A.C.I.T.-2, Agra V. M/s Sharma International Pvt. Ltd., Agra

ITA 145/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0752 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-07-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L MAURYA
• Assessee Lawyers: P N AGARWAL
• Keywords: TDS
• Section: 37(1); 194C; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 145/AGRA/ 2013 ASSESSMENT YEAR 2009-10 ASSTT. COMMISSIONER OF INCOME-TAX-2, VS. M/S SHA RMA INTERNATIONAL PVT. LTD. AGRA. 5/89/A-4, SOUTH KE MANDI AGRA. (PAN AAHCS 4171 Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.L. MAURYA, SR. D.R. RESPONDENT BY : SHRI P.N. AGARWAL, ADVOCATE. DATE OF HEARING : 22.07.2013 DATE OF PRONOUNCEMENT : 26.07.2013 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-I, AGRA DATED 09.11.2012 FOR A.Y. 2009-10, C HALLENGING THE ORDER OF LD. CIT(A) IN ALLOWING THE EXPENDITURE UPTO RS.15,03,9 04/- I.E. 80% OF THE TOTAL EXPENDITURE MADE AS JOB WORK CHARGES, WITHOUT APPR ECIATING THE FACTS OF THE CASE. 2. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HA S MADE PAYMENT OF RS.18,79,880/- UNDER THE HEAD JOB WORK EXPENSES. TH E ASSESSEE WAS DIRECTED TO ITA NO.145/AGRA/2013 A.Y.2009-10 2 PROVIDE COMPLETE DETAILS REGARDING THESE PAYMENTS. THE ASSESSEE HAS EXPLAINED THAT PAYMENTS WERE MADE ON ACCOUNT OF WEEKLY JOB WO RK CHARGES TO DIFFERENT KARIGARS IN CASH. THE JOB CHARGES ARE PAID TO DIFFERENT KARIGARS WHOSE INCOME IS BELOW THE TAXABLE LIMIT. THE WAGES WERE PAID TO THE PERMANENT WORKERS AND THEY ARE NOT CONTRACT LABOUR, THEREFORE, PAYMENTS MADE T O THEM FALLS UNDER THE DEFINITION OF SALARY & WAGES. SOME OF THE VOUCHERS COULD NOT BE PRODUCED DUE TO SEROUS FAMILY DISPUTE. THE A.O., HOWEVER, FOUND THA T ASSESSEE HAS NOT BEEN ABLE TO PROVIDE COMPLETE DETAILS AND ONLY LIST OF NAMES HAVE BEEN PROVIDED, WHICH ARE LABOURERS ON CONTRACT. THEREFORE, NON DEDUCTION OF TDS ON THE SOME AMOUNT, THE AMOUNT IS DISALLOWABLE BY INVOKING THE PROVISIONS O F SECTION 40A(IA) OF THE I.T. ACT. THE ADDITION WAS CHALLENGED BEFORE LD. CIT(A) AND SAME SUBMISSIONS WERE REITERATED AND IT WAS SUBMITTED THAT PROVISION OF T DS ARE NOT APPLICABLE IN THIS CASE. THEREFORE, PROVISION OF SECTION 194C ARE NOT APPLICABLE BECAUSE THE ASSESSEE HAS NOT MADE ANY PAYMENT TO ANY CONTRACTOR . THE REMAND REPORT OF THE A.O. WAS CALLED FOR. ON MERIT THE ASSESSEE ALSO EXP LAINED THAT JOB WORK INCOME HAS INCREASED SUBSTANTIALLY AND N.P. RATE IS ALSO B ETTER AS COMPARED TO EARLIER YEARS. THE SUBMISSIONS OF THE ASSESSEE ARE INCORPOR ATED AT PAGE 8 OF THE APPELLATE ORDER. ITA NO.145/AGRA/2013 A.Y.2009-10 3 3. THE LD. CIT(A) CONSIDERED THE SUBMISSION OF THE ASSESSEE IN THE LIGHT OF THE VARIOUS CASE LAWS HELD THAT JOB WORK PAYMENTS ARE M ADE TO WORKERS INDIVIDUALLY. DURING THE COURSE OF HEARING, THE A.O. ALSO ADMITTE D THAT THERE IS NO EVIDENCE WITH HER TO SHOW THAT PAYMENT HAS BEEN MADE TO ANY CONTRACTOR INSTEAD OF INDIVIDUAL PERSON FOR APPLYING SECTION 194C OF THE ACT. THE LD. CIT(A) THEREFORE, FOUND THAT DISALLOWANCE WITH AID OF TDS PROVISION I S NOT JUSTIFIED. HOWEVER, THE FULL PAYMENT TO THE EMPLOYEES ARE NOT ALLOWABLE UND ER SECTION 37(1) OF THE ACT. THE LD. CIT(A) CONSIDERING THE COMPARATIVE CHART OF JOB WORK INCOME AND JOB CHARGES PAID ACCEPTED THE CLAIM OF THE ASSESSEE AND CONSIDERING THE TOTALITY OF FACTS AND THE HISTORY OF THE ASSESSEE DIRECTED TO M AKE DISALLOWANCE OF 20% OF THE TOTAL EXPENDITURE. IN THE ABSENCE OF SUPPORTING EVI DENCE HE CONFIRMED THE ADDITION OF RS.3,75,976/-. THE REVENUE IS IN APPEAL ON THE ABOVE GROUND. 4. THE LD. D.R. MERELY RELIED UPON THE ORDER OF THE A.O. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS ION MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT THE DEPARTMENT HAS NOT CHA LLENGED THE APPLICABILITY OF THE TDS PROVISION IN THIS CASE. THE LD. CIT(A) ON P ROPER EXAMINATION OF THE HISTORY OF THE ASSESSEE RIGHTLY ALLOWED DEDUCTION A T THE RATE OF 80%. HE HAS SUBMITTED THAT IN SUBSEQUENT A.Y. 2010-11 THE A.O. HAS ONLY DISALLOWED 10% OF ITA NO.145/AGRA/2013 A.Y.2009-10 4 THE EXPENDITURE ON THE SAME HEAD. COPY OF THE ORDER DATED 22.03.2013 IS FILED AT PAGE 19 OF THE PAPER BOOK. 5. ON CONSIDERATION OF RIVAL SUBMISSION, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE A.O. MADE DISALLOWANCE ON THIS HEAD BY HOLDING THAT PAYMENTS ARE MADE TO THE CONTRACTOR AND FOR VIOLATI ON OF TDS PROVISION. THE LD. CIT(A) HOWEVER, CONSIDERING THE SUBMISSION OF THE A .O. AT THE APPELLATE PROCEEDING THAT PROVISION OF TDS ARE NOT APPLICABLE IN THIS CASE HELD THAT THE SAME PROVISION ARE NOT APPLICABLE, THEREFORE, THERE IS NO BASIS TO PREFER THE DEPARTMENTAL APPEAL ON THE ISSUE. LD. CIT(A) ALSO E XAMINED THE ISSUE OF DISALLOWANCE OF EXPENDITURE UNDER SECTION 37 OF THE ACT AND CONSIDERING THE HISTORY OF THE ASSESSEE IN WHICH JOB WORK INCOME OF THE ASSESSEE HAS INCREASED SUBSTANTIALLY AS COMPARED TO THE EARLIER YEARS, COR RECTLY FOUND THAT EVEN THE N.P. RATE HAS INCREASED. THEREFORE, LD. CIT(A) CONSIDERI NG THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE CORRECTLY ALLOWED 80% OF THE EXPENDITURE ON THIS HEAD. LD. COUNSEL FOR THE ASSESSEE IS ALSO JUSTIFIED IN R EFERRING TO THE ASSESSMENT ORDER OF SUBSEQUENT A.Y.2010-11 IN WHICH A.O. HAS DISALLO WED 10% OF THE EXPENDITURE OUT OF WAGES. THEREFORE, THE ORDER PASSED BY CIT(A) IS JUST AND PROPER. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ASSESSEE IS NO T IN APPEAL ON THIS GROUND. ITA NO.145/AGRA/2013 A.Y.2009-10 5 6. IN VIEW OF ABOVE, WE DO NOT FIND ANY MERIT IN TH E DEPARTMENTAL APPEAL AND THE SAME IS ACCORDINGLY DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (A.L. GEHLOT) (BHAV NESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- APPELLANT/RESPONDENT/CIT (APPEALS) CONCERNED CIT CONCERNED/D.R., ITAT, AGRA BENCH, AGRA GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY