M/s. Gokuldas Virjibhai & Company, Sangli V. ITO, Sangli

ITA 1062/PUN/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9706 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 16-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: S V DESHPANDE
• Keywords: Non-deduction of tax; Procedural lapse
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1062/PN/2010 (ASSTT. YEAR : 2007-08) M/S GOKULDAS VIRJIBHAI & COMPANY ... APPELLANT 86, MARKET YARD, SANGLI 416416 PAN AACFG 4224 G V. ITO WARD 1(2), SANGLI RESPONDENT (ASSTT. YEAR : 2007-08) ITA NO. 1064/PN/2010 (ASSTT. YEA R : 2007-08) M/S. NATWARLAL AMRITLAL PAREKH APPELLANT 126, MARKET YARD, SANGLI-416416 PAN : AACFN 1579 K V. ITO, WARD 1(2), SANGLI RESPONDENT APPELLANT BY : SHRI S.V. DESHPANDE RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 07/8 /12 DATE OF PRONOUNCEMENT : 12TH - 9-12 ORDER PER R.S. PADVEKAR, JM THESE TWO APPEALS ARE FILED BY TWO DIFFERENT ASSES SEES CHALLENGING THE IMPUGNED ORDERS OF THE LD CIT(A), KOLHAPUR DATE D 31/05/2010 AND 28/05/2010 RESPECTIVELY FOR THE A.Y. 2007-08. AS T HE FACTS AS WELL AS THE ISSUES ARE COMMON, HENCE, BOTH THE APPEALS ARE DISP OSED OF BY THIS CONSOLIDATED ORDER. 2. THE COMMON ISSUE IN CONTROVERSY IS WHETHER THE LD CIT(A) IS JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY TH E A.O U/S. 40(A)(IA) OF THE ACT IN RESPECT OF THE PAYMENT MADE TO THE MATH ADI BOARD. 2 ITA NOS. 1062 & 1064/PN/2010 M/S. GOKULDAS VIJIBHAI & COMPANY ETC., A.YSS. 2007-08 3. WE FIRST TAKE UP THE APPEAL OF M/S. GOKULDAS V IRJIBHAI AND COMPANY, BEING ITA NO. 1062/PN/2010. THE ASSESSEE FIRM IS A GENERAL MERCHANT AND COMMISSION AGENT HAVING SHOP IN THE MA RKET YARD, SANGLI. IT WAS NOTICED BY THE A.O THAT THE ASSESSEE HAD PAI D THE LABOUR CHARGES OF RS.1,97,505/- TO SANGLI MIRAJ KAMGAR MATHADI BOA RD (IN SHORT MATHADI BOARD). IN THE OPINION OF THE A.O, PAYMENT MADE TO SAID MATHADI BOARD WAS COVERED U/S. 194C(1) OF THE ACT AND AS THE ASSE SSEE HAS NOT DEDUCTED THE TAX AT SOURCE (TDS), THE SAME WAS DISA LLOWABLE U/S. 40(A)(IA) OF THE ACT. AFTER EXAMINING THE SCHEME OF MAHARASHTRA MATHADI HAMAL AND OTHER WORKERS ( REGULATION OF EMP LOYMENT AND WELFARE) ACT, 1969 AS WELL AS MATHADI BOARD CONSTIT UTED UNDER THE SAID ACT, THE A.O. CAME TO THE CONCLUSION THAT THE MATHA DI BOARD IS ACTING AS A INTERMEDIARY BETWEEN THE BUSINESSMEN AND REGISTERE D WORKERS AND THERE IS A CONTRACT BETWEEN THE MATHADI BOARD AND ASSES SEE FIRM IN RESPECT OF THE SUPPLY OF THE LABOURERS AND HENCE, ASSESSEE SHO ULD HAVE DEDUCTED A TAX FROM THE PAYMENT MADE TO THE MATHADI BOARD, SA NGLI U/S. 194C(1) OF THE ACT. THE A.O ALSO REFERRED TO THE EXEMPTION CE RTIFICATE OBTAINED BY THE KOLHAPUR DISTRICT MATHADI AND LABOUR BOARD U/S . 197 R.W.S. 194C OF THE ACT AND FINALLY CONCLUDED THAT AS THE ASSESSEE FAILED TO MAKE TDS IN RESPECT OF AMOUNT PAID TO MATHADI BOARD, THE SAME W AS NOT ALLOWABLE IN VIEW OF U/S. 40(A)(IA) OF THE ACT. THE SAID ASSE SSEE CARRIED THE ISSUE BEFORE THE LD CIT(A) BUT WITHOUT SUCCESS, AS THE AP PEAL WAS DISMISSED. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. SO FAR AS ANOTHER APPELLANT-ASSESSEE M/S. NATWAR LAL AMRITLAL PAREKH, BEING ITA NO. 1064/PN/2010 IS CONCERNED, IT WAS NOTICED BY THE A.O THAT THE ASSESSEE HAS PAID RS. 3,35,149/- AS LA BOUR CHARGES TO SANGLI MIRAJ KAMGAR MATHADI BOARD. IN THE OPINION OF THE A.O, THE SAID PAYMENT WAS COVERED WITHIN THE PROVISIONS OF SEC. 1 94C OF THE ACT AND HENCE THE ASSESSEE SHOULD HAVE DEDUCTED THE TAX AT SOURCE. AS ASSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE, HE MADE DISALLO WANCE BY EVOKING THE PROVISION OF SEC. 40(A)(IA) OF THE ACT AND MADE THE ADDITION TO THE INCOME OF THE ASSESSEE. THE REASONS RECORDED BY TH E A.O IN THIS CASE FOR MAKING THE DISALLOWANCE IS IDENTICAL AS IN THE CASE OF M/S. GOKULDAS VIRJIBHAI AND COMPANY. THE SAID ASSESSEE ALSO CHALL ENGED DISALLOWANCE MADE BY THE A.O. BEFORE THE LD CIT(A) BUT WITHOUT S UCCESS. IT APPEARS THAT WITHOUT EXAMINING OF THE NATURE OF THE RELATI ONSHIP OF THE ASSESSEE WITH THE MATHADI BOARD, THE A.O WAS MUCH INFLUENCED BY THE FACT THAT THE 3 ITA NOS. 1062 & 1064/PN/2010 M/S. GOKULDAS VIJIBHAI & COMPANY ETC., A.YSS. 2007-08 MATHADI BOARD HAS OBTAINED THE CERTIFICATE U/S. 19 7 FOR NO DEDUCTION OF TAX IN THE F.Y. 2008-09 AND CONCLUDED THAT THERE IS A CONTRACTUAL RELATIONSHIP BETWEEN THE ASSESSEE AND MATHADI BOARD . 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE SHORT ISSUE IN CONTROVERSY IS WHETHER T HE MATHADI BOARD IS LABOUR CONTRACTOR OF THE ASSESSEE WITHIN THE MEANIN G OF SEC. 194C(1) OF THE ACT WHICH READS AS UNDER : 194C (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO AN Y RESIDENT(HEREAFTER IN THIS SECTION REFERRED TO AS T HE CONTRACTOR )FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR F OR CARRYING OUT ANY WORK ) IN PURSUANCE OF A CONTRACT 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 CAS H (A) THE CENTRAL GOVERNMENT OF ANY STATE GOVERNMENT; OR (B) ANY LOCAL AUTHORITY, OR (C)ANY CORPORATION ESTABLISHED BY OR UNDER A CENTR AL, STATE OR PROVINCIAL ACT, OR (D) ANY COMPANY; 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 SATISFYI NG THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURPOSE OF PLANNIN G, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VIL LAGES, OR FOR BOTH; OR (G) ANY SOCIETY REGISTERED UNDER THE SOCIETIES REG ISTRATION 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 ESTABLISHED OR INCORPORATED BY O R UNDER A CENTRAL, STATE OR PROVINCIAL ACT AND AN INSTITUTIO N 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 OR A N ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS, WHETHER INCORP ORATED OR NOT, OTHER THAN THOSE FALLING UNDER ANY OF THE PRECEDING CLAUSES, WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE B USINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LI MITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURI NG THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WH ICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR, SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT 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 (II) IN ANY OTHER CASE TWO PER CENT, OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THERE IN: 4 ITA NOS. 1062 & 1064/PN/2010 M/S. GOKULDAS VIJIBHAI & COMPANY ETC., A.YSS. 2007-08 6. THE A.O HAS DISCUSSED PROVISIONS OF THE MAHARASH TRA MATHADI HAMAL AND OTHER MANNUAL WORKS (REGULATION OF EMPLOY MENT 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 (REGULA TION OF EMPLOYMENT AND WELFARE) ACT 1969 (IN SHORT MAHARASH TRA MATHADI ACT). FROM THE PREAMBLE TO THE MAHARASHTRA MATHADI ACT, I T IS SEEN THAT THE OBJECT FOR ENACTMENT OF THIS ACT IS FOR REGULATING THE EMPLOYMENT OF UN- PROTECTED MANUAL WORKERS EMPLOYED IN SCHEDULED EMPL OYMENTS IN THE STATE OF MAHARASHTRA AND TO MAKE PROVISION FOR THEI R ADEQUATE SUPPLY AND PROPER UTILIZATION IN SUCH EMPLOYMENT. IT IS ALSO MENTIONED IN THE PREAMBLE THAT THE SAID ACT IS ENACTED TO MAKE BETTE R PROVISION FOR THEIR TERMS AND CONDITIONS OF EMPLOYMENT, TO PROVE FOR TH EIR WELFARE AND FOR HEALTH AND SAFETY MEASURES AND TO PROVIDE FOR ESTAB LISHMENT OF BOARDS IN THE DIFFERENT AREAS OF THE STATE ETC., 7. SEC. 2 OF THE ACT DEFINES THE DIFFERENT TERMS/P HRASES USED IN THE SAID ACT. TO UNDERSTAND THE SCHEME OF THE ACT, SEC TION 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 SCHEDU LED EMPLOYMENTS, AND GENERALLY FOR MAKING BETTER PROVIS ION FOR THE TERMS 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 SCHEDUL ED EMPLOYMENT OR EMPLOYMENTS, AND PROVIDE FOR THE TERM S AND CONDITIONS OF WORK OF REGISTERED UNPROTECTED WORKE RS, AND MAKE PROVISION FOR THE GENERAL WELFARE IN SUCH EMPLOYMEN TS. (2) IN PARTICULAR, A SCHEME MAY PROVIDE FOR ALL OR ANY OF THE FOLLOWING MATTERS THAT IS TO SAY (A) FOR THE APPLICATION OF THE SCHEME OF SUCH CLASSES O F REGISTERED UNPROTECTED WORKERS AND EMPLOYERS, AS MA Y BE SPECIFIED THEREIN; 5 ITA NOS. 1062 & 1064/PN/2010 M/S. GOKULDAS VIJIBHAI & COMPANY ETC., A.YSS. 2007-08 (B) FOR DEFINING THE OBLIGATIONS OF REGISTERED UNPROTEC TED WORKERS AND EMPLOYERS SUBJECT TO THE FULFILLMENT OF WHICH THE SCHEME MAY APPLY TO THEM; (C) FOR REGULATING THE RECRUITMENT AND ENTRY INTO THE S CHEME OF UNPROTECTED WORKERS, AND THE REGISTRATION OF UNPROT ECTED WORKERS AND EMPLOYERS, INCLUDING THE MAINTENANCE OF REGISTERS, REMOVAL, EITHER TEMPORARILY OR PERMANENT LY, OF NAMES FROM THE REGISTERS, AND THE IMPOSITION OF FEE S FOR REGISTRATION; (D) FOR REGULATING THE EMPLOYMENT OF REGISTERED UNPROTECTED WORKERS, AND THE TERMS AND CONDITIONS O F SUCH EMPLOYMENT, INCLUDING RATES OF WAGES, HOURS OF WORK , MATERNITY BENEFIT, OVERTIME PAYMENT, LEAVE WITH WAG ES, PROVISION FOR GRATUITY AND 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 PAYAB LE TO THE REGISTERED WORKERS FOR THE WORK DONE BY SUCH WORKER S; FOR REQUIRING SUCH EMPLOYER WHO, IN THE OPINION OF THE BOARD, MAKE DEFAULT IN REMITTING THE AMOUNT OF WAGES IN TI ME AS AFORESAID, TO DEPOSIT WITH THE BOARD, AN AMOUNT EQU AL TO THE MONTHLY AVERAGE OF THE WAGES TO BE REMITTED AS AFOR ESAID; IF AT ANY TIME THE AMOUNT OF SUCH DEPOSIT FALLS SHORT OF SUCH AVERAGE, FOR REQUIRING THE EMPLOYER TO MAKE GOOD TH E 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 REMIT TED AS THE BOARD MAY DETERMINE; (E) FOR SECURING THAT, IN RESPECT OF PERIOD DURING WHIC H EMPLOYMENT OR FULL EMPLOYMENT IS NOT AVAILABLE TO REGISTERED UNPROTECTED WORKERS THOUGH THEY ARE AVAI LABLE FOR WORK, SUCH UNPROTECTED WORKERS WILL, SUBJECT TO THE CONDITIONS OF THE SCHEME, RECEIVE A MINIMUM WAGE; (F) FOR PROHIBITING, RESTRICTING OR OTHERWISE CONTROLLI NG THE EMPLOYMENT OF UNPROTECTED WORKERS TO WHOM THE SCHEM E DOES NOT APPLY, AND THE EMPLOYMENT OF UNPROTECTED 6 ITA NOS. 1062 & 1064/PN/2010 M/S. GOKULDAS VIJIBHAI & COMPANY ETC., A.YSS. 2007-08 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 PRO VISION 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 F AR AS SATISFACTORY PROVISION THEREFOR, IS REQUIRED BUT DO ES NOT EXIST, APART FROM THE SCHEME; (I) FOR THE CONSTITUTION OF ANY FUND OR FUNDS INCLUDING PROVIDENT FUND FOR THE BENEFIT OF REGISTERED UNPROT ECTED 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 MAD E AFTER TAKING INTO CONSIDERATION THE PROVISIONS OF THE EMP LOYEES PROVIDENT FUNDS ACT, 1952, AND THE SCHEME FRAMED THEREUNDER WITH SUITABLE MODIFICATIONS, WHERE NECES SARY, TO SUIT THE CONDITIONS OF WORK OF SUCH REGISTERED UNPROTECTED WORKS) AND ALL MATTERS RELATING THERETO ; (J) FOR THE MANNER IN WHICH, THE DAY FROM WHICH (EITHER PROSPECTIVE OR RETROSPECTIVE) AND THE PERSONS BY WH OM, THE COST OF OPERATING THE SCHEME IS TO BE DEFRAYED. (K)FOR CONSTITUTING THE PERSONS OR AUTHORITIES W HO ARE TO BE RESPONSIBLE FOR THE ADMINISTRATION OF THE SCHEME, AND FOR THE ADMINISTRATION OF FUNDS CONSTITUTED FOR THE PUR POSES AFORESAID; (K-I)FOR SPECIFYING THE POWERS AND DUTIES WHICH TH E PERSONS OR AUTHORITIES REFERRED TO IN CLAUSE (K) MAY EXERCISE OR PERFORM, FOR PROVIDING APPEALS AND REVISION APPLICA TIONS AGAINST THE DECISIONS OR ORDERS OF SUCH PERSONS AN D AUTHORITIES; AND FOR DECIDING SUCH APPEALS AND APPLICATIONS AND FOR MATTERS INCIDENTAL THERETO; (L) FOR SUCH INCIDENTAL AND SUPPLEMENTARY MATTERS, AS M AY BE NECESSARY OR EXPEDIENT FOR GIVING EFFECT TO THE PUR POSES OF A SCHEME. (3) THE SCHEME MAY FURTHER PROVIDE THAT A CONTRAVENTION OF ANY PROVISION THEREOF SHALL BE PUNISHED WITH IMPRISONME NT FOR SUCH TERM AS MAY BE SPECIFIED (BUT IN NO CASE EXCEEDING THREE 7 ITA NOS. 1062 & 1064/PN/2010 M/S. GOKULDAS VIJIBHAI & COMPANY ETC., A.YSS. 2007-08 MONTHS IN RESPECT OF A FIRST CONTRAVENTION OR SIX M ONTHS IN RESPECT OF ANY SUBSEQUENT CONTRAVENTION) OR WITH FI NE WHICH MAY EXTEND TO SUCH AMOUNT AS MAY BE SPECIFIED (BUT IN N O CASE EXCEEDING FIVE HUNDRED RUPEES IN RESPECT OF THE FIR ST CONTRAVENTION, OR ONE THOUSAND RUPEES IN RESPECT OF ANY SUBSEQUENT CONTRAVENTION) OR WITH BOTH IMPRISONMENT AND FINE AND IF THE CONTRAVENTION IS CONTINUED AFTER CONVICT ION, 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 S UCH NAME AS MAY BE SPECIFIED IN THE NOTIFICATION OF ANY SCHEDULED EMP LOYMENT 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 GOVER NMENT MAY MAKE ONE OR MORE SCHEMES FOR ANY SCHEDULED EMPLOYMENT OR GROUP OF SCHEDULED EMPLOYMENT IN ONE OR MORE AREAS AND THE S AME MAY BE PUBLISHED IN OFFICIAL GAZETTE. SECTION 6 PROVIDES FOR CONSTITUTING OR ESTABLISHING A BOARD BY NOTIFICATION IN THE OFFICIA L GAZETTE FOR ANY SCHEDULED EMPLOYMENT IN ANY AREA. SUB-SECTION 6(3) PROVIDES THAT THE GOVERNMENT WILL NOMINATE THE MEMBERS OF THE BOARD F ROM TIME TO TIME REPRESENTING THE EMPLOYERS UN-PROTECTED WORKERS AND STATE GOVERNMENT. SECTION 6(4) PROVIDES THAT THERE WILL BE EQUAL REPR ESENTATION FROM THE EMPLOYERS AND UN-PROTECTED WORKERS AND THE SECTION 6(5) PROVIDES THAT CHAIRMAN OF THE BOARD SHALL BE NOMINATED BY THE STA TE GOVERNMENT. SECTION 7 PROVIDES FOR THE POWERS AND DUTIES OF THE BOARD AND SUB-SECTION (1) TO SEC. 7 PROVIDES THAT THE BOARD SHALL BE RESP ONSIBLE FOR ADMINISTERING A SCHEME AND SHALL EXERCISES SUCH POW ERS AND PERFORM SUCH FUNCTIONS AS MAY BE CONFIRMED BY IT BY THE SCH EME. SECTION 13 PROVIDES FOR DETERMINATION OF THE MONIES DUE FROM E MPLOYERS AND WORKERS. SEC. 14 OF THE ACT PROVIDES FOR CONSTITUT ION OF ADVISORY COMMITTEE TO ADVISE UPON SUCH MATTERS ARISING OUT O F THE ADMINISTRATION OF THE MATHADI ACT OR ANY SCHEME MADE UNDER THE SAI D ACT OR RELATING TO APPLICATION OF PROVISIONS OF SAID ACT TO ANY PARTIC ULAR CLASS OF UN- PROTECTED WORKERS AND EMPLOYERS ETC. SEC. 17 PROVI DES THAT EVERY 8 ITA NOS. 1062 & 1064/PN/2010 M/S. GOKULDAS VIJIBHAI & COMPANY ETC., A.YSS. 2007-08 OFFENCE PUNISHABLE BY OR UNDER THE SAID ACT (INCLUD ING ANY OFFENCE MADE PUNISHABLE BY A SCHEME MADE UNDER THE SAID ACT) SH ALL 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 MAH ARASHTRA MATHADI ACT MAKE APPLICABLE THE PROVISIONS OF WORKMEN COMPENSA TION ACT 1923 AND THE PAYMENT OF WAGES ACT 1936 TO THE REGISTERED UN -PROTECTED WORKERS EMPLOYED IN ANY SCHEDULED EMPLOYMENT. SEC. 2(11) D EFINES THE TERM UNPROTECTED WORKER MEANS A MANUAL WORKER WHO IS ENG AGED OR TO BE ENGAGED IN ANY SCHEDULED EMPLOYMENT. THE DEFINITIO N OF EMPLOYER IS GIVEN IN SEC.2(3) OF THE ACT. IN SUM AND SUBSTANCE , THE MAHARASHTRA MATHADI ACT IS A LABOUR WELFARE LEGISLATION FOR PRO TECTING THE INTEREST OF THE UN-PROTECTED & UNORGANISED MANUAL WORKERS SUCH AS MATHADI HAMALS ETC., AND FOR THE PURPOSE OF REGULATING THE TERMS A ND CONDITIONS OF THEIR EMPLOYMENT, STATE GOVERNMENT HAS TO MAKE A SCHEME C ONSIDERING THE WELFARE, HEALTH AND SAFETY MEASURES AND FOR ASSURIN G THE REGULAR EMPLOYMENT TO THE UNPROTECTED WORKERS IN THE SCHEDU LED EMPLOYMENT. AT THE END OF THE ACT, SCHEDULE IS APPENDED IN WHIC H THE CLASS OR CATEGORY OF THE EMPLOYMENT ARE MENTIONED TO WHICH T HE 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 A SSESSEES THROUGH THE MATHADI BOARD CONSTITUTED UNDER THE MAHARASHTRA MATHADI ACT, CAN IT BE SAID THAT THERE IS A RELATIONSHIP OF THE PRINCIP AL AND CONTRACTOR BETWEEN THE ASSESSEE AND THE MATHADI BOARD WITHIN THE MEANI NG OF SEC. 194C OF THE ACT ? 9. THE GOVERNMENT OF MAHARASHTRA HAS NOTIFIED THE S CHEME DATED 13.7.1984 WHICH IS PUBLISHED IN THE GOVERNMENT NOTI FICATION OF THE SAME DATE AS PROVIDED UNDER SECTION 4(1) OF THE ACT. AS PER NOTIFIED SCHEME, SAME IS APPLICABLE TO THE EMPLOYMENT IN THE GROCER Y MARKET OR SHOPS, OR MARKET ESTABLISHED UNDER THE MAHARASHTRA AGRICUL TURAL PRODUCE MARKETING (REGULATION) ACT 1963 AND MORE PARTICULA RLY, TO THE MANUAL WORKERS ENGAGED IN LOADING, UNLOADING, SACKING, CAR RYING, WEIGHING, MEASURING, FILLING, STITCHING ETC., IS APPLICABLE. IN THE SCHEME, OTHER CLASSES OF THE EMPLOYMENT ALSO MENTIONED, TO WHIC H, THE SCHEME WILL BE APPLICABLE. IN THE SCHEME, THERE IS PROVISION FOR APPOINTMENT OF THE 9 ITA NOS. 1062 & 1064/PN/2010 M/S. GOKULDAS VIJIBHAI & COMPANY ETC., A.YSS. 2007-08 SECRETARY AND PERSONNEL OFFICER. CLAUSE 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, PURCHASE R, IMPORTER, EXPORTER, ENGAGED IN SELLING, PURCHASING OR TRADING OR ACTING AS AGENT IN GROCERY MARKETS OR SHOPS AND AGRICULTURAL PRODUCE MARKETS OR SUBSIDIARY MARKETS IN AREAS TO WHICH THI S SCHEME APPLIES SHALL REGISTERED WITH THE BOARD BY APPLYING IN FORM A APPENDED TO THE SCHEME WIT FIFTEEN DAYS FROM THE DA TE OF COMING INTO FORCE OF THIS CLAUSE. PROVIDED, HOWEVER, THAT AN EMPLOYER OF ANY ESTABLISHMENT COMING INTO EXISTENCE AFTER THE C OMMENCEMENT OF THE SCHEME SHALL APPLY FOR A REGISTRATION SIMULT ANEOUSLY ON THE COMMENCEMENT OF HIS BUSINESS. 10. AS PER CLAUSE 14 OF THE SCHEME, IT IS A MANDATO RY FOR EVERY EMPLOYER IN THE SCHEDULED EMPLOYMENT, WHO GET REGIS TERED WITH THE MATHADI BOARD. RULE 29 OF THE SCHEME MAKE IT OBLIG ATORY ON THE REGISTERED EMPLOYERS TO EMPLOY A WORKER, WHO IS A R EGISTERED WORKER AND WHO IS ALLOTTED TO HIM BY THE SECRETARY OF THE BOAR D IN ACCORDANCE WITH CLAUSE 9(E) OF THE SCHEME. CLAUSE 29(5)(I) PROVIDE S THAT A REGISTERED EMPLOYER SHALL PROVIDE TO THE BOARD WITHIN FIVE DAY S OF EVERY FORTNIGHT OR SUCH SHORTER PERIODS AS MAY BE SPECIFIED, THE GROSS WAGES DUE TO REGISTERED WORKS FOR THE WORK DONE BY SUCH REGISTE RED WORKERS DURING THE FORTNIGHT AND OTHER AMOUNT DUE TO DAILY REGISTE RED WORKERS. CLAUSE 33 OF THE SCHEME PROVIDES THAT THE BOARD MAY PERMIT ANY REGISTERED EMPLOYER TO PAY WAGES AND OTHER ALLOWANCES TO THE R EGISTERED MONTHLY WORKERS EMPLOYED BY THEM DIRECTLY. THE SAID CLAUSE ALSO PROVIDES THAT IN RESPECT OF THE REGISTERED WORKERS OTHER THAN REG ISTERED MONTHLY WORKERS, THE EMPLOYER SHALL REMIT THE WAGES AND OTH ER ALLOWANCES BY CHEQUE TO THE SECRETARY OF THE BOARD EVERY FORTNIGH T AND SECRETARY SHALL ARRANGE TO DISBURSE THE WAGES AND OTHER DUES TO T HE 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 EMPLOYERS AND CLAUSE 29 IS IN RESPECT OF PROHIBITION ON THE REGISTERED EMP LOYER TO EMPLOY MANUAL WORKERS IN THE SCHEDULED EMPLOYMENT OTHER THAN THE REGISTERED WORKERS WHO ARE ALLOTTED TO HIM BY THE SECRETARY IN ACCORDA NCE WITH THE PROVISIONS OF CLAUSE 9(E) OF THE SCHEME. THE PENA LTY INCLUDE THE 10 ITA NOS. 1062 & 1064/PN/2010 M/S. GOKULDAS VIJIBHAI & COMPANY ETC., A.YSS. 2007-08 IMPRISONMENT FOR THE TERM WHICH MAY EXTENT TO SIX M ONTHS OR WITH FINE WHICH MAY EXTEND TO RS. 1000/- OR WITH BOTH. 11. IN SUM AND SUBSTANCE, THE PERSON WHO IS CARRYIN G ON HIS BUSINESS IN THE NOTIFIED AREA AND ALSO CARRYING ON THE SCHED ULED EMPLOYMENT, IT IS MANDATORY FOR HIM TO GET REGISTERED UNDER THE MAHA RASHTRA MATHADI SCHEME AND ALSO TO EMPLOY ONLY THE REGISTERED WORKE RS ALLOTTED BY THE BOARD. SEVERE PENALTIES ARE PROVIDED FOR CONTRAVEN TION FOR NOT COMPLYING WITH THE SCHEME. THE BOARD IS NOT THE LABOUR SUPPL IER BUT A BODY CORPORATE FOR IMPLEMENTING THE SCHEME FRAMED BY THE GOVERNMENT UNDER THE MAHARASHTRA MATHADI ACT. THE ASSESSEE IS REG ISTERED UNDER THE MAHARASHTRA MATHADI ACT AS PER PROVISIONS OF THE S CHEME FRAMED AND BOTH THE ASSESSEES ARE UNDER OBLIGATION TO ENGAGE T HE LABOURERS OR WORKERS FOR CARRYING OUT WORK IN THEIR BUSINESS THR OUGH THE BOARD ONLY, WHICH THEY ARE LEGALLY BOUND TO DO. 12. THE MANDATE OF SEC. 194C IS THAT THE RELATIONSH IP 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 T O CONTRACTOR. AFTER ANXIOUSLY EXAMINING THE PROVISIONS OF MAHARASHTRA M ATHADI ACT AND SCHEME FRAMED UNDER IT, WE ARE OF THE OPINION THAT THERE IS NO CONTRACTUAL RELATIONSHIP AS A PRINCIPAL AND CONTRAC TOR BETWEEN THESE ASSESSEES AND MATHADI BOARD, BUT, IN FACT, IN PURSU ANCE OF THE PROVISIONS OF THE ACT AS WELL AS THE SCHEME, BOTH THESE ASSESS EES ARE BOUND TO ENGAGE THE LABOURERS OR THE WORKERS THROUGH THE MAT HADI BOARD. IN OUR OPINION, THE INTERPRETATION GIVEN BY BOTH THE AUTHO RITIES BELOW TO THE PROVISIONS OF THE MAHARASHTRA MATHADI ACT IS TOTALL Y MISPLACED AS SEC. 194C HAS NO APPLICATION WHEN THESE ASSESSEES REMITS THE PAYMENT IN RESPECT OF THE WAGES PAYABLE TO THE WORKERS OR LAB OURERS ENGAGED THROUGH THE MATHADI BOARD. WE, THEREFORE, HOLD THA T 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 SAME I N BOTH THE CASES AND THE RESPECTIVE GROUNDS TAKEN BY BOTH THE ASSESSEES ARE ALLOWED. 13. THERE IS ONE MORE ISSUE IN THE CASE OF M/S. NAT WARLAL AMRITLAL PAREKH, ITA NO. 1064/PN/2010 I.E. THE DISALLOWANCE OF RS. 1,02,609/- FOR NON-DEDUCTION OF TAX AS PROVIDED U/S. 194A OF THE ACT. IT WAS NOTICED BY THE A.O THAT THE ASSESSEE HAS PAID INTEREST OF R S. 1,02,609/- ON BORROWED FUNDS TO NEMINATH NAGARI SAHKARI PAT SANST HA. IN THE OPINION 11 ITA NOS. 1062 & 1064/PN/2010 M/S. GOKULDAS VIJIBHAI & COMPANY ETC., A.YSS. 2007-08 OF THE A.O, THE ASSESSEE SHOULD HAVE DEDUCTED THE T AX AT SOURCE AS PER PROVISIONS OF SEC. 194A. THE A.O, THEREFORE, EVOKE D THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT AND DISALLOWED THE ENTIRE INTEREST CLAIMED BY THE ASSESSEE OF RS. 1,02,609/- FOR FAILURE ON THE P ART OF THE ASSESSEE TO DEDUCT THE TAX AT SOURCE. THE ASSESSEE PLEADED THA T THE ASSESSEE HAS RECEIVED FORM NO. 15G AND EVEN IF THERE IS A DEFAUL T IN SUBMITTING FORM NO. 15G, SEC. 40(A)(IA) CANNOT BE EVOKED. THE A.O H AS OBSERVED THAT IN RESPECT OF THE INTEREST PAID TO NEMINATH NAGARI SAH KARI PAT SANSTHA, DECLARATION U/S. 197A(1)(IA) IN FORM NO. 15G WAS GI VEN BY THE PAYEE TO THE ASSESSEE ON 10.2.2007. AS OBSERVED BY THE A.O , THE ASSESSEE DID NOT SUBMIT THE SAID FORM TO THE CITI, KOLHAPUR WIT HIN THE STIPULATED TIME. THE A.O, THEREFORE, REJECTED THE CONTENTION OF THE ASSESSEE THAT AS FORM NO. 15G WAS NOT FILED WITH THE CIT, KOLHAPUR, AND HENCE, IT IS A PROCEDURAL LAPSE AND NO DISALLOWANCE U/S. 40(A)(IA) CAN BE MADE. THE ASSESSEE CHALLENGED THE SAID ADDITION BEFORE THE LD CIT(A), BUT, WITHOUT SUCCESS. 14. WE HAVE HEARD THE PARTIES AND PERUSED THE RECO RD. IN THIS CASE,, THERE IS NO DISPUTE ABOUT THE FACT THAT THE ASSESS EE HAS OBTAINED THE FORM NO. 15G AS PROVIDED U/S. 197A(1)(IA) OF THE A CT, BUT THE ASSESSEE DID NOT FURNISH THE SAID FORM TO THE CIT, KOLHAPUR. IN OUR OPINION, IT IS ONLY THE PROCEDURAL LAPSE. ONCE THE ASSESSEE HAS O BTAINED THE FORM NO. 15G FROM THE PAYEE ASSESSEE, HAS NO LEGAL OBLIGATIO N TO DEDUCT THE TAX ON THE PAYMENT MADE TO PAYEE. WE FIND NO JUSTIFICA TION IN ORDER TO SUSTAINING THE SAID ADDITION. ACCORDINGLY, THE SAM E IS DELETED. 15. IN RESULT, BOTH THE APPEALS ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER 2012. SD/- SD/- (R.K. PANDA) ACCOUNTANT MEMBER (R.S.PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 12TH SEPTEMBER, 2012 US COPY OF THE ORDER IS FORWARDED TO : 12 ITA NOS. 1062 & 1064/PN/2010 M/S. GOKULDAS VIJIBHAI & COMPANY ETC., A.YSS. 2007-08 1. THE APPELLANT 2. THE RESPONDENT 3. THECIT- (CENTRAL), NAGPUR 400 001 4. THE CIT(A)-I, NASHIK 5. THE D.R. B BENCH, PUNE 6. GUARD FILE /- TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE FIT FOR PUBLICATION SD/- SD/- (RKP) (RSP) AM JM