M/s. Shreenath Estates, Indore V. The ITO, Indore

ITA 394/IND/2009

• Counselvise Citation: 39422714 RSA 2009
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 29-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Keywords: Retrospective amendment
• Section: 194C; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.394/IND/2009 A.Y. 2005-06 M/S. SHRINATH ESTATE, INDORE PAN AASFS 7799 E APPELLANT VS ITO, WARD-2(3), INDORE RESPONDENT APPELLANT BY : SHRI SUDHIR PADLIYA, CA RESPONDENT BY : SHRI ARUN DEWAN, SR. DR O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-I, INDORE, DATED 12.5.2009 ON THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE PAYMENTS DISBURSED TO LABOUR THROUGH SUPERVISORS 2 AS PAYMENTS MADE TO CONTRACTOR AND CONSEQUENTLY HAS ERRED IN CONFIRMING THE ADDITIONS OF RS.41,30,050/- OUT OF DISALLOWED RS.45,72,150/- BY LD. ASSESSING OFFICER U/S 40(A)(IA) OF THE ACT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ADHOC ADDITION OF RS.50,000/- OUT OF MATERIAL PURCHASES. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON THE FIL E. SO FAR AS THE DISALLOWANCE U/S 40(A)(IA) IS CONCERNED, THE CR UX OF THE ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE DED UCTED AMOUNT WAS DEPOSITED BEFORE FILING OF RETURN, THERE FORE, THERE IS NO JUSTIFICATION IN MAKING THE ADDITION. THIS FACTU AL MATRIX WAS NOT CONTROVERTED BY THE REVENUE. BRIEF FACTS ARE THAT THE LD. ASSESSING OFFICER OBS ERVED THAT LABOUR HIGHER CHARGES OF RS.45,72,150/- WAS PAID AF TER THE END 3 OF THE RELEVANT PREVIOUS YEAR AND ACCORDINGLY HE DI SALLOWED LABOUR PAYMENT OF RS.45,72,150/- U/S 40(A)(IA) OF T HE ACT WHICH WAS AFFIRMED BY THE LD. CIT(A) TO THE EXTENT OF RS. 41,30,050/- AND THE SAME IS UNDER CHALLENGE BEFORE THE TRIBUNAL . BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUN DER THE RELEVANT PROVISION OF SEC. 40 OF THE ACT: ( IA ) ANY INTEREST, COMMISSION OR BROKERAGE, 70 [RENT, ROYALTY,] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICA L SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONT RACTOR OR SUB- CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WO RK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHI CH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, 71 [HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 ;] 72 [ PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCT ED DURING THE PREVIOUS YEAR BUT PAID AFTER THE SAID DUE DATE SPEC IFIED IN SUB- SECTION (1) OF SECTION 139, SUCH SUM SHALL BE ALLOW ED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS Y EAR IN WHICH SUCH TAX HAS BEEN PAID.] THE PROVISO WAS SUBSTITUTED BY THE FINANCE ACT, 200 8 WITH RETROSPECTIVE EFFECT FROM 1.4.2005. THE PRESENT ASS ESSMENT YEAR IS 2005-06 AND THE TDS AMOUNT WAS DULY PAID IN THE GOVERNMENT ACCOUNT ON 28.6.2005, WELL BEFORE THE DU E DATE, AS PROVIDED IN SEC. 139(1), SPECIFIED FOR THE RELEVANT PERIOD. EVEN 4 AS PER ASSESSMENT ORDER, THE IMPUGNED AMOUNTS TOTAL ING TO RS.44,82,500/- WERE PAID TO THE SUB-CONTRACTORS AND THE TDS WAS DEDUCTED AND PAID ON 28.6.2005 AMOUNTING TO RS. 49,840/-. WE FIND NO VIOLATION OF THE PROVISIONS OF SEC. 40(A )(IA) READ WITH SECTION 194C OF THE ACT AS HAS BEEN ALLEGED. BEFORE THE LD. ASSESSING OFFICER AS WELL AS BEFORE THE LD. CIT(A), A PLEA HAS BEEN RAISED BY THE ASSESSEE THAT SINCE THE WAGES WE RE DIRECTLY PAID TO THE LABOURS, THEREFORE, THE ASSESSEE WAS NO T EVEN REQUIRED TO DEDUCT ANY TAX U/S 194C OF THE ACT AS T HE WAGES WERE PAID TO RESPECTIVE LABOUR ON THE BASIS OF THEI R ATTENDANCE, CONSEQUENTLY, THE ASSESSEE CANNOT BE TREATED IN DEF AULT. IN VIEW OF THESE UNCONTROVERTED FACTS, SINCE THE DEDUC TED AMOUNT WAS DEPOSITED BEFORE DUE DATE, NO DISALLOWANCE IS W ARRANTED, THEREFORE, THIS GROUND OF THE ASSESSEE IS ALLOWED. 3. THE NEXT GROUND PERTAINS TO RESTRICTING THE LUMP SUM ADHOC DISALLOWANCE OF RS.50,000/- FROM RS.1 LAC MAD E BY THE LD. ASSESSING OFFICER ON THE PLEA THAT MATERIALS WE RE PURCHASED BY ASSESSEE THROUGH KACHHA BILLS. THE FINDING OF TH E LD. CIT(A) IS THAT THE TOTAL AMOUNT OF SUCH KACCHA BILLS WERE NEITHER 5 ASCERTAINED BY THE LD. ASSESSING OFFICER NOR PROVID ED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. THERE IS NO FINDING WHETHER THESE BILLS WERE ASKED FOR AT ANY STAGE AND MERELY A LUMP SUM ADHOC ADDITION OF RS.1 LAC WAS MADE OUT OF THE MATERIAL PURCHASED WHICH WAS REDUCED TO RS.50,000/- BY THE LD. CIT(A). KEEPING IN VIEW THE NATURE OF ASSESSEES BU SINESS AND TOTALITY OF FACTS, IT WILL MEET THE END OF THE JUST ICE IF THE ADDITION IS RESTRICTED TO RS.25,000/- IN PLACE OF RS.50,000/ - SUSTAINED IN THE IMPUGNED ORDER, THEREFORE, THIS GROUND OF THE A SSESSEE IS PARTLY ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 16 TH JUNE, 2011. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16.6.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE !VYAS!