DCIT, Circle 49, Kolkata V. M/s. Pragati Nirman Bureae, Kolkata

ITA 1568/KOL/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9186 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 27-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 13-08-2008
• Court: TRIBUNAL
• Department Lawyers: B R PURKAYASTHA
• Assessee Lawyers: S M SURANA
• Keywords: TDS
• Section: 40(a)(ia); 194C

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE . .. . . .. . , , , , , SHRI D.K.TYAGI, JUDICIAL MEMBER. !' !' !' !' /AND . .. . . .. .! !! ! , # SHRI C.D.RAO, ACCOUNTANT MEMBER '$ '$ '$ '$ / ITA NO . 1568/KOL/2008 %&' !()/ ASSESSMENT YEAR : 2005-06 (+, / APPELLANT ) D.C.I.T., CIRCLE-49, KOLKATA - !& - - VERSUS - . (.+,/ RESPONDENT ) M/S. PRAGATI NIRMAN BUREAU, KOLKATA (PAN : AAHFP 9701 E ) / 01 / 01 / 01 / 01 / '$ '$ '$ '$ / C.O.NO.50/KOL/2009 A/O ITA NO . 1568/KOL/2008 %&' !()/ ASSESSMENT YEAR : 2005-06 (/ %/ CROSS OBJECTOR ) - !& - (.+,/ RESPONDENT ) M/S. PRAGATI NIRMAN BUREAU, KOLKATA -VERSUS- D.C.I.T., CIRCLE-49, (PAN : AAHFP 9701 E ) KOLKATA +, 2 3 / FOR THE APPELLANT: SHRI B.R.PURKAYASTHA .+, 2 3 / FOR THE RESPONDENT: SHRI S.M.SURANA 4 / ORDER ( (( ( . .. . . .. .! !! !) )) ), , , , # PER SHRI C.D.RAO, AM THE ABOVE TWO APPEALS ONE FILED BY THE REVENUE AND THE OTHER CROSS OBJECTION RAISED BY THE ASSESSEE ARE AGAINST THE ORDER DATE D 30 . 06 . 2008 OF THE CIT(A),KOLKATA- XXXII, KOLKATA PERTAINING TO ASSESSMENT YEAR 2005-0 6. 2. THE BRIEF FACTS OF THIS ISSUE ARE THAT WHILE DOING THE SCRUTINY ASSESSMENT THE AO HAS MADE THE DISALLOWANCE OF RS.28,05,455/- U/S 40 (A)(IA) OF THE IT ACT, 1961 BY OBSERVING THAT : 2 THE ASSESSEE HAS DEBITED TO P/L A/C A SUM OF RS.28 ,05,455/- ON A/C OF LABOUR CHARGES. AS PER DETAILS FILED IT IS SEEN THAT SUCH LABOUR CHARGES WAS ALLOWED TO A SINGLE PARTY NAMED M/S.R.A.M.S. BUT NO TDS (AS PE R DETAILS AND AUDIT REPORT ALSO) WAS MADE. ASSESSEES CLAIM FOR LABOUR CHARGES FOR RS.28,05,455/- CALLS FOR DISALLOWANCE U/S 40(A)(IA) WHICH IS EFFEC TIVE FROM THE A.Y. 2005-06. HOWEVER, ON BEING CONFRONTED WITH THE ISSUE, ASSESS EE FIRM VIDE HIS LETTER DATED 6/12/2007 OFFERED FOLLOWING EXPLANATION :- DURING THE F.Y. 2004-05 THE FIRM RECEIVED ORDER FO R CONSTRUCTION OF RESIDENTIAL QUARTER VALMIKI AMBEDKAR AWASYOJANA (VANDAY) AT ASA NDOL-DURGAPUR DEVELOPMENT AUTHORITY WITHIN THE URBAN AREA OF DURG APUR, NEAR F.C.I. COLONY. AS A CONDITION TO AWARD OF CONTRACT, THE CONTRACTOR WAS REQUIRE TO SUBMIT TAX CLEARANCE CERTIFICATE, THE TAX CLEARANCE CERTIFICAT E HAS BEEN SUBMITTED BY THE CONTRACTOR WHICH SHOWS THAT THE CONTRACTOR HAS NOT TAXABLE INCOME WHICH IS NOT ASSESSABLE AT ALL AND NO GIR OR PAN HAS BEEN ALLOTT ED TO HIM. XEROX COPY OF TAX CLEARANCE CERTIFICATE IS ENCLOSED. IN VIEW OF THE INCOME OF THE CONTRACTOR BEEN NON-TA XABLE. NO TAX WERE DEDUCTED, THEREFORE, NO VIOLATION OF SECTION 40(A)( IA) WHICH PROVIDES FOR DEDUCTION OF TDS FROM PAYMENT TO CONTRACTORS. THE ASSESSEE FIRM IN ITS EXPLANATION AHS TAKEN THE FOLLOWING PLEA :- A) THE PAYEE HAD NO GIR AND PAN B) THE PAYEE FILED A CERTIFICATE TO THIS EFFECT THAT I TS INCOME WAS BELOW TAXABLE LIMIT. THE ABOVE EXPLANATION IS NOT TAXABLE IN THE EYE OF LAW BECAUSE IN THE ABSENCE OF GIR OR PAN, THE ASSESSEE SHOULD HAVE DED UCTED THE TDS AND DEPOSITED IT TO SUSPENSE A/C. AS REGARDS TO CERTIFI CATE FOR INCOME BEING BELOW THE TAXABLE LIMIT IT IS TO BE NOTED HERE THAT ASSES SEE COULD NOT PRODUCE ANY SUCH CERTIFICATE OBTAINED FROM THE PAYEE FOR NO DEDUCTIO N OF TAX OR DEDUCTION OF TAX AT A LOWER RATE. IN THE VIEW OF THE ASSESSEES EXPLANATION HAVING NO LEGAL SUPPORT IS REJECTED AND LABOUR CHARGES FOR RS.28,05,455/- IS D ISALLOWED U/S 40(A)(IA). HOWEVER, THIS CLAIM WILL BE ALLOWED IN THE YEAR IN WHICH TDS WILL BE MADE AND DEPOSITED TO THE GOVT. TREASURY. 2.1. ON APPEAL THE LD. CIT(A) HAS DELETED THE DISAL LOWANCE OF RS.15,55,510/- AND CONFIRMED THE BALANCE BY OBSERVING AS UNDER :- I HAVE GONE THROUGH THE ASSTT. ORDER AND WRITTEN S UBMISSION MADE BY THE A/R OF THE APPELLANT AND ALSO THE REMAND REPORT SENT BY THE AO. THE UNDISPUTED FACT ON RECORD IS THAT THE TOTAL CHARGES PAID TO SRI ANI L SINGH IS RS.12,53,945/- AND NOT RS.28,05,445/- AS HELD BY THE AO. THE PROVISION OF SECTION 194C IS APPLICABLE TO THIS PAYMENT AND TDS WAS REQUIRED TO BE MADE FORM THIS AMOUNT AND THEREFORE PROVISION OF SECTION 40(A)(IA) OF THE IT ACT SO FAR AS AMOUNT OF RS.12,53,945/- IS CONCERNED HAS BEEN RIGHTLY MADE A ND THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE ACTION OF AO IN M AKING ADDITION OF 3 RS.12,53,945/- U/S 40(A)(IA) OF THE IT ACT. SO FAR AS PAYMENT OF RS.15,51,510/- IS CONCERNED, IT HAS BEEN FOUND THAT THE SAID PAYME NT IS MADE TO DIFFERENT LABOURERS DIRECTLY PROCURED FROM OPEN MARKET AND P AYMENT TO EACH LABOUR/MANSON DURING THE WHOLE ACCOUNTING YEAR IS L ESS THAN RS.20,000/- AND THEREFORE AS PER PROVISION OF SECTION 194C(3), NO T DS IS REQUIRED TO BE MADE FROM SUCH PAYMENT. THEREFORE, THE PROVISION OF SECT ION 40(A)(IA) ARE NOT ATTRACTED, SO FAR AS THE AMOUNT OF RS.15,51,510/- I S CONCERNED. THE AO IS THEREFORE DIRECTED TO DELETE THE ADDITION OF RS.15, 51,510/-. 2.2. AGGRIEVED BY THIS NOW THE REVENUE IS IN APPEAL BEFORE US. WHEREAS IN C.O. THE ASSESSEE HAS CONTESTED THAT THE SUSTENANCE OF RS.2, 53,945/- IS ALSO NOT JUSTIFIABLE. 3. AT THE TIME OF HEARING, THE LD. DR HAS SUBMITTED THAT THE LD. CIT(A) HAS ACCEPTED THE ASSESSEES SUBMISSIONS IN VIOLATION OF RULE 46A OF THE IT RULES, 1962 AND HE FURTHER SUBMITTED THAT THE LD. CIT(A) HAS NO T CONSIDERED THE REMAND REPORT SENT BY THE AO. THEREFORE, HE REQUESTED TO SET ASID E THE ORDERS OF THE LD. CIT(A) AND RESTORE THE ORDER OF THE AO. 4. ON THE OTHER HAND THE LD. COUNSEL APPEARING ON B EHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED THE CERTIFICA TE ISSUED BY THE AO ON M/S.R.A.M.S. CONSTRUCTION WHEREIN IT WAS SUBMITTED THAT M/S. R.A .M.S. CONSTRUCTION HAS NO TAXABLE INCOME. KEEPING IN VIEW OF THE CERTIFICATE THE ASSE SSEE HAS NOT DEDUCTED TDS. THEREFORE THE REVENUE IS NOT JUSTIFIED IN INVOKING PROVISION OF SECTION 40(A)(IA) OF THE IT ACT. THEREFORE, HE REQUESTED TO DELETE EVEN THE CONFIRMATION MADE BY THE LD. CIT(A). 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT TH AT NO SPECIFIC FORM WAS PRESCRIBED FOR NON DEDUCTION OF TDS U/S 197 OF THE IT ACT AND THE ASSESSEE HAS RELIED ON THE CERTIFICATE ISSUED BY THE AO TO M/S.R.A.M.S. CONSTR UCTION DATED 30 TH APRIL, 2004 WHEREIN IT WAS MENTIONED THAT M/S. R.A.M.S. CONSTRU CTION HAS NO TAXABLE INCOME. WE ARE OF THE VIEW THAT THE ASSESSEE IS NOT REQUIRED T O RECOVER TDS IN THE CASE OF M/S.R.A.M.S. CONSTRUCTION AND THAT NO DISALLOWANCE U/S 40(A) (IA) OF THE IT ACT IS REQUIRED. IN VIEW OF THIS WE ALLOW THE CROSS OBJECT ION OF THE ASSESSEE. 4 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 5 4 6 7& 58 9 ORDER PRONOUNCED IN THE COURT ON 29.03.2011. SD/- SD/- . .. . . .. . % % % % D.K.TYAGI, JUDICIAL MEMBER . .. . . .. .! !! !, ,, , # # # # , C.D.RAO, ACCOUNTANT MEMBER. ( (( (# # # #) )) ) DATE:29.03.2011. ORDER PRONOUNCED IN THE COURT ON 29.03.2011 SD/- SD/- AM JM (CDR) (MS) 4 2 .%%0 :0(;- COPY OF THE ORDER FORWARDED TO: 1. M/S. PRAGATI NIRMAN BUREAU, C/O DEBASISH CHOWDHURY, 1/115, M.M.GHOSH ROAD, KOLKATA-700074. 2 DCIT, CIRCLE-49, KOLKATA 3. THE CIT-(A)-XXXII,KOLKATA 4. THE CIT 5. DR, KOLKATA BENCHES, KOLKATA 0 .%/ TRUE COPY, 4&7/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.) 5 .