD SH ALL BE RESPONSIBLE FOR ADMINISTERING A SCHEME AND SHALL EXERCISES SUCH POWERS AND PERFORM SUCH FUNCTIONS AS MAY BE CONFIRMED BY IT BY THE SCHEME. SECTION 13 PROVIDES FOR DETERMINATION OF THE MONIES DUE FROM EMPLOYERS AND WORKERS. SEC. 14 OF THE ACT PRO VIDES FOR CONSTITUTION OF ADVISORY COMMITTEE TO ADVISE UPON SUCH MATTERS ARISING OUT OF THE 13 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI ADMINISTRATION OF THE MATHADI ACT OR ANY SCHEME MADE UNDER THE SAID ACT OR RELATING TO APPLICATION OF PROVISIONS OF SAID ACT TO ANY PARTICULAR CLASS OF UN - PROTECTE D WORKERS AND EMPLOYERS ETC. SEC. 17 PROVIDES THAT EVERY OFFENCE PUNISHABLE BY OR UNDER THE SAID ACT (INCLUDING ANY OFFENCE MADE PUNISHABLE BY A SCHEME MADE UNDER THE SAID ACT) SHALL BE TRIED BY THE LABOUR COURT. SEC. 17B PROVIDES FOR COGNIZANCE OF THE OFFENCE UNDER THE ACT BY THE LABOUR COURT. SEC. 18 AND 19 OF THE MAHARASHTRA MATHADI ACT MAKE APPLICABLE THE PROVISIONS OF WORKMEN COMPENSATION ACT 1923 AND THE PAYMENT OF WAGES ACT 1936 TO THE REGISTERED UN - PROTECTED WORKERS EMPLOYED IN ANY SCHEDULED EMPLOYMENT. SEC. 2(11) DEFINES THE TERM UNPROTECTED WORKER MEANS A MANUAL WORKER WHO IS ENGAGED OR TO BE ENGAGED IN ANY SCHEDULED EMPLOYMENT. THE DEFINITION OF EMPLOYER IS GIVEN IN SEC.2(3) OF THE ACT. IN SUM AND SUBSTANCE, THE MAHARASHTRA MATHADI ACT I S A LABOUR WELFARE LEGISLATION FOR PROTECTING THE INTEREST OF THE UN - PROTECTED & UNORGANISED MANUAL WORKERS SUCH AS MATHADI HAMALS ETC., AND FOR THE PURPOSE OF REGULATING THE TERMS AND CONDITIONS OF THEIR EMPLOYMENT, STATE GOVERNMENT HAS TO MAKE A SCHEME CONSIDERING THE WELFARE, HEALTH AND SAFETY MEASURES AND FOR ASSURING THE REGULAR EMPLOYMENT TO THE UNPROTECTED WORKERS IN THE SCHEDULED EMPLOYMENT. AT THE END OF THE ACT, SCHEDULE IS APPENDED IN WHICH THE CLASS OR CATEGORY OF THE EMPLOYMENT ARE MENTIONED TO WHICH THE PROVISIONS OF THE MAHARASHTRA MATHADI ACT IS APPLICABLE VIS - - VIS, ALSO THE SCHEME FRAMED BY THE GOVERNMENT U/S 4 OF THE ACT. WE NEED NOT GO INTO ENTIRE SCHEME OF THE MAHARASHTRA MATHADI ACT AS THE ONLY LIMITED ISSUE BEFORE US IS WHEN THE LABOURS OR WORKERS ARE EMPLOYED BY THESE ASSESSEES THROUGH THE MATHADI BOARD CONSTITUTED UNDER THE MAHARASHTRA MATHADI ACT, CAN IT BE SAID THAT THERE IS A RELATIONSHIP OF THE PRINCIPAL AND CONTRACTOR BETWEEN THE ASSESSEE AND THE MATHADI BOARD WITHIN THE M EANING OF SEC. 194C OF THE ACT ? 9. THE GOVERNMENT OF MAHARASHTRA HAS NOTIFIED THE SCHEME DATED 13.7.1984 WHICH IS PUBLISHED IN THE GOVERNMENT NOTIFICATION OF THE SAME DATE AS PROVIDED UNDER SECTION 4(1) OF THE ACT. AS PER NOTIFIED SCHEME, SAME IS APPLICA BLE TO THE EMPLOYMENT IN THE GROCERY MARKET OR SHOPS, OR MARKET ESTABLISHED UNDER THE MAHARASHTRA AGRICULTURAL PRODUCE MARKETING (REGULATION) ACT 1963 AND MORE PARTICULARLY, TO THE MANUAL WORKERS ENGAGED IN LOADING, 14 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI UNLOADING, SACKING, CARRYING, WEIGHI NG, MEASURING, FILLING, STITCHING ETC., IS APPLICABLE. IN THE SCHEME, OTHER CLASSES OF THE EMPLOYMENT ALSO MENTIONED, TO WHICH, THE SCHEME WILL BE APPLICABLE. IN THE SCHEME, THERE IS PROVISION FOR APPOINTMENT OF THE SECRETARY AND PERSONNEL OFFICER. CL AUSE 14 OF THE SCHEME WHICH IS VERY IMPORTANT WHICH READS AS UNDER : 14. REGISTRATION OF EMPLOYERS. - EVERY EMPLOYER INCLUDING A MUKADAM, COMMISSION AGENT, CLEARING AGENT, PURCHASER, IMPORTER, EXPORTER, ENGAGED IN SELLING, PURCHASING OR TRADING OR ACTI NG AS AGENT IN GROCERY MARKETS OR SHOPS AND AGRICULTURAL PRODUCE MARKETS OR SUBSIDIARY MARKETS IN AREAS TO WHICH THIS SCHEME APPLIES SHALL REGISTERED WITH THE BOARD BY APPLYING IN FORM A APPENDED TO THE SCHEME WIT FIFTEEN DAYS FROM THE DATE OF COMING IN TO FORCE OF THIS CLAUSE. PROVIDED, HOWEVER, THAT AN EMPLOYER OF ANY ESTABLISHMENT COMING INTO EXISTENCE AFTER THE COMMENCEMENT OF THE SCHEME SHALL APPLY FOR A REGISTRATION SIMULTANEOUSLY ON THE COMMENCEMENT OF HIS BUSINESS. 10. AS PER CLAUSE 14 OF THE SC HEME, IT IS A MANDATORY FOR EVERY EMPLOYER IN THE SCHEDULED EMPLOYMENT, WHO GET REGISTERED WITH THE MATHADI BOARD. RULE 29 OF THE SCHEME MAKE IT OBLIGATORY ON THE REGISTERED EMPLOYERS TO EMPLOY A WORKER, WHO IS A REGISTERED WORKER AND WHO IS ALLOTTED TO HIM BY THE SECRETARY OF THE BOARD IN ACCORDANCE WITH CLAUSE 9(E) OF THE SCHEME. CLAUSE 29(5)(I) PROVIDES THAT A REGISTERED EMPLOYER SHALL PROVIDE TO THE BOARD WITHIN FIVE DAYS OF EVERY FORTNIGHT OR SUCH SHORTER PERIODS AS MAY BE SPECIFIED, THE GROSS WAGE S DUE TO REGISTERED WORKS FOR THE WORK DONE BY SUCH REGISTERED WORKERS DURING THE FORTNIGHT AND OTHER AMOUNT DUE TO DAILY REGISTERED WORKERS. CLAUSE 33 OF THE SCHEME PROVIDES THAT THE BOARD MAY PERMIT ANY REGISTERED EMPLOYER TO PAY WAGES AND OTHER ALLOWA NCES TO THE REGISTERED MONTHLY WORKERS EMPLOYED BY THEM DIRECTLY. THE SAID CLAUSE ALSO PROVIDES THAT IN RESPECT OF THE REGISTERED WORKERS OTHER THAN REGISTERED MONTHLY WORKERS, THE EMPLOYER SHALL REMIT THE WAGES AND OTHER ALLOWANCES BY CHEQUE TO THE SECR ETARY OF THE BOARD EVERY FORTNIGHT AND SECRETARY SHALL ARRANGE TO DISBURSE THE WAGES AND OTHER DUES TO THE REGISTERED WORKS ON A SPECIFIED DAY EVERY MONTH. CLAUSE 14 PROVIDES FOR PENALTY, MORE PARTICULARLY, FOR CONTRAVENTION OF CLAUSES 14, 29 AND 30 OF THE SCHEME. CLAUSE 14 IS IN RESPECT OF THE REGISTRATION OF THE 15 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI EMPLOYERS AND CLAUSE 29 IS IN RESPECT OF PROHIBITION ON THE REGISTERED EMPLOYER TO EMPLOY MANUAL WORKERS IN THE SCHEDULED EMPLOYMENT OTHER THAN THE REGISTERED WORKERS WHO ARE ALLOTTED TO HI M BY THE SECRETARY IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE 9(E) OF THE SCHEME. THE PENALTY INCLUDE THE IMPRISONMENT FOR THE TERM WHICH MAY EXTENT TO SIX MONTHS OR WITH FINE WHICH MAY EXTEND TO RS. 1000/ - OR WITH BOTH. 11. IN SUM AND SUBSTANCE, THE P ERSON WHO IS CARRYING ON HIS BUSINESS IN THE NOTIFIED AREA AND ALSO CARRYING ON THE SCHEDULED EMPLOYMENT, IT IS MANDATORY FOR HIM TO GET REGISTERED UNDER THE MAHARASHTRA MATHADI SCHEME AND ALSO TO EMPLOY ONLY THE REGISTERED WORKERS ALLOTTED BY THE BOARD. SEVERE PENALTIES ARE PROVIDED FOR CONTRAVENTION FOR NOT COMPLYING WITH THE SCHEME. THE BOARD IS NOT THE LABOUR SUPPLIER BUT A BODY CORPORATE FOR IMPLEMENTING THE SCHEME FRAMED BY THE GOVERNMENT UNDER THE MAHARASHTRA MATHADI ACT. THE ASSESSEE IS REGIS TERED UNDER THE MAHARASHTRA MATHADI ACT AS PER PROVISIONS OF THE SCHEME FRAMED AND BOTH THE ASSESSEES ARE UNDER OBLIGATION TO ENGAGE THE LABOURERS OR WORKERS FOR CARRYING OUT WORK IN THEIR BUSINESS THROUGH THE BOARD ONLY, WHICH THEY ARE LEGALLY BOUND TO DO. 12. THE MANDATE OF SEC. 194C IS THAT THE RELATIONSHIP OF THE PERSON PAYING ANY SUM TO THE PERSON CARRYING OUT ANY WORK INCLUDING THE SUPPLY OF LABOUR SHOULD BE IN HE NATURE OF THE PRINCIPAL TO CONTRACTOR. AFTER ANXIOUSLY EXAMINING THE PROVISIONS OF MA HARASHTRA MATHADI ACT AND SCHEME FRAMED UNDER IT, WE ARE OF THE OPINION THAT THERE IS NO CONTRACTUAL RELATIONSHIP AS A PRINCIPAL AND CONTRACTOR BETWEEN THESE ASSESSEES AND MATHADI BOARD, BUT, IN FACT, IN PURSUANCE OF THE PROVISIONS OF THE ACT AS WELL AS THE SCHEME, BOTH THESE ASSESSEES ARE BOUND TO ENGAGE THE LABOURERS OR THE WORKERS THROUGH THE MATHADI BOARD. IN OUR OPINION, THE INTERPRETATION GIVEN BY BOTH THE AUTHORITIES BELOW TO THE PROVISIONS OF THE MAHARASHTRA MATHADI ACT IS TOTALLY MISPLACED AS SEC . 194C HAS NO APPLICATION WHEN THESE ASSESSEES REMITS THE PAYMENT IN RESPECT OF THE WAGES PAYABLE TO THE WORKERS OR LABOURERS ENGAGED THROUGH THE MATHADI BOARD. WE, THEREFORE, HOLD THAT THE DISALLOWANCE MADE BY THE A.O. EVOKING THE PROVISIONS OF SEC. 40 (A)(IA) OF THE ACT IS NOT JUSTIFIED. WE, ACCORDINGLY, DELETE THE 16 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI SAME IN BOTH THE CASES AND THE RESPECTIVE GROUNDS TAKEN BY BOTH THE ASSESSEES ARE ALLOWED. 8. WE, THEREFORE, FOLLOWING THE DECISION IN THE CASE OF M/S. GOKULDAS VIRJIBHAI & COMPANY (SUPR A) CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUND NOS. 5 & 6. AT THIS JUNCTURE WE MAKE IT CLEAR THAT THE DECISION OF SPECIAL BENCH, ITAT, VISAKHA IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS (SUPRA) HAS BEEN REVERSED BY THE HON'BLE HIGH COUR T OF KOLKATA IN THE CASE OF CIT, KOLKATA VS. CRESCENT EXPORT SYNDICATE (2013) 33 TAXMANN.COM 250 (KOLKATA) AS WELL AS HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. SIKANDARKHAN N TUNVAR (2013) 33 TAXMANN.COM 133 (GUJA RAT). THE ITAT, PUNE BENCHES HA VE TAKEN A CONSISTENT VIEW FOLLOWING HIS DECISION OF THE HON'BLE HIGH COURT OF KOLKATA IN THE CASE OF CRESCENT EXPORT SYNDICATE (SUPRA) AND HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF SIKANDARKHAN N TUNVAR (SUPRA) HENCE, WE DO NOT AGREE WITH THE REASONS O F THE LD. CIT(A) FOR GIVING THE RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS (SUPRA). 9. NOW WE TAKE UP CROSS OBJECTION FILE BY THE ASSESSEE. IN THE CROSS OBJECTION THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: 1. THAT ON FACTS AND IN LAW, THE CIT(A) ERRED IN NOT DEALING WITH THE GROUND NO . L WHEREIN IT WAS CLAIMED THAT THE PROVISIONS OF SECTION 40(A)(IA) R.W.S. 1 94C (1) WERE NOT AT ALL APPLICABLE TO THE PAYMENTS MADE BY THE ASSESSEE TO THE MATHADI UNIO N SINCE THE SAID PAYMENTS TO MATHADI UNION WERE DUE TO STATUTORY COMPULSION, THOUGH HE (CIT - A) ALLOWED THE APPEAL BY TAKING SUPPORT OF THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (70 DTR 81). 10. WE HAVE AL READY ADJUDICATED THIS ISSUE IN THE REVENUES APPEAL HENCE, THE CROSS OBJECTION BECOME INFRUCTUOUS. 17 ITA NO . 2348/PN/2012 & CO NO. 100/PN/2013, M/S. GOVINDRAM SHOB HARAM & CO., SANGLI 1 1 . IN THE RESULT, THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS OBJECTION ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 25 - 0 3 - 201 4 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 25 TH MARCH, 2014 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) , KOLHAPUR 4 THE CIT, KOLHAPUR 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE