Sushil Govindrao Uttarwar, Nashik V. Assistant Commissioner of Income-tax,

ITA 508/PUN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1749 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 23-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Keywords: Opportunity of being heard; Application of stay
• Section: 194C; 201(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 508 /PN/201 6 / ASSESSMENT YEAR : 20 1 2 - 1 3 MR. SUSHIL GOVINDRAO UTTARWAR, F - 5, PRIYANKA HEIGHTS, PARIJAT NAGAR, NEAR WATER TANK, NASHIK 422005 . / APPELLANT PAN: AAHPU7606D VS. THE ASST. COMMISSION ER OF INCOME TAX, CIRCLE - 2, NASHIK . / RESPONDENT S.A. NO. 34 /PN/201 6 ARISING OUT OF ITA NO. 508 /PN/201 6 ASSESSMENT YEAR: 20 12 - 13 ASSESSMENT YEAR: 20 12 - 13 MR. SUSHIL GOVINDRAO UTTARWAR, F - 5, PRIYANKA HEIGHTS, PARIJAT NAGAR, NEAR WATER TANK, NASHIK 422005 APPLICANT PAN: AAHPU7606D VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2, NASHIK RESPONDENT / APPELLANT BY : SHRI VAIBHAV RATHI / RESPONDENT BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 2 7 . 0 5 .201 6 / DATE OF PRONOUNCEMENT: 31 . 0 5 .201 6 ITA NO. 508 /PN/20 1 6 SA NO.34/PN/2016 SUSHIL GOVINDRAO UTTARWAR 2 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 2 , NASHIK , DATED 19 . 0 1 .20 1 6 RELATING TO ASSESSMENT YEAR 20 1 2 - 1 3 AGAINST ORDER PASSED UNDER SECTION 1 4 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS FILED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE CIT(APPEAL) IS PREJUDICIAL AGAINST THE ASSESSEE ON THE FACTS AND IN THE LAW . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE HE OUGHT TO HAVE ALLOWED DEDUCTION IN A.Y. 2012 - 13 ITSELF. 2. THE LEARNED CIT(APPEALS) HAS ERRED IN RULING BY CONFIRMING THE ADDITION OF PIECE WORK EXPENSE OF RS.1,52,95,475/ - U/S 40(A)(IA) IN THE YEAR UNDER APPEAL AND ALLOWED AS DEDUCTION IN SUBSEQUENT YEAR. WHILE DOING SO THE HONOURABLE CIT - APPEAL HAS IGNORED THE FACT THAT ASSESSEE IS A SMALL TAXPAYER. HE IS A CIVIL CONTRACTOR AND 70% OF THE TOTAL CONTRACT WAS EXECUTED BY WAY OF SUB - CONTRACT I.E. PIE CE WORK. THUS, CONFIRMING SUCH SUBSTANTIAL AMOUNT IN YEAR UNDER APPEAL AND ALLOWING IN SUBSEQUENT YEAR WILL HAVE ADVERSE CONSEQUENCES AND FINANCIAL STRESS. 3. THIS RESULTS IN SHIFTING OF THE YEAR IN WHICH EXPENDITURE CAN BE CLAIMED. 3. THIS RESULTS IN SHIFTING OF THE YEAR IN WHICH EXPENDITURE CAN BE CLAIMED. PRINCIPLE OF MATCH ING I.E. MATCHI NG OF RECEIPTS WITH EXPENDITURE TO THE EXTENT INDICATED IN SECTION 40(A)(IA) WILL BE AFFECTED. THIS PRINCIPLE WILL NOT AFFECT THE INCOME TAX DEPARTMENT OR LARGE TAX PAYERS HAVING NECESSARY CUSHION TO ABSORB THE EFFECT. HOWEVER, FOR SMALL T AXPAYER LIKE THE APPELLANT, EFFECT OF ORDER U/S 40(A)(IA) IS SUBSTANTIAL AND WILL CAUSE REAL HARDSHIP WHICH IS APPARENT FROM THE CASE OF COMMISSIONER OF INCOME TAX VS. NARESH KUMA, DELHI HIGH COURT AND CIT VS. TALBROS (P) LTD. 4. THUS, BY ADDING INCOME OF RS.1,52,95,475/ - THE TOTAL INCOME SUMS UP TO RS.1,77,88,140/ - WHICH IS 80% OF TURNOVER WHICH IS PRACTICALLY IMPOSSIBLE IN SUCH BUSINESS. ASSESSEES INCOME HAS DECREASED IN THE SUBSEQUENT YEARS AND DEDUCTION OF RS.1,52,95,475/ - WILL NOT BE ABSORBED EVEN I N NEXT 6 - 7 ASSESSMENT YEAR. HENCE, CLAIMING LOSS FOR ANOTHER 6 - 7 A.Y. WILL CAUSE UNDUE HARDSHIP TO THE ASSESSEE TO CLAIM DEDUCTION OF SAID EXPENDITURE IN COMING YEARS. 3. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST ADDITION OF RS.1,52,95,475/ - BE ING AMOUNT DISALLOWED FOR NON - DEDUCTION OF TAX AT SOURCE OUT OF SUB - CONTRACT PAYMENTS INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE ASSESSEE HAD MOVED A STAY APPLICATION FOR GRANTING STAY OF THE OUTSTANDING DEMAND. HOWEVER, ON PERUSAL OF A PPELLATE FOLDER, WE FIND THE ISSUE RAISED IN THE PRESENT APPEAL IS COVERED BY THE ORDERS OF TRIBUNAL AND ITA NO. 508 /PN/20 1 6 SA NO.34/PN/2016 SUSHIL GOVINDRAO UTTARWAR 3 HENCE, WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES IN THIS REGARD. 4. BRIEFLY, IN THE FACTS OF T HE PRESENT CASE , THE ASSESSEE WAS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF GOVERNMENT CONTRACT . IN ADDITION, THE ASSESSEE HAD DECLARED INCOME FROM HOUSE PROPERTY AND OTHER SOURCES. THE ASSESSING OFFICER ON VERIFICATION OF THE PROFIT & LOSS ACCOUNT NOTED THAT THE ASSESSEE HAD INCURRED EXPENDITURE UNDER THE HEAD PIECE WORK AMOUNTING TO RS.1.52 CRORES. THE ASSESSEE WAS ASKED TO PRODUCE THE DETAILS. THE ASSESSEE SUBMITTED THAT THE PIECE WORK IS SIMILAR TO THE SUB - CONTRACT, WHERE THE CONTRACT OR A PART OF IT IS EXECUTED BY ANOTHER PERSON OR A COMPANY. THE ASSESSEE IN THIS REGARD PRODUCED LEDGER EXTRACT OF SAID EXPENDITURE IN HIS BOOKS OF ACCOUNT. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE ON THE AFORESAID PAYMENTS AND SINCE THE NATURE OF PAYMENT WAS COVERED UNDER SECTION 194C OF THE ACT, PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WERE ATTRACTED. THE ASSESSEE BEFORE THE ASSESSING OFFICER ADMITTED THAT NO TAX WAS DEDUCTED AT SOURCE AFTER PAYMENT MADE TO MR. ANIL PATIL, WHO WAS THE SUB - CONTRACTOR. THEREAFTER, THE ASSESSEE POINTED OUT THAT BY THE FINANCE ACT, 2012, PROVISO HAS BEEN INSERTED AND WHERE IT HAD TAKEN INTO ACCOUNT THE SAID SUM IN COMPUTING HIS INCOME AND HAD PAID TAXES DUE THEREON AND HAD ALSO FURNISHED HIS RE TURN OF INCOME UNDER SECTION 139 OF THE ACT, THE ASSESSEE COULD NOT BE SAID TO BE AT DEFAULT. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID AMENDMENT WAS APPLICABLE AF TER THE RELEVANT FINANCIAL YEAR. HOWEVER, THE ASSESSEE HAD PLACED RELIANCE ON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF TRIBUNAL IN BHARTI SHIPYARD LTD. VS. DCIT IN ITA NO.2404/MUM/2009, RELATING TO ASSESSMENT YEAR 2005 - 06, DATED 09.09.2011. THE ASSESSING OFFICER NOTED THAT THE AMENDMENT HAS BEEN MADE TO SECTION 201 OF THE ACT AND AL SO TO SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2012, WHICH CLEARLY STATES THAT THE SAID ITA NO. 508 /PN/20 1 6 SA NO.34/PN/2016 SUSHIL GOVINDRAO UTTARWAR 4 AMENDMENT WOULD COME INTO EFFECT FROM FIRST DAY OF APRIL, 2013. IN VIEW THEREOF, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID AMENDMENT WOULD COME INTO EFFECT FROM 01.04.2013 AND FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE WAS IN DEFAULT AND HENCE, SUM OF RS. 1,52,95,475/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. 5. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER BY REJECTING THE PLEA OF ASSESSEE WITH REGARD TO THE AMOUNT BEING PAID DURING THE YEAR UNDER CONSIDERATION AND NOTHING BE ING PAYABLE AT THE END OF YEAR. IN RESPECT OF SECOND CLAIM OF THE ASSESSEE OF APPLICABILITY OF PROVISO TO SECTION 40(A)(IA) OF THE ACT , HE HELD THAT FROM THE COMBINED READI NG OF SECTION 40(A)(IA) OF THE ACT AND PROVISO TO THE SAID SECTION CLEARLY LAYS DOWN THAT THE DEDUCTION OF EXPENDITURE WAS TO BE DISALLOWED IN THE YEAR IN WHICH IT WAS INCURRED, BUT THE SAME IS TO BE ALLOWED IN THE YEAR IN WHICH THE PAYEE OF THE EXPENDITUR E HAS FILED RETURN OF INCOME. IN VIEW THEREOF, THE CIT(A) HELD THAT INSERTION OF PROVISO TO SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2012 WAS APPLICABLE RETROSPECTIVELY. HOWEVER, THE ADDITION OF RS. 1.52 CRORES WAS CONFIRMED ON ACCOUNT OF DISALLOW ANCE OF DEDUCTION UNDER SECTION 40(A)(IA) OF THE ACT IN THE YEAR UNDER APPEAL AND HE FURTHER HELD THAT THE SAME WAS TO BE ALLOWED AS DEDUCTION IN THE SUBSEQUENT YEAR. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL CO NTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS A GOVERNMENT CONTRACTOR AND AS AGAINST ITS RECEIPTS FROM CONTRACT, THE ASSESSEE HAD BOOKED AN EXPENDITURE OF RS.1,52,95,475/ - ON ACCOUNT OF PIECE WORK. THE ASSESSEE EXPLAINED THAT THE SAID PIECE WORK WAS ON ACCOUNT OF SUB - CONTRACT OF PART OF CONTRACT BY THE ASSESSEE. THE ASSESSING OFFICER WAS ITA NO. 508 /PN/20 1 6 SA NO.34/PN/2016 SUSHIL GOVINDRAO UTTARWAR 5 OF THE VIEW THAT SINCE THE PAYMENT WAS TO CONTRACTOR, THE PROVISIONS OF TDS WERE TO BE APPLIED AND SINCE THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE OUT OF AFORE SAID PAYMENTS, THEN THERE IS CLEAR VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT . THE CIT(A) HELD THAT PROVISO TO SECTION 40(A)(IA) OF THE ACT WAS TO BE APPLIED RETROSPECTIVELY BUT HE DISALLOWED THE CLAIM, SINCE IT IS TO BE ALLOWED IN WHICH PAYE E HAD FILED RETURN OF INCOME. CONSEQUENTLY, THE ABOVE SAID AMOUNT WAS DISALLOWED IN THE HANDS OF ASSESSEE. ON THE OTHER HAND, THE PLEA OF ASSESSEE WAS TWO - FOLD THAT, ALL THE AMOUNTS WHICH WERE DUE TO THE SUB - CONTRACTOR, W ERE PAID TO HIM, BEFORE THE CLOSE OF YEAR . SECONDLY, APPLYING THE CONCEPT OF PAID OR PAYABLE, THE AFORESAID AMOUNTS HAVING BEEN PAID BY THE ASSESSEE TO THE PAYEE, DID NOT ATTRACT THE TDS PROVISIONS. WE FIND NO MERIT IN THE SAID CLAIM OF ASSESSEE, IN VIEW OF VARIOUS DECISIONS RENDERED BY PUNE BENCH OF TRIBUNAL AND REFERENCE IS BEING MADE TO ITA NO.1752/PN/2013, RELATING TO ASSESSMENT YEAR 2007 - 08, ORDER DATED 20.02.2015. 8. NOW, COMING TO THE SECOND ASPECT OF THE ISSUE. THE ASSESSEE CLAIMS THAT ONCE HE HAD MADE PAYMENTS TO THE SUB - CONTR ACTOR, WHO IN TURN, HAD ACCEPTED THE SAME AS ITS RECEIPTS AND HAD PAID TAXES THEREON AND ALSO FURNISHED RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT, THEN THE ASSESSEE WAS PREVENTED FROM DEDUCTING THE TAX AT SOURCE. WE FIND THAT THE FINANCE ACT, 2012 HAS INSERTED A PROVISO TO SECTION 40(A)(IA) OF THE ACT , WHICH INTER ALIA, PROVIDES THAT WHERE THE PAYMENT HAS BEEN MADE TO A RESIDENT AND SUCH RESIDENT HAS INCLUDED THE RECEIPTS AS PART OF HIS INCOME A ND PAID TAXES THEREON AND ALSO FURNISHED THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT, THEN THE ASSESSEE COULD NOT BE HELD IN DEFAULT FOR NON - DEDUCTION OF TAX AT SOURCE. THE ASSESSEE HAD MADE THE SUB - CONTRACT PAYMENTS TO ONE MR. ANIL PATIL. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFOR E US HAS FURNISHED THE PAPER BOOK, IN WHICH HE HAS FILED THE COPY OF COMPUTATION OF INCOME FILED ITA NO. 508 /PN/20 1 6 SA NO.34/PN/2016 SUSHIL GOVINDRAO UTTARWAR 6 BY THE SAID CONCERN ALONG WITH TAX AUDIT REPORT. THE PERUSAL OF DETAILS FURNISHED AT PAGES 7.1 TO 7.22 OF THE PAPER BOOK REFLECTS THAT THE SAID CONCERN HAS SH OWN SUB - CONTRACT RECEIPTS TO THE EXTENT OF RS.3.66 CRORES, WHICH AS PER THE ASSESSEE INCLUDES THE SUB - CONTRACT PAYMENTS MADE BY IT TO THE SAID CONCERN AT RS.1.52 CRORES. HE HAS FURTHER FILED THE COPY OF COMPUTATION OF INCOME FOR THE YEAR UNDER CONSIDERATI ON, WHEREIN THE INCOME FROM BUSINESS HAS BEEN INCLUDED IN THE HANDS OF THE SAID PERSON AND TAX PAYABLE BY THE SAID PERSON IS ADJUSTED AGAINST THE TAX DEDUCTED AT SOURCE OUT OF OTHER PAYMENTS RECEIVED BY THE SAID CONCERN. 9. THE ISSUE ARISING IN THE PRES ENT APPEAL IS WHETHER THE PROVISO ADDED UNDER FINANCE ACT, 2012 W.E.F. 01.04.2013 IS TO BE APPLIED RETROSPECTIVELY TO ALL THE PENDING ASSESSMENTS. THE PUNE BENCH OF TRIBUNAL IN VIVEK DATTATRAYA GUPTE HUF VS. ITO IN ITA NOS.406 & 407/PN/2014, RELATING TO ASSESSMENT YEAR 2008 - 09 & 2009 - 10 , ORDER DATED 16.12.2015 , IN TURN FOLLOWING THE RATIO LAID DOWN BY IT IN ACIT VS. BHAVOOK CHANDRAPRAKASH TRIPATHI (2015) 43 CCH 292 (PUNE - TRIB) HAVE HELD THAT THE PROVISO TO SECTION 40(A)(IA) OF THE ACT IS TO BE APPLIED RE TROSPECTIVELY TO ALL PENDING ASSESSMENTS . THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER: - 10. NOW, COMING TO THE SECOND ASPECT OF THE ISSUE I.E. NEW LEGAL PLEA RAISED BY THE ASSESSEE IN VIEW OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, WHICH W AS INSERTED BY THE FINANCE ACT, 2012. THE TRIBUNAL IN ACIT VS. BHAVOOK CHANDRAPRAKASH TRIPATHI (SUPRA) WHILE ADJUDICATING SIMILAR ISSUE HAD OBSERVED AS UNDER: - 4. FOLLOWING THE AFORESAID PRECEDENT, WE HEREBY REVERSE THE DECISION OF THE CIT(A). HOWEVER, AT THE TIME OF HEARING, THE LD. REPRESENTATIVE FOR THE RESPONDENT - ASSESSEE MADE A NEW LEGAL ARGUMENT THAT SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WAS INSERTED BY FINANCE ACT, 2012 W.E.F. 01.04.2013, WHEREBY IT IS PROVIDED THAT THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT WOULD NOT BE MADE IF THE ASSESSEE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SECTION 201(1) OF THE ACT. THE STAND OF THE ASSESSEE IS THAT THE SAID PROVISO SHOULD BE UNDERSTOOD AS RETROSPECTIVE IN NATURE AS IT HAS BEEN INTRODUCED TO ELIMINATE UNINTENDED CONSEQUENCES WHICH MAY CAUSE UNDUE HARDSHIPS TO THE TAX PAYERS. IT WAS POINTED OUT THAT IN SIMILAR CIRCUMSTANCES, THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S GAURIMAL MAHAJAN & SONS VIDE ITA NO.185 2/PN/2012 DATED 06.01.2014 FOLLOWING ITA NO. 508 /PN/20 1 6 SA NO.34/PN/2016 SUSHIL GOVINDRAO UTTARWAR 7 THE DECISION OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF ANTONY D. MUNDACKAL VS. ACIT VIDE ITA NO.38/COCH/2013 DATED 29.11 .2013 HAS RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. IN THE PRECEDENT DATED 06.01.2014 (SUPRA), THE TRIBUNAL NOTED THAT SUCH A PLEA WAS RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL AND THE CORRECTNESS OR OTHERWISE OF THE CONTENTIONS RAISED WAS NOT EXAMINED BY THE LOWER AUTHORITIES. THEREFORE, THE TRIBUNAL RESTORED THE MAT TER BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION AFRESH, FOLLOWING THE DECISION OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF ANTONY D. MUNDACKAL (SUPRA) IN A SIMILAR CIRCUM STANCE. THE LD. REPRESENTATIVE SUBMITTED THAT THE MATTER BE REST ORED BACK TO THE FILE OF THE ASSESSING OFFICER IN THE LIGHT OF THE ORDER OF THE TRIBUNAL DATED 06,01.2014 (SUPRA). THE AFORESAID PLEA OF THE RESPONDENT - ASSESSEE HAS NOT BEEN SERIOUSLY OPPOSED BY THE LD. DEPARTMENTAL REPRESENTATIVE APPEARING FOR THE REVENUE . 5. FOLLOWING THE AFORESAID PRECEDENT, WE THEREFORE DEEM IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL CONSIDER THE PLEA OF THE ASSESSEE BASED ON THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT INSERTED BY THE FINANCE ACT W.E.F. 01.04.2013 IN THE LIGHT OF THE DIRECTIONS OF THE TRIBUNAL CONTAINED IN ITS ORDER DATED 06.01.2014 (SUPRA). NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE PASSING AN OR DER AFRESH ON THIS ASPECT AS PER LAW. 11. THE ISSUE RAISED IN THE PRESENT APPEALS IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL (SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER, WHO SHALL CONSIDER THE PLEA OF THE ASSESSEE BASED ON THE PROVISIONS OF THE ACT INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013 AND IN LINE WITH EARLIER ORDER OF THE FINANCE ACT, 2012 W.E.F. 01.04.2013 AND IN LINE WITH EARLIER ORDER OF THE TRIBUNAL DATED 06.01.2014 (SUPRA), THE ASSESSING OFFICER IS DIRECTED TO ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 10. O NCE THE PROVISIONS ARE TO BE APPLIED TO THE FACTS OF THE PRESENT CASE, THEN THE ISSUE IS TO BE SEEN FROM THE ANGLE OF PAYEE HAVING PAID TAXES ON THE SO - CALLED SUB - CONTRACT RECEIPTS RECEIVED BY HIM. THE ASSESSEE HAS FURNISHED ON RECORD THE COMPLETE PARTICULARS IN THIS REGARD WHICH ESTABLISHED THE CASE OF ASSESSEE. THE RETURN OF INCOME FILED BY MR. ANIL PATIL RELATES TO ASSESSMENT YEAR 2012 - 13 AND IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE AMOUNT OF SUB - CONTRACT PAYMENTS MADE BY THE ASSESSEE THOUGH WITHOUT TAX DEDUCTION AT SOURCE, HAS BEEN INCLUDED BY THE RECIPIENT IN HIS RETURN OF INCOME AND THE SAID RECIPIENT HAD PAID TAXES ON T HE INCOME RELATABLE TO SUCH RECEIPTS, THEN THERE IS NO MERIT IN HOLDING THE ASSESSEE TO BE IN DEFAULT FOR NOT DEDUCTING TAX AT SOURCE. ACCORDINGLY, WE HOLD SO. ONCE THE ASSESSEE IS NOT IN DEFAULT BY NON DEDUCTION OF TAX AT SOURCE, THEN THE SAID PAYMENT O N ACCOUNT OF ITA NO. 508 /PN/20 1 6 SA NO.34/PN/2016 SUSHIL GOVINDRAO UTTARWAR 8 SUB - CONTRACT AMOUNTING TO RS.1.52 CRORES IS TO BE ALLOWED AS DEDUCTION IN THE HANDS OF ASSESSEE. WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF ASSESSEE AFTER VERIFYING THE CLAIM OF ASSESSEE THAT THE PAYER HAS INCLUDED THE SUB - CONTRACT PAYMENTS AS PART OF ITS RECEIPTS . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED AS DIRECTED . 1 1 . IN VIEW OF OUR DECIDING THE PRESENT APPEAL, THE STAY APPLICATION FILED BY THE ASSESSEE IS DISMISSED. 1 2 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AND STAY APPLICATION IS DISMISSED. ORDER PRONOUNCED ON THIS 31 ST DAY OF MAY , 201 6 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 31 ST MAY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 2 , NASHIK ; 4. / THE PR. CIT - 2 , NASHIK ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE