ITO, Ward - 1(3), Midnapore, Midnapore V. M/s. Midnapore House Developers, Paschim Medinipur

ITA 484/KOL/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4955 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 22-03-2011
• Court: TRIBUNAL
• Department Lawyers: DEBASISH LAHIRIJCIT
• Assessee Lawyers: S S ROY; RATAN GUHA
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A, KO LKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM] ITA NO.484/KOL/2011 ASSESSMENT YEAR : 2007-08 I.T.O., WARD-1(3), -VERSUS- M/S.MIDNAPORE HOUSING DEVELOPERS MIDNAPORE MIDNAPORE (PAN:AANFM8037C) (APPELLANT ) (RESPONDENT) FOR THE APPELLANT : SHRI DEBASISH LAHIRI,JCIT, SR.D R FOR THE RESPONDENT : SHRI S.S.ROY, ADVOCATE & RATAN GUHA, ADVOCATE DATE OF HEARING : 18.02.2016. DATE OF PRONOUNCEMENT : 02.03.2016. ORDER PER SHRI N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE DIRECT ED AGAINST THE ORDER DATED 11.01.2011 OF CIT(A)-XXXVI, KOLKATA RELATING TO A.Y.2007-08. 2. THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS ENGAGE D IN THE BUSINESS OF CONSTRUCTION. IN THE COURSE OF ASSESSMENT PROCEEDIN GS U/S 143(3) OF THE INCOME TAX ACT, 1961 (ACT), AO FOUND THAT THE ASSESSEE HAD PAI D A SUM OF RS.4,00,000/- TO ONE AMRITENDU MAITY AND OTHERS TO VACATE THE LAND AND E NSURE IT FREE FROM DISTURBANCE/ENCUMBRANCE. HE WAS OF THE VIEW THAT TH IS WAS A PAYMENT MADE TO A CONTRACTOR FOR CARRYING OUT WORK AND THEREFORE THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE WHILE MAKING SUCH PAYMENT U/S 194C OF THE ACT. SINCE THE TAX WAS NOT DEDUCTED AT SOURCE, THE AO INVOKING THE PROVISION O F SECTION 40(A)(IA) OF THE ACT ADDED A SUM OF RS.4,00,000/- TO THE TOTAL INCOME OF THE ASSESSEE. 2.1. AO ALSO NOTICED THAT THE ASSESSEE HAD PAID A S UM OF RS.33,81,818/- TOWARDS LABOUR WAGES. HE WAS OF THE VIEW THAT THIS PAYMENT WAS ALSO IN THE NATURE OF PAYMENT ITA NO.484/KOL/2011 M/S. MIDNAPORE HOUSI NG DEVELOPERS. A.YR.2007-08 2 FOR CARRYING OUT A CONTRACT OF WORK AND THE ASSESSE E OUGHT TO HAVE DEDUCTED TAX AT SOURCE ON THE SAID PAYMENT U/S 194C OF THE ACT. SIN CE THE TAX WAS NOT DEDUCED AT SOURCE AO INVOKING THE PROVISION OF SECTION 40(A)(I A) OF THE ACT ADDED THE AFORESAID SUM TO THE TOTAL INCOME OF THE ASSESSEE. 3. ON APPEAL BY THE ASSESSEE CIT(A) DELETED BOTH TH E ADDITIONS MADE BY AO BY OBSERVING AS FOLLOWS :- 4.1. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND EXAMINED THE LABOUR CHARGES REGISTER AND LEDGER BOOK. IT IS SEEN THAT THE LABOURERS WERE PAID WAGES DIRECTLY THROUGH LABOUR CHARGES REGISTER AND THEREF ORE, THE SAME CANNOT BE EQUATED WITH CONTRACTUAL PAYMENTS, MOREOVER, INDIVIDUAL PAYMENTS MADE WERE IN THE RANGE OF RS,2,800/. TO RS.4,500/ PER MONTH AND IN NO CASE A GGREGATE PAYMENT WAS MORE THAN RS.50,000/-. IN THE YEAR SO AS TO ATTRACT THE PROVI SIONS OF SECTION 194C OF THE ACT. THE SLIPSHOD ADDITION OF RS.33,81,818/. MADE BY THE AO IS DEVOID OF MERIT HENCE, DELETED. 5. GROUND NO. 3 OF THE APPEAL RELATES TO ADDITION O F RS.4,00,000/- U/S, 40(A)(IA) OF-THE ACT, FOR NON DEDUCTION OF TAX AT SOURCE FOR THE PAY MENTS MADE TO SHRI AMRITENDU MAITY (SHOULD BE AMRIRENDU NAYAK) TO VACATE THE LAND FROM ENCROACHMENT. THE AO HELD THE SAID PAYMENTS AS CONTRACTUAL PAYMENT IN TERMS OF PR OVISIONS OF SECTION 194C OF THE ACT. THE ARS REITERATED THE SAID DECISION OF THE AO AND SUBMITTED THAT THE APPELLANT BUD TO MAKE SUCH PAYMENTS TO VACATE THE ENCROACHER SHRI AM RITENDU NAYAK FROM LAND AND THEREFORE, SAME WERE 110T CONTRACTUAL PAYMENTS. I H AVE DULY CONSIDERED THE SUBMISSION OF THE APPELLANT AND INCLINED TO ACCEPT APPELLANT'S VERSION, PAYMENTS MADE FOR VACATING LAND FROM ENCROACHMENTS CANNOT BE SAID AS CONTRACTU AL PAYMENTS IN TERMS OF SECTION 194C OF THE ACT. THIS ADDITION OF RS.4,00,000/- IS THEREFORE DELETED. 4. AGGRIEVED BY THE ORDER OF CIT(A) REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED COU NSEL FOR THE ASSESSEE AND THE LEARNED DR. ALONG WITH THE GROUNDS OF APPEAL RAISED BY THE REVENUE A LIST OF LABOUR CHARGES PAID TO SHRI JAYDEB SAHA DURING THE PREVIOU S YEAR HAS ALSO BEEN FURNISHED BY THE REVENUE WHICH SHOWS THE TOTAL PAYMENT OF RS.13, 35,000/- MADE TO JAYDEB SAHA. THE LEARNED DR FILED BEFORE US PHOTO COPIES OF THE VOUCHERS EVIDENCING THE PAYMENT OF LABOUR CHARGES. HE SUBMITTED THAT FROM A CURSORY GLANCE OF THE VOUCHERS IT CAN BE SEEN THAT MORE THAN A SUM OF THE RS.50,000/- HAD BE EN PAID BY THE ASSESSEE TO ONE PERSON DURING THE PREVIOUS YEAR AND THEREFORE THE P ROVISION OF SECTION 194C OF THE ACT ARE ATTRACTED. HE POINTED OUT THAT CIT(A)S FINDING S TO THE CONTRARY ARE NOT CORRECT. HIS PRAYER WAS THAT THE LABOUR CHARGES REGISTER, LEDGER BOOK AND VOUCHERS ARE TO BE ITA NO.484/KOL/2011 M/S. MIDNAPORE HOUSI NG DEVELOPERS. A.YR.2007-08 3 EXAMINED AFRESH BY THE AO AND WHEREVER THERE IS VIO LATION OF PROVISION OF SECTION 194C OF THE ACT, DISALLOWANCE U/S 40(A)(IA) OF THE ACT SHOULD BE DIRECTED TO BE MADE. 5.1. WITH REGARD TO THE ADDITION OF RS.4,00,000/- B EING PAYMENT MADE TO AMRITENDU MAITY HE RELIED ON THE ORDER OF AO. 5.2. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 5.3. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE AR E OF THE VIEW THAT THE FINDINGS OF CIT(A) WITH REGARD TO DISALLOWANCE OF LABOUR CHARGE S U/S 40(A)(IA) REQUIRES FRESH CONSIDERATION BY THE AO IN THE LIGHT OF THE SUBMISS IONS MADE BY THE LEARNED DR BEFORE US. WE, THEREFORE, SET ASIDE THE ORDER OF CI T(A) ON THIS ISSUE AND DIRECT THE AO TO EXAMINE THE LABOUR CHARGES REGISTER AND THE VOUC HERS AND MAKE DISALLOWANCE ONLY IN THE CASES WHERE THERE IS VIOLATION OF SECTION 19 4C OF THE ACT. 5.4. AS FAR AS PAYMENT MADE TO AMRITENDU MAITY (REA L NAME AMRITENDU NAYAK) THE PAYMENT WAS MADE TO THE PERSON CONCERNED FOR VACATI NG THE PROPERTY. IN SUCH PAYMENT THERE IS NO ELEMENT OF CONTRACT OF WORK INVOLVED SO AS TO ATTRACT THE PROVISION OF SECTION 194C OF THE ACT. CIT(A) HAS APPRECIATED THI S POSITION AND HAS RIGHTLY DELETED THE ADDITION MADE BY AO. THUS CIT(A)S ORDER ON THI S ISSUE DOES NOT CALL FOR ANY INTERFERENCE. CONSEQUENTLY APPEAL BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 02.03.2016. SD/- SD/- [M.BALAGANESH] [N.V.VASUDEVAN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 02.03.2016. R.G.(.P.S.) ITA NO.484/KOL/2011 M/S. MIDNAPORE HOUSI NG DEVELOPERS. A.YR.2007-08 4 COPY OF THE ORDER FORWARDED TO: 1. M/S. MIDNAPORE HOUSING DEVELOPERS, KERANITOLA, M IDNAPORE, P.O.- MIDNAPORE-721101. 2 THE I.T.O., WARD-1(3), MIDNAPORE. 3. THE CIT-XIX, KOLKATA, 4. THE CIT(A)-XXXVI, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES