Muruganantha Tex, Erode V. ITO, Erode

CO 79/CHNY/2015

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4059 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 18-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 06-07-2015
• Court: TRIBUNAL
• Department Lawyers: N C RAVIKRISHNAN
• Assessee Lawyers: A V SREEKANTH
• Keywords: TDS

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! , ' #$ BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO. 1259/MDS/2015 / ASSESSMENT YEAR : 2006-07 AND C.O.NO.79/MDS/2015 THE INCOME-TAX OFFICER, WARD-1(4), ERODE. ( /APPELLANT) VS M/S. MURUGANANTHA TEX, NO.128, MANICKAMPALAYAM PIRIVU, NASIYANOOR ROAD, ERODE 638 011. PAN AAEFM0300K ( /RESPONDENT) / APPELLANT BY : SHRI A.V.SREEKANTH, JCIT / RESPONDENT BY : SHRI N.C.RAVIKRISHNAN, ADVOCATE / DATE OF HEARING : 18.07.2016 ! / DATE OF PRONOUNCEMENT: 29.07.2016 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THE APPEAL BY THE REVENUE AND CROSS OBJECTION B Y THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME-TAX(APPEALS) DATED 28.2.2015. - - ITA 1259 & CO 79/15 2 2. THE GRIEVANCE OF THE REVENUE IN ITS APPEAL IS WI TH REGARD TO DELETION OF ADDITION OF 33,63,617/ - MADE BY THE AO ON THE REASON THAT THERE IS NO TDS U/S.194COF THE ACT BY A PPLYING THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAS PAID TOTAL WAGES TO THE TUNE OF 33,63,617/-. THE AO DISALLOWED THIS AMOUNT IN VIEW OF THE FACT THAT THE ASSESSEE HAS NO T COMPLIED WITH THE TDS PROVISIONS U/S.194C. THE ASSESSEE HAS STRONGLY OBJECTED TO THIS STATING THAT THE PROVISIONS OF SEC .194C ARE ATTRACTED FOR CARRYING OUT ANY WORK IN THE NATURE O F CONTRACT. HOWEVER, THE MERE FACT THAT DAILY WAGE EARNER WERE DISBURSED WAGES AT THE END OF THE WORK AND DOES NOT MEAN THAT THE ASSESSEE HAS ENTERED INTO A WAGE CONTRACT AGREEMENT WITH THEM. THE AO HAS SUMMONED THE WORKERS AND THEY HAV E STATED THAT THEY HAVE RECEIVED THE FULL WAGES AS PER VOUCH ERS SIGNED BY THEM AND DISBURSED THE AMOUNT TO THE WORKERS AFTER TAKING A SMALL PORTION OF THEIR SHARE OF COOLIE. THEREFORE, IT HAS TO BE HELD THAT THERE IS NO CONTRACT BETWEEN THE ASSESSEE AND THE WORKERS EXCEPT THE FACT THAT THEY ARE DAILY WAGE EARNERS. THEREFORE THE PROVISIONS U/S.194C CANNOT APPLY IN THIS CASE. HOW EVER, ON - - ITA 1259 & CO 79/15 3 PERUSAL OF THE ASSESSMENT ORDER IT IS EVIDENT THAT ALL THE WORKERS HAVE GIVEN ONLY SELF MADE VOUCHERS. THEREFORE, AN ELEMENT OF INFLATION IN EXPENDITURE IN THE NAME OF WAGES AND C OOLIE PAYMENTS CANNOT BE RULED OUT. THEREFORE ON AN ESTI MATE 10% OF THE WAGES IS DISALLOWED IN THE HANDS OF THE ASSESSE E WHICH WILL COMES TO 3,36,361/- AND THIS WILL BE CONFIRMED IN THE HANDS OF THE ASSESSEE AND THE BALANCE AMOUNT IS DELETED. AGA INST THIS, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE HAS MADE THE PAYMENT TO THE FOLLOWING PERSONS SAID TO BE THE WORKERS ON CON TRACT BASIS : 1. SHRI S. RASAIYA 2. SHRI K. JEEVANANDHAM 3. SHRI P. VENKATESH 4. SHRI N. PANDIAN 5. SHRI K.C.RAMESH 6. SHRI P. MUNIRAJ THE AO SUMMONED THEM AND RECORDED THE STATEMENTS FR OM THEM. OUT OF THEM, SHRI P. VENKATESH, SHRI N. PAND IAN, SHRI K.C.RAMESH, SHRI P. MUNIRAJ AND SHRI S. RASAIYA WER E APPEARED , WHEREIN IT WAS STATED THAT ABOUT 15 TO 2 5 PERSONS WORKED UNDER THEM AND HE RECEIVED THE COOLIE AS PER THE VOUCHERS SIGNED BY THEM AND DISBURSED THE AMOUNTS T O THE - - ITA 1259 & CO 79/15 4 WORKERS AFTER TAKING A SMALL PORTION TOWARDS THEIR SHARE. SINCE THESE PERSONS ARE NOT GIVEN THEIR NAME AND ADDRESSE S AT THE TIME OF RECORDING THE STATEMENTS, THEY ARE NOT HAVI NG ANY EVIDENCE FOR THE DISBURSEMENT OF COOLIE TO THE PERS ONS WHO ARE WORKED UNDER THEM AND ANY ACCOUNT BOOKS OR ANY EVID ENCE FOR THE WORK UNDERTAKEN BY THEM. ONLY ON THE BASIS OF VOUCHERS, THE PAYMENT WERE MADE TO THE WORKERS. THE AO DI SALLOWED THE ENTIRE PAYMENT ON THE REASON THAT NO TDS WAS MA DE. HOWEVER, THE CIT(APPEALS) WAS OF THE OPINION THAT T HERE IS CONTRACT ENTRY BY THE ASSESSEE WITH THESE PERSONS A ND PAYMENT HAS BEEN MADE BY VOUCHERS TO THE WORKERS AFTER RETA INING A SMALL PORTION OF THEIR SHARES. ACCORDINGLY, HE OBS ERVED THAT SEC.194C OF THE ACT IS NOT APPLICABLE. HOWEVER, HE SUSTAINED 10% OF THE WAGES AS IT IS MADE BY SELF VOUCHERS. 5. A PERUSAL OF SEC.194C OF THE ACT REVEALS THAT T AX IS TO BE DEDUCTED AT SOURCE WHERE ANY SUM PAID FOR CARRYING OUT ANY WORK IN PURSUANCE OF CONTRACT BETWEEN THE CONTRACTO R AND VARIOUS PERSONS MENTIONED IN VARIOUS CLAUSES UNDER SUB-SEC.(1) OF SEC.194C. SUB-SEC.(3) PROVIDES THAT NO DEDUCTION SHALL BE MADE WHERE THE AMOUNT TO BE PAID OR CREDITED DOES N OT EXIST - - ITA 1259 & CO 79/15 5 20,000/-. THE PROVISION HAS BEEN EXPLAINED BY THE BOARD CIRCULAR NO.715 DATED 8.4.1995. THEREFORE, THE AMO UNT SO AGGREGATED EXCEEDS 20,000/ -, THEN THE ASSESSEE REQUIRES TO DEDUCT TAX AT SOURCE. THE ASSESSEE TOOK A PLEA BEF ORE THE LOWER AUTHORITIES THAT IT WAS PAID ON BEHALF OF CASUAL WO RKER AND ON DIFFERENT DATES AND THESE PERSONS RETAINED THEIR SM ALL PORTION OF SHARE AND EACH PAYMENT DOES NOT EXCEED 20,000/- AND HERE IS NO CONTRACT TOWARDS THIS. THE AO THOUGH SUMMONED P EOPLE, HE HAS NOT BROUGHT ON RECORD ANY CONTRACT TO SHOW THAT EACH PAYMENT EXCEEDS 20,000/- IN RESPECT OF EACH PERSONS MENTIONED HEREIN. HAD THAT BEEN, THE ASSESSEE WOU LD NOT HAVE PAID DIFFERENT AMOUNTS ON DIFFERENT DATES IN RESPEC T OF THESE PERSONS. THE CIRCUMSTANCES SHOW THAT THE PAYMENTS ARE MADE ON DIFFERENT OCCASIONS FOR THESE CASUAL WORKERS. T HEREFORE, IN THE ABSENCE OF ANY MATERIAL TO PROVE THAT ALL THE P AYMENTS ARE MADE ON A SINGLE CONTRACT, PROVISIONS OF SEC.194C O F THE ACT COULD NOT BE INVOKED, AS EACH PAYMENT TO EACH WORKE R IS LESS THAN 20,000/-. BEING SO, IN OUR OPINION, THE CIT(APPEA LS) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(APPEALS). - - ITA 1259 & CO 79/15 6 6. COMING TO THE CROSS-OBJECTION, IT IS IN SUPPORTI VE OF THE ORDER OF THE CIT(APPEALS). SINCE, WE HAVE DISMISSE D THE APPEAL OF THE REVENUE, THE CROSS-OBJECTION IS ALSO DISMISS ED AS INFRUCTUOUS. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AND CRO SS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 29 TH OF JULY, 2016 AT CHENNAI. SD/- SD/- ( ' . . ' . #$ ) ( % & ' ( ) ) N.R.S.GANESAN * )+,-./0-1223-04* 5 67 /JUDICIAL MEMBER 6789::2;.<-.<=>?@>0 %5 /CHENNAI, A6 /DATED, THE 29 TH JULY, 2016. MPO* 6$ BCDC /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. E)* /CIT(A) 4. E /CIT 5. CF# G /DR 6. #HI /GF.