Smt. Madhumita Basu , Kolkata V. ACIT, Circle - 50, Kolkata

ITA 68/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4483 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 14-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: TDS
• Section: 143(3); 40(a)(ia); 194C; 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A.T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.68/KOL/2019 ( S / ASSESSMENT YEAR: 2008-09) SMT. MADHUMITA BASU C/O SOUMITRA CHOUDHURY, ADVOCATE, 1A, RAJA SUBODH MULLICK SQUARE, 5 TH FLOOR, KOLKATA-700013 VS. ACIT, CIRCLE-50, KOLKATA ./ ./ PAN/GIR NO. :AJQPB 3642 J (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI SOUMITRA CHOUDHURY, ADVOCATE RESPONDENT BY :SMT. RANU BISWAS, ADDL. CIT / DATE OF HEARING : 04/12//2019 /DATE OF PRONOUNCEMENT : 26/02/2020 / O R D E R PER DR. A. L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERT AINING TO ASSESSMENT YEAR 2008-09, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-XXXII, KOLKATA, IN APPEAL NO. 99/XXXII/11- 12/CIR-50/KOL, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY TH E ASSESSING OFFICER U/S 147 / 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) DATED 28/10/2011. SMT. MADHUMITA BASU ITA NO.68/KOL/2019 ASSESSMENT YEAR:2008-09 2 2. ALTHOUGH IN THIS APPEAL THE ASSESSEE HAS RAISED A MULTIPLE GROUNDS OF APPEAL, BUT AT THE TIME OF HEARING THE SOLITARY GRI EVANCE OF THE ASSESSEE HAS BEEN CONFINED TO THE ADDITION U/S 40(A)(IA) OF THE ACT A MOUNTING TO RS. 1,80,51,163/-, WHICH WAS MADE BY ASSESSING OFFICER ON ACCOUNT OF N ON-DEDUCTION OF TDS. 3. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 30.09.2008, SHOWING A TOTAL INCOME OF RS. 9,30,500/ -. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT ON 30.10.2009 AT RE TURNED INCOME. LATER ON, ASSESSEE`S CASE WAS SELECTED FOR SCRUTINY U/S 143(2 ) OF THE ACT. ON SCRUTINY, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 1,80,51,163/-IN THE WORK CONTRACT ACCOUNT, BEING AM OUNT PAID TO SUBCONTRACTOR. ON VERIFICATION OF FORM 3CD,ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAD NOT DEDUCTED TDS ON PAYMENT MADE TO SUBCONTRACTOR AS P ER SECTION 194C OF THE ACT. THEREFORE, NOTICE U/S 148 OF THE ACT WAS ISSUED BY ASSESSING OFFICER. IN RESPONSE TO NOTICE,ASSESSEE APPEARED ON DIFFERENT DATES AND ASSESSEE HAS ACCEPTED THAT THERE WAS A VIOLATION OF SECTION 40(A)(IA) READ WIT H SECTION 194C OF THE ACT. HENCE, THE EXPENDITURE TO THE TUNE OF RS. 1,80,51,1 63/-(AMOUNT PAID TO SUBCONTRACTOR) WAS DISALLOWED AND ADDED TO THE INCO ME OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED T HE ADDITION MADE BY THE ASSESSING OFFICER. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFOR E THE BENCH THAT THE ASSESSEE IS A JOB WORKER AND IN ORDER TO EXECUTE THE WORK THE A SSESSEE HIRES THE TEMPORARY LABOURERS / INDIVIDUAL LABOURER TO WHOM THE ASSESSE E PAYS THE LABOUR CHARGES. THE LABOURERS ARE NOT THE CONTRACTORS. THE ASSESSEE PAI D DURING THE A.Y. 2008-09 TO ALL THE INDIVIDUAL LABOURERS TO THE TUNE OF RS. 1,8 0,51,163/- BUT THE AMOUNT PAID TO EACH LABOURER DOES NOT EXCEED RS. 50,000/- THEREFOR E THE PROVISION OF SECTION 40(A)(IA) OF THE ACT, DOES NOT APPLY TO THE ASSESSE E. THE ASSESSEE PAID NEARLY 375 SMT. MADHUMITA BASU ITA NO.68/KOL/2019 ASSESSMENT YEAR:2008-09 3 LABOURERS AND EACH PAYMENT TO LABOUR IS BELOW THE T HRESHOLD LIMIT PRESCRIBED U/S 194C OF THE ACT. THEREFORE, THE TDS OBLIGATION DOES NOT ARISE ON THE ASSESSEE. THE LD. COUNSEL ALSO SUBMITTED THAT THE PROVISION O F CLAUSE K OF SECTION 194C(1) OF THE ACT CAME INTO EFFECT FROM A.Y. 2008- 09 AND IT IS THE FIRST TIME THE PROVISIONS OF THE ACT WERE APPLICABLE TO THE ASSESS EE. THE COUNSEL ALSO SUBMITTED BEFORE US THAT THE LD. ASSESSING OFFICER HAS NOT CH ALLENGED THE VERACITY OF THE EXPENSES, THEREFORE, DISALLOWANCE MADE BY ASSESSING OFFICER AND SUSTAINED BY LD. CIT(A) SHOULD BE DELETED. 7. ON THE OTHER HAND, THE LD. D.R. FOR THE REVENUE SUBMITTED THAT THE ASSESSEE ALL ALONG HAS BEEN MAINTAINING THAT HE WAS MAKING THE P AYMENT TO SUB-CONTRACTORS AND AT THE TIME OF APPELLATE PROCEEDINGS THE ASSESS EE HAS CHANGED ITS STAND THAT SHE WAS NOT MAKING PAYMENT TO SUB-CONTRACTORS, WHIC H IS NOT TENABLE. THE LD. D.R. ALSO POINTED OUT THAT THE PAYMENT IN CASE OF E ACH INDIVIDUAL EXCEEDS RS. 50,000/- THEREFORE THERE IS ANOBLIGATION ON THE ASS ESSEE TO DEDUCT THE TDS AT SOURCE U/S 194C OF THE ACT. SINCE THE ASSESSEE DID NOT DEDUCT THE TDS U/S 194C OF THE ACT THEREFORE THE ADDITION MADE BY THE ASSES SING OFFICER SHOULD BE SUSTAINED. 8. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GON E THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCU MENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACTS OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF CIVIL WO RKS AND RESALE OF CONSTRUCTION MATERIALS UNDER THE NAME & STYLE OF M/S S.J. CONSUL TANT & CONTRACTOR. DURING THE SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER NOTICE D THAT THE ASSESSEE HAD DEBITED A SUM OF RS. 1,80,51,163/- AS HAVING BEEN PAID TO S UB-CONTRACTORS BUT SHE HAD NOT DEDUCTED THE TAX AT SOURCE WHILE MAKING THE PAYMENT THEREFORE, THE ASSESSING OFFICER HAD DISALLOWED THE ENTIRE EXPENSES OF RS. 1 ,80,51,163/-. WE NOTE THAT THE ASSESSEE IS ENGAGED IN EXECUTING THE JOB WORK AND F OR THAT SHE HIRES THE INDIVIDUAL LABOURS AND MAKES THE PAYMENT FROM TIME TO TIME. DU RING THE ASSESSMENT YEAR 2008- 09 THE ASSESSEE HAD RECEIVED FROM JOB WORK RS. 5,74 ,94,676/ LABOUR CHARGES TO THE TUNE OF RS. 1,8 CONTRACTORS ACCOUNT FOR THE YEAR ENDED 31.03.2008 WHICH THE LD. COUNSEL SUBMITTED BEFORE US WORK FOR OTHERS AND IN ORDER TO EXECUTE THE JOB WOR K, THE ASSESSEE HIRES THE INDIVIDUAL LABOURERS AND SHE PAID LABOURERS ARE NOT PERMANENT STAFF OF THE ASSESSEE. THE ASSESSEE HIRES THE LABOURERS AS AND WHEN REQUIRED FOR JOB WORK ASSESSEE HAD RECEIVED EXECUTING THE J OB WORK, THE ASSESSEE HA RS. 1,80,51,163/- . AT THIS JUNCTURE, THE LD. COUNSEL POINTED OUT THA T IN ORDER TO EXECUTE THE SCHEDULED JOB WORK THE ASSESSEE NEEDS T O HIRE THE LABOURERS AND THE LABOUR CHARGES PAID BY THE AS THE INVOLVEMENT OF THE JOB WORK ACCOUNT . THE ASSESSEE HAS 5,74,94,676/- WHEREAS IT INCURRED LABOUR CHARGES, TO E EXTENT OF RS. 1,80 ,51,163/ THEREFORE THE VERACITY OF THE EXPENSES CANNOT BE DO UBTED. 9. WE NOTE THAT T HE ASSESSING OFFICER HAS ALSO NOT DISPUTED THAT THE ASSESSEE HAS NOT INCURRED THE LABOUR CHARGES. ASSESSMENT YEAR: 4 09 THE ASSESSEE HAD RECEIVED FROM JOB WORK RS. 5,74 ,94,676/ LABOUR CHARGES TO THE TUNE OF RS. 1,8 0,51,163/- WHICH IS EVIDENT FROM THE WORK CONTRACTORS ACCOUNT FOR THE YEAR ENDED 31.03.2008 WHICH REPRODUCED THE LD. COUNSEL SUBMITTED BEFORE US THAT THE ASSESSEE IS ENGAGED IN DOING THE JOB WORK FOR OTHERS AND IN ORDER TO EXECUTE THE JOB WOR K, THE ASSESSEE HIRES THE INDIVIDUAL LABOURERS AND SHE PAID NEAR LY 375 LABOURERS DURING THE YEAR. THE LABOURERS ARE NOT PERMANENT STAFF OF THE ASSESSEE. THE ASSESSEE HIRES THE LABOURERS AS AND WHEN REQUIRED FOR JOB WORK . WE NOTE THAT IT IS ADMITTED FACT THAT THE ASSESSEE HAD RECEIVED FROM JOB WORK TO THE TUNE OF RS. 5,74,94,676/ OB WORK, THE ASSESSEE HA D INCURRED LABOUR CHARGES TO THE TUNE OF . AT THIS JUNCTURE, THE LD. COUNSEL POINTED OUT THA T IN ORDER TO EXECUTE THE SCHEDULED JOB WORK THE ASSESSEE NEEDS T O HIRE THE LABOURERS AND THE LABOUR CHARGES PAID BY THE AS SESSEE PRIMA FACIE APPEARS TO BE CORRECT CONSIDERING THE INVOLVEMENT OF THE JOB WORK AS MENTIONED IN THE ABOVE NOTED JOB CONTRACT . THE ASSESSEE HAS RECEIVEDINCOME FROM JOB WORK CHARGES AT RS. WHEREAS IT INCURRED LABOUR CHARGES, TO E XECUTE THE JOB WORK TO THE ,51,163/ - WHICH IS NORMAL EXPENDITURE TO EXECUTE THE JOB WORK THEREFORE THE VERACITY OF THE EXPENSES CANNOT BE DO UBTED. HE ASSESSING OFFICER HAS ALSO NOT DISPUTED THAT THE ASSESSEE HAS INCURRED THE LABOUR CHARGES. THE MAIN GRIEVANCE OF THE ASSESSING OFFICER WAS SMT. MADHUMITA BASU ITA NO.68/KOL/2019 ASSESSMENT YEAR: 2008-09 09 THE ASSESSEE HAD RECEIVED FROM JOB WORK RS. 5,74 ,94,676/ - AND PAID THE WHICH IS EVIDENT FROM THE WORK REPRODUCED BELOW: THAT THE ASSESSEE IS ENGAGED IN DOING THE JOB WORK FOR OTHERS AND IN ORDER TO EXECUTE THE JOB WOR K, THE ASSESSEE HIRES THE LY 375 LABOURERS DURING THE YEAR. THE SE LABOURERS ARE NOT PERMANENT STAFF OF THE ASSESSEE. THE ASSESSEE HIRES THE LABOURERS . WE NOTE THAT IT IS ADMITTED FACT THAT THE JOB WORK TO THE TUNE OF RS. 5,74,94,676/ -, AND IN INCURRED LABOUR CHARGES TO THE TUNE OF . AT THIS JUNCTURE, THE LD. COUNSEL POINTED OUT THA T IN ORDER TO EXECUTE THE SCHEDULED JOB WORK THE ASSESSEE NEEDS T O HIRE THE LABOURERS AND THE APPEARS TO BE CORRECT CONSIDERING AS MENTIONED IN THE ABOVE NOTED JOB CONTRACT JOB WORK CHARGES AT RS. XECUTE THE JOB WORK TO THE TO EXECUTE THE JOB WORK , HE ASSESSING OFFICER HAS ALSO NOT DISPUTED THAT THE ASSESSEE HAS THE MAIN GRIEVANCE OF THE ASSESSING OFFICER WAS SMT. MADHUMITA BASU ITA NO.68/KOL/2019 ASSESSMENT YEAR:2008-09 5 THAT DURING THE ASSESSMENT STAGE, THE ASSESSEE HAD HERSELF ADMITTED THAT SHE VIOLATED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. WE NOTE THAT THERE IS NO ESTOPPLE AGAINST THE LAW. WHAT IS NOT OTHERWISE TAXABLE CAN NOT BECOME TAXABLE MERELY BECAUSE OF ADMISSION OF ASSESSEE. NOR CAN TH ERE BE ANY WAIVER OF THE RIGHT OTHERWISE ADMISSIBLE TO THE ASSESSEE IN LAW. THE CH ARGEABILITY IS NOT DEPENDENT ON THE ADMISSION OF OR WAIVER BY ASSESSEE. THE CHARGEA BILITY IS DEPENDENT ON THE CHARGING SECTION, WHICH NEEDS TO BE STRICTLY CONSTR UED. WE NOTE THAT DURING THE ASSESSMENT STAGE THE ASSESSEE HERSELF ADMITTED THAT THERE IS VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, DOES NOT MEAN THAT THERE SHOULD BE VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND ENTI RE EXPENSES OF THE ASSESSEE SHOULD BE DISALLOWED. IF THERE IS NO NEED TO DEDUCT TDS ON LABOUR CHARGES THEN THESE LABOUR CHARGES CANNOT BE DISALLOWED MERELY BE CAUSE ASSESSEE HAD ADMITTED DURING THE ASSESSMENT STAGE. RIGHT EXPENDITURE OUGH T TO BE ALLOWED AND RIGHT INCOME OUGHT TO BE TAXED. THEREFORE, WE DO NOT AGRE E WITH THE STAND TAKEN BY ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS . IN ORDER TO EXECUTE THE JOB WORK IT IS NECESSARY TO INCUR THE LABOUR CHARGES AN D THE SAME HAD BEEN INCURRED AND WHICH HAD BEEN DISCLOSED IN THE WORK CONTRACT A CCOUNT (MENTIONED ABOVE)FOR THE YEAR ENDED ON 31.03.2008 AS NOTED ABOVE. 10. COMING TO THE SECOND LIMB OF THE ARGUMENT OF LD . D.R. THAT THE ASSESSEE HAS PAID THE LABOUR CHARGES TO EACH LABOURER EXCEEDING RS. 50,000/- THEREFORE, THE ASSESSEE IS UNDER AN OBLIGATION TO DEDUCT THE TDS O N PAYMENT OF LABOUR CHARGES. WE NOTE THAT THE ASSESSEE HAS PAID 375 LABOURERS VI DE PB PAGE NO. 17 TO 41 WHICH IS FILED BY THE ASSESSEE BEFORE THE LOWER AUTHORITI ES AS WELL, WHEREIN WE NOTICE THAT THE INDIVIDUAL / LABOURER WAS GETTING BELOW RS . 50,000/- IN A YEAR THEREFORE NONE OF THE LABOURER FALLS UNDER THE AMBIT OF SECTI ON 194C OF THE ACT AND HENCE THERE IS NO REQUIREMENT TO DEDUCT TDS. APART FROM T HIS, THE ASSESSEE ALSO SUBMITTED THE LEDGER ACCOUNT OF LABOUR CHARGES (VI DE PB PAGE NO. 42 TO 50) WHEREIN WE NOTICED THAT THE NONE OF THE PAYMENT EXC EEDS RS. 50,000/- THEREFORE TDS OBLIGATION DOES NOT ARISE. THEREFORE, CONSIDERI NG THE FACTUAL POSITION AS SMT. MADHUMITA BASU ITA NO.68/KOL/2019 ASSESSMENT YEAR:2008-09 6 NARRATED ABOVE, WE ARE OF THE VIEW THAT THE ASSESSE E DOES NOT HAVE ANY OBLIGATION TO DEDUCT THE TDS, HENCE THE ADDITION MADE BY THE A SSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) NEEDS TO BE DELETED. TH EREFORE, WE DELETE THE ADDITION OF RS. 1,80,51,163/-. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON 26.02.2020 SD/- ( A.T. VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 26/02/2020 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. SMT. MADHUMITA BASU 2. ACIT, CIRCLE-50, KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES