Mr JAHEDBEG HAIDARBEG MIRZA, Aurangabad V. ACIT CIR 2, Aurangabad

ITA 682/PUN/2013

• Counselvise Citation: 68224514 RSA 2013
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 15-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Business income; Additional evidence; Ignorance of law
• Section: 234B; 194C; 6; 28; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO . 682 /PN/20 1 3 ASSESSMENT YEAR : 200 9 - 10 MR. JAHEDBEG HAIDARBEG MIRZA, GALI NO. 2, SANJAY NAGAR, MUKUNDWADI, AURANGABAD VS. ASSTT. COMMISSIONER OF INCOME - TAX, CIRCLE - 2, AURANGABAD (APPELLANT) (RESPONDENT) PAN NO. AFXPM2900D ITA NO. 733/PN/2013 ASSESSMENT YEAR : 2009 - 10 ASSTT. COMMISSIONER OF INCOME - TAX, CIRCLE - 2, A URANGABAD VS. MR. JAHEDBEG HAIDARBEG MIRZA, GALI NO. 2, SANJAY NAGAR, MUKUNDWADI, AURANGABAD (APPELLANT) (RESPONDENT) PAN NO. AFXPM2900D CO NO. 23 /PN/2013 ASSESSMENT YEAR : 200 9 - 10 MR. JAHEDBEG HAIDARBEG MIRZA, GALI NO. 2, SANJAY NAGAR, MUKUND WADI, AURANGABAD VS. ASSTT. COMMISSIONER OF INCOME - TAX, CIRCLE - 2, AURANGABAD (APPELLANT) (RESPONDENT) PAN NO. AFXPM2900D A SSESSEE BY: SHRI M.K. KULKARNI RE VENUE BY: SHRI P.L. PATHADE DATE OF HEARING : 20 - 03 - 2014 DATE OF PRONOUNCEMENT : 25 - 03 - 2014 ORDER PER BENCH : - TH ESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND ANOTHER BY THE REVENUE ARE FILED CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A) , AURANGABAD DATED 10 - 01 - 2013 FOR THE A.Y . 200 9 - 10. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 2 ITA NO S. 682 & 733 /PN/2013 & CO NO. 23 /PN/2013, MR. JAHEDBEG HAIDARBEG MIRZA, AURANGABAD 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW T HE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS. 2,22,62,872 / - OUT OF THE TOTAL DISALLOWANCE MADE BY THE A. O. OF RS. 4,01,08,595/ - INVOKING THE PROVISIONS OF S. 40( A)(I - A) OF TH E ACT. THE SAME BE DELETED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT IN THE ABSENCE OF ANY CONTRACT WHICH IS SINE - QUA - NON FOR APPLICABILITY OF S. 194C(2) OF THE ACT THE PROVISIONS OF S. 40(A)(I - A) BECOME INAPPLICABLE. IN VIEW OF THIS DISALLOWANCE WAS NOT CALLED FOR ACCORDING TO THE PROVISIONS OF LAW. THE DISALLOWANCE SUSTAINED BE DELETED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE EXPENDITURE BEING LABOUR PAYMENTS SIN CE SO WERE COVERED BY S. 28 AND 29 OF THE ACT THE PROVISIONS OF S. 40(A)(I - A) WERE NOT APPLICABLE AND THEREFORE, NO DISALLOWANCE COULD HAVE LEGALLY BEEN MADE. THE SUSTAINED ADDITION BY LD. CIT(A) UNDER S. 40(A)(I - A) OF THE ACT IS ILLEGAL, BEING WITHOUT JUR ISDICTION. THE SAME BE QUASHED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND IN VIEW OF GROUND NOS. 1 TO 3 ABOVE THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS. 63,43,270/ - OUT OF RS. 73,56,773 / - MADE BY A. O. INVOKING S. 40( A)(I - A) OF THE ACT. THE SUSTAINED ADDITION BY LD. CIT(A) UNDER S. 40(A)(I - A) OF THE ACT IS WITHOUT JURISDICTION. THE SAME BE QUASHED. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEVY OF INTEREST U/S. 234B AND 234D IS NOT JUSTIFIED AND IN THE CIRCUMSTANCES IT BE DELETED. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE, WHETHER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 1,78,45,723/ - OUT OF ADDITION MADE OF RS. 4,01,08,595/ - ON ACCOUNT OF NON DEDUCTION OF T DS FROM THE AMOUNTS PAID TO VARIOUS PARTIES IN CONTRAVENTION OF PROVISIONS OF SECTION 194C. ADDITION MADE OF RS.4,01,08,595/ - U/S. 40(A)(IA) R.W.S. 194C MAY BE RES TORED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE CIT (A), AURANGABAD WAS JUSTIFIED IN DELETING IN ADDITION OF 3 ITA NO S. 682 & 733 /PN/2013 & CO NO. 23 /PN/2013, MR. JAHEDBEG HAIDARBEG MIRZA, AURANGABAD RS.63,43,270/ - OUT OF ADDITION MADE OF RS. 73,56,773/ - ON ACCOUNT OF NON DEDUCTION OF T DS FROM THE AMOUNTS PAID TO VARIOUS P ARTIES IN CONTRAVENTION OF PROVISIONS OF SECTION 1941. ADDITION MADE OF RS.73,56,773/ - U/S. 40(A)(IA) R.W.S. 194 I MAY BE RESTORED. 3. WHETHER THE CIT (A), AURANGABAD WAS JUSTIFIED IN RELYING ON THE DECISION IN THE CASE OF M/S. MERILYN SHIPPING AND TRANSPORTS, VISAKHAPATTANAM VS. ADDL. CIT (2012) 70 DTR 81 (SB VISAKHA) AS THIS DECISION HAS BEEN SUSPENDED BY THE HON'BLE ANDHRA PRADESH HIGH COURT VIDE ITS ORDER DATED 08/10/2012. 4. WHETHER THE CIT(A), AURANGABAD WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF LATE PAYMENT OF PF AND ESIC AMOUNTING TO RS. 1,14,000/ - ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ESPECIALLY IN VIEW OF THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. MADRAS RADIATORS AND PRESSING LTD. (2003) 129 TAXMANN 709 (MAD). 3. WE FIRST DISPOSE THE APPEALS AND THEN DECIDE THE CROSS OBJECTION FILED BY THE ASSESSEE. THE FACTS WHICH ARE REVEALED FORM THE RECORD AS UNDER. THE ASSESSEE IS AN INDIVIDUAL AND EARNING INCOME FROM BUSINESS AS THE CONTRACTOR/SUB - CONTRACTOR . THE ASSESS EE HAS FILED RETURN OF INCOME ON 30 - 09 - 2009 DECLARING TOTAL INCOME AT RS.33,65,370/ - AND AGRICULTURAL INCOME AT RS.78,620/ - . THE ASSESSING OFFICER HAS ASSESSED THE INCOME OF THE ASSESSEE AT RS.5,09,44,738/ - BY MAKING ADDITION OF RS.4,75,79,368/ - . THE DET AILS OF ADDITIONS MADE BY THE ASSESSING OFFICER ARE AS UNDER: SL. NO. PARTICULARS AMOUNT 1 ADDITION ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE U/S. 40(A)(IA) FOR CONTRAVENTION OF TDS PROVISIONS OF SECTION 194C RS.4,01,08,595/ - 2 ADDITION ON ACCOUNT OF DIS ALLOWANCE OF EXPENDITURE U/S. 40(A)(IA) FOR CONTRAVENTION OF TDS PROVISIONS OF SECTION 194I RS.73,56,773/ - 3 ADDITION ON ACCOUNT OF NON - PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND ESIC WITHIN DUE DATE UNDER THE SAID ACTS. RS.1,14,000/ - TOTAL RS.4,75,79,3 68/ - 4 ITA NO S. 682 & 733 /PN/2013 & CO NO. 23 /PN/2013, MR. JAHEDBEG HAIDARBEG MIRZA, AURANGABAD 4. GROUND NO. 2 IS IN RESPECT OF DISALLOWANCE OF RS.4,01,08,595/ - U/S. 40(A)(IA) ON ACCOUNT OF CONTRAVENTION OF PROVISIONS OF SEC. 194C OF THE ACT. THE ASSESSING OFFICER HAS MADE THIS ADDITION AS PER HIS RECORDS IN PARA NO. 5 OF THE ASSESSMENT ORDER . THE DETAILS OF THE ADDITION MADE BY THE ASSESSING OFFICER AS NOTED FROM THE ASSESSMENT ORDER ARE AS UNDER: PARTICULARS OF EXPENDITURE AMOUNT RS. REMARK OF THE A.O. FABRICATION AND CARPENTRY WORK 53,32,150 THE TOTAL EXPENDITURE DEBITED TO P & L A/C. WAS RS.54,23,016/ - OUT OF WHICH RS.53,32,150/ - WAS LIABLE FOR TDS BEING AMOUNT PAID TO 15 PARTIES IN EXCESS OF RS.50,000/ - DURING THE YEAR TO EACH PERSON. HARD ROCK EXPENSES 28,15,494 THE TOTAL EXPENDITURE DEBITED TO P & L A/C. WAS RS.28,15,494/ - WHICH WAS L IABLE FOR TDS BEING AMOUNT PAID TO 3 PARTIES IN EXCESS OF RS.50,000/ - DURING THE YEAR TO EACH PERSON. EXCAVATION WORK 2,04,01,210 THE TOTAL EXPENDITURE DEBITED TO P & L A/C. WAS RS.2,04,01,210/ - WHICH WAS LIABLE FOR TDS BEING AMOUNT PAID TO 29 PARTIES IN EXCESS OF RS.50,000/ - DURING THE YEAR TO EACH PERSON. CONSTRUCTION WORK 1,15,59,741 THE TOTAL EXPENDITURE DEBITED TO P & L A/C. WAS RS.1,28,57,335/ - OUT OF WHICH RS.1,15,59,741/ - WAS LIABLE FOR TDS BEING AMOUNT PAID TO 41 PARTIES IN EXCESS OF RS.50,000/ - DURING THE YEAR TO EACH PERSON. TOTAL 4,01,08,595 4.1. THE A.O. HAS HELD THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE IN RESPECT OF THE ABOVE MENTIONED PAYMENTS/EXPENDITURE AMOUNTING TO RS.4,01,08,595/ - AND AS HE HAS FAILED TO DO SO HENCE THE P ROVISION OF SECTION 40(A)(IA) IS ATTRACTED. THE A.O. HAS ACCORDINGLY DISALLOWED THE EXPENDITURE TO THE EXTENT OF RS.4,01,08,595/ - U/S.40(A)(IA) OF THE ACT. THE A.O. HAS REJECTED THE CONTENTIONS RAISED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS THAT THE DEFAULT IS ONLY TECHNICAL AND DUE TO IGNORANCE OF LAW AND AS THE SITE OF CONTRACT WORK IS SITUATED 30 KMS AWAY FROM AURANGABAD; THE PAYMENTS WERE IN FACT 5 ITA NO S. 682 & 733 /PN/2013 & CO NO. 23 /PN/2013, MR. JAHEDBEG HAIDARBEG MIRZA, AURANGABAD MADE/INCURRED BY THE CONTRACTEE AND THE SAME WERE ONLY ROUTED THROUGH ASSESSEE'S BOOKS ; AND OSTENSIBLY THERE IS NO CONTRACT AS SUCH WITH THE PAYEES. THE A.O. HAS OBSERVED THAT AS PER PROVISIONS OF SECTION 194C THE CONTRACT MAY BE WRITTEN OR ORAL, PAYMENT MADE TO SUB CONTRACTOR ATTRACTS PROVISIONS OF S ECTION 194C AND THE CONTRACTEE HAS MADE PAYMENT TO THE A SSESSEE AS PER TDS CERTIFICATES AND BUSINESS RECEIPTS CLAIMED BY THE ASSESSEE AND THE PAYMENT TO THE SUB - CONTRACTOR HAS ACTUALLY BEEN MADE BY THE ASSESSEE AND HENCE, THE ASSESSEE HAS CONTRAVENED THE PROVISIONS OF S ECTION 194C AND HENCE, LIABLE FOR DISALLOW ANCE U/S. 40(A)(IA). 5. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND LD. CIT(A) HELD THAT TO THE EXTENT OF AMOUNT PAID DURING THE YEAR OF RS.1,78,45,723/ - NO EXPENDITURE CANNOT BE DISALLOWED BUT TO THE EXTENT OF RS.2,22,62,872/ - THE EXPE NDITURE HAS TO BE DISALLOWED WHICH WAS OUTSTANDING AT THE END OF THE YEAR. THE REASONS AND FINDINGS OF THE LD. CIT(A) ARE AS UNDER: 6.2. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTICED TH AT THE A.O. HAS DISALLOWED THE EXPENDITURE CLAIMED BY THE APPELLANT TO THE EXTENT OF RS.4,01,08,595/ - U/S.40(A)(IA) FOR NON DEDUCTION OF TDS U/S.194C OF THE ACT. IN THIS REGARD THE APPELLANT HAS RAISED 2 CONTENTIONS. THE FIRST CONTENTION IS THAT THE PAYMEN T OF EXPENDITURE HAS BEEN MADE TO GROUP LEADERS AND IN TURN THEY HAVE MADE PAYMENTS TO VARIOUS PERSONS BELOW RS.50,000/ - EACH DURING THE YEAR UNDER APPEAL AND HENCE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE AND HENCE NO DISALLOWANCE CAN BE MADE U/S.40( A)(IA) OF THE ACT. THIS CONTENTION OF THE APPELLANT IS NOT SUPPORTED BY ANY EVIDENCE AS NO SUCH EVIDENCE HAS BEEN FILED THE APPELLANT EITHER DURING ASSESSMENT PROCEEDINGS AS CAN BE NOTICED FROM ASSESSMENT ORDER OR DURING APPELLATE PROCEEDINGS BEFORE THE UN DERSIGNED. THIS CONTENTION OF THE APPELLANT IS THEREFORE REJECTED. THE SECOND CONTENTION RAISED BY THE APPELLANT IS THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ONLY IN RESPECT OF THE AMOUNTS OF EXPENDITURE OUTSTANDING AT THE YEAR END AND NOT T HE TOTAL EXPENDITURE AND HENCE THE A.O. HAS ERRED IN DISALLOWING THE 6 ITA NO S. 682 & 733 /PN/2013 & CO NO. 23 /PN/2013, MR. JAHEDBEG HAIDARBEG MIRZA, AURANGABAD EXPENDITURE WHICH HAS ALREADY BEEN PAID DURING THE YEAR UNDER APPEAL. THIS CONTENTION OF THE APPELLANT IS FOUND TO BE SUPPORTED BY DECISION OF HON'BLE SPECIAL BENCH OF VISAKHAPATTANNAM IN THE CASE OF M/S MERILYN SHIPPING & TRANSPORTS, VISAKHAPATTANAM VS. ADDL.CIT (2012) 70 DTK 81 (SB VISAKHA) AND ALSO BY THE DECISIONS IN THE FOLLOWING CASES INCLUDING HON'BLE JURISDICTIONAL ITAT, PUNE. 1. JAYPUR VIDYUT VITARAN NIGAM LTD. VS. DCIT [2009] (12 3 TTJ 888) (JP), 26 DTK 79 (JP) 2. TEJA CONSTRUCTIONS VS. ACIT [2010] 36 DTK 220 (HYD.) 3. K. SHRINIVAS NAYADU VS. ACIT [2010] 131 TTJ 17 (HYD.) 4. JAGANNATH KALANTRI (PUNE) ITA NO. 315/PN/09 5. MRS.SHAH CHARUDATTA MILIND (PUNE) ITA NO.L318/PN/08 6. SIN HA VAHTUK SAHAKARI SANSTHA LTD. (PUNE) ITA NO.488/PN/10 IN THIS REGARD THE A.R. OF THE APPELLANT HAS SUBMITTED A CHART IN RESPECT OF EXPENDITURE DISALLOWED BY THE A.O., THE EXPENDITURE ACTUALLY PAID DURING THE YEAR UNDER APPEAL AND THE EXPENDITURE OUTSTAND ING AT THE YEAR END. THE EXPENDITURE OUTSTANDING AT THE YEAR END IS ALSO FOUND TO BE SUPPORTED BY THE AUDITED BALANCE SHEET AND EXTRACTS OF ACCOUNTS OF THE SAID PARTIES TO WHOM THE PAYMENT OF EXPENDITURE HAS BEEN MADE. THE DETAILS FILED BY THE APPELLANT IN A TABULAR CHART ARE SUMMARIZED AS UNDER NATURE OF EXPENDITURE AMOUNT DISALLOWED BY THE A.O. U/S 40(A)(IA) RS. AMOUNT PAYABLE AT THE YEAR END RS. AMOUNT PAID DURING THE YEAR RS. CONSTRUCTION WORK 1,15,59,741 22,87,499 92,72,242 EXCAVATIONS WO RK 2,04,01,210 1,43,70,020 60,31,190 FABRICATION & CARPENTRY WORK 53,32,150 38,54,453 14,77,697 HARD ROCK EXPENDITURE 28,15,494 17,50,900 10,64,594 TOTAL 4,01,08,595 2,22,62,872 1,78,45,723 IN VIEW OF THE ABOVE FACTS AND DISCUSSION THE EXPENDITURE DISALLOWED BY THE A.O. U/S.40(A)(IA) IS CONFIRMED TO THE EXTENT OUTSTANDING AT THE YEAR END AT RS.2,22,62,872/ - THE ADDITION IN RESPECT OF THE SAID EXPENDITURE DISALLOWED HAS BEEN DELETED TO THE EXTENT OF RS.1,78,45,723/ - WHICH HAS BEEN CLAIME D TO HAVE BEEN PAID BY THE APPELLANT DURING THE YEAR UNDER APPEAL SUBJECT TO VERIFICATION OF THIS CLAIM OF THE APPELLANT BY THE A.O. GROUND NO.2 IS PARTLY ALLOWED WITH ABOVE DIRECTION. 7 ITA NO S. 682 & 733 /PN/2013 & CO NO. 23 /PN/2013, MR. JAHEDBEG HAIDARBEG MIRZA, AURANGABAD 6. IN RESPECT OF DISALLOWANCE OF RS.73,56,773/ - FOR NON - DEDUCTION OF TA X AT SOURCE U/S. 194 I OF THE ACT IN RESPECT OF HIRE CHARGES , THE LD. CIT(A) ACCEPTED THE SECOND CONTENTION OF THE ASSESSEE THAT U/S. 40(A)(IA) IS APPLICABLE ONLY IN RESPECT OF THE AMOUNT OF EXPENDITURE OUTSTANDING AT THE END OF THE YEAR AND NOT THE TOTAL E XPENDITURE. HE, ACCORDINGLY, DIRECTED THE ASSESSING OFFICER TO SUSTAIN THE DISALLOWANCE TO THE EXTENT OF RS.10,13,503/ - OUT OF TOTAL HIRE CHARGES OF RS.73,56,773/ - AND GAVE GIVING PARTIAL RELIEF TO THE ASSESSEE ON ABOVE TWO DISALLOWANCE S MADE BY THE ASSE SSING OFFICER INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE INCOME - TAX ACT. THE LD. CIT(A) APPLIED THE PRINCIPLES LAID DOWN BY THE ITAT, SPECIAL BENCH OF VISAKHAPATNAM IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORT VS. ADDL. CIT 70 DTR 81 (SB) (VISAK HA). NOW BEING AGGRIEVED BY PARTLY SUSTAIN ING THE DISALLOWANCE THE ASSESSEE IS IN APPEAL AND FOR PARTLY DELETING THE DISALLOWANCE THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE PARTIES. THE DECISION IN THE CASE OF M/S. MERILYN SHIPPING & TRANSP ORT (SUPRA) HAS BEEN REVERSED BY THE HON'BLE HIGH COURT OF KOLKATA IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE (2013) 33 TAXMANN.COM 250 (KOLKATA). THE DECISION OF HON'BLE HIGH COURT OF KOLKATA HAS BEEN FOLLOWED BY THE HON'BLE HIGH COURT OF GUJARAT A ND ITAT, PUNE BENCHES HAVE CONSISTENTLY FOLLOWING THE DECISION IN THE CASE OF CRESCENT EXPORT SYNDICATE (SUPRA) AS WELL AS HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. SIKANDARKHAN N TUNVAR (2013) 33 TAXMANN.COM 133 (GUJARAT). AS THE DECISION OF T HE SPECIAL BENCH IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORT (SUPRA) IS REVERSED BY THE ABOVE TWO HIGH COURTS , WE, THEREFORE, REVERSE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE ORDER OF THE ASSESSING OFFICER AS LD. CIT(A) HAS GIVEN PART IAL RELIEF BY FOLLOWING THE PRINCIPLES LAID DOWN IN THE CASE OF M/S. MERILYN SHIPPING AND TRANSPORT (SUPRA) . 8 ITA NO S. 682 & 733 /PN/2013 & CO NO. 23 /PN/2013, MR. JAHEDBEG HAIDARBEG MIRZA, AURANGABAD 7.1. THE ASSESSEE HAS FILED THE ADDITIONAL EVIDENCE IN THIS CASE. THE LD. COUNSEL SUBMITS THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS TAK EN THE SPECIFIC PLEA THAT CONSIDERING THE NATURE OF BUSINESS ACTIVITY OF THE ASSESSEE THE PROVISIONS OF SEC. 194C ARE NOT APPLICABLE AND ACTUALLY ALL THE WORKS TO THE VARIOUS SUB - CONTRACTORS W ERE GIVEN DIRECTLY BY THE COMPANY I.E. CONTRACTEE AND THE TRANSA CTIONS W ERE ROUTED THROUGH THE ASSESSEE S BOOKS. HE FURTHER SUBMITS THAT EVEN IF THE SPECIFIC PLEA WAS RAISED BEFORE THE LD. CIT(A) BUT ISSUE IS NOT DECIDED ON THE CONTENTION WHETHER THE PROVISIONS OF SEC. 194C ARE APPLICABLE. HE SUBMITS THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AS THE FACTS HAVE NOT BEEN PROPERLY APPRECIATED. THE LD. DR HAS NO OBJECTION FOR REMITTING THE ISSUE OF THE APPLICABILITY OF SEC. 194C TO THE FILE OF THE ASSESSING OFFICER. WE, ACCORDINGLY, REMIT THE ISSUE OF APPLICABILITY OF SEC. 194C TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTIONS TO DECIDE THE SAME DE NOVO CONSIDERING THE EVIDENCES FILED BY THE ASSESSEE AS WELL AS THE JUDICIAL PRONOUNCEMENT S ON THE ISSUE. 8. SO FAR AS THE APPLICABILITY OF SEC. 194I OF THE ACT IN RESPECT OF THE HIRE CHARGES ARE CONCERNED, THE LD. COUNSEL RELIED ON THE DECISION OF THE ITAT, DELHI BENCH IN THE CASE OF ITO VS. AHAAR CONSUMER (P) LTD., (2011) 10 TAXMANN.COM 181 (DELHI) . HE SUBMITS THAT T HE SCOPE OF SEC. 40(A)(IA) AS LIMITED TO EXPENDITURE U/S 30 TO 38 OF THE INCOME - TAX ACT IN VIEW OF THE NON OBSTANTE PREAMBLE TO THE SECTION. SO FAR AS THE HIRE CHARGES ARE CONCERNED, THERE CAN BE NO DISPUTE AB OUT THE PROPOSITION THAT UNLESS THE EXPENDITUR E IS COVERED U/S. 30 TO 38 NO DISALLOWANCE CAN BE MADE U/S. 40(A)(IA) . HE PLEADED THAT AS THE ASSESSEE WAS ONLY FOR NAME SHAKE SEC. 194I IS NOT APPLICABLE. ON EXAMINATION OF THE ASSESSMENT ORDER, WE FIND THAT NOWHERE THE ASSESSEE TOOK THE PLEA THAT SEC. 194I IS NOT APPLICABLE AND THE SAID SPECIFIC PLEA WAS TAKEN ONLY IN RESPECT OF THE APPLICABILITY OF SEC. 194C. NOWHERE IT IS DENIED THAT THE ASSESSEE PAID THE HIRE CHARGES AND HENCE, IN OUR OPINION THE ISSUE OF APPLICABILITY OF SEC. 194I CANNOT 9 ITA NO S. 682 & 733 /PN/2013 & CO NO. 23 /PN/2013, MR. JAHEDBEG HAIDARBEG MIRZA, AURANGABAD BE REMITTE D BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AS IT IS THE NEW PLEA ON THE FACTS. MOREOVER THE JUDGMENT RELIED ON BY THE LD. COUNSEL ARE IN THE CONTE X T OF THE APPLICABILITY OF SEC. 194C ONLY. WE, THEREFORE, DECLINE TO RESTORE THE ISS UE OF APPLICABILITY OF SEC. 194I TO THE FILE OF THE ASSESSING OFFICER IN RESPECT OF THE HIRE CHARGES PAID BY HIM . AT THE SAME TIME WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN GIVING THE PART RELIEF TO THE ASSESSEE FOLLOWING THE PRINCIPLES LAID DOWN I N THE CASE OF M/S. MERILYN SHIPPING & TRANSPORT (SUPRA) . W E, THEREFORE, REVERSE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE ORDER OF THE ASSESSING OFFICER. 9. IN THE RESULT, ON THE ISSUE OF APPLICABILITY OF SEC. 40(A)(IA) R.W.S. 194C OF T HE ACT THE ASSESSEES GROUND NOS. 1, 2, AND 3 AND REVENUES GROUND NO.1 ARE ALLOWED FOR THE STATISTICAL PURPOSES AS THE SAID ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION. SO FAR AS ISSUE OF APPLICABILITY OF SEC. 40( A)(IA) R.W.S. 194I OF THE ACT THE GROUND NO. 4 OF THE ASSESSEE IS DISMISSED AND GROUND NO. 2 OF THE REVENUE IS ALLOWED AS THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS REVERSE D AND ORDER OF THE ASSESSING OFFICER IS RE STORE D . SO FAR AS GROUND NO. 5 IN THE A SSESSEES APPEAL IS CONCERNED IT IS A CONSEQUENTIAL IN NATURE . 10. THERE IS ONE MORE ISSUE IN THE REVENUES APPEAL ARISING FROM GROUND NO. 4 I.E. IN RESPECT OF THE LATE PAYMENT OF PF AND ESIC AMOUNTING TO RS.1,14,000/ - . ON THE PERUSAL OF THE IMPUGNED ORDE R WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE DECISION IN THE CASE OF CIT VS. AIMIL LIMITED AND OTHERS 321 ITR 508 (DEL). IN OUR OPINION NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AS THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUND NO. 4 OF THE REVENUE IS DISMISSED. 11. IN THE RESULT, BOTH THE APPEALS I.E. OF THE ASSESSEE AS WELL AS REVENUE , ARE PARTLY ALLOWED FOR THE STATISTICAL PURPOSES. 10 ITA NO S. 682 & 733 /PN/2013 & CO NO. 23 /PN/2013, MR. JAHEDBEG HAIDARBEG MIRZA, AURANGABAD 12. THE ASSESSEE HAS FILED THE CROSS OBJECTION S IN WHICH THREE GROUNDS ARE TAKEN. ON THE PERUSAL OF THE GROUNDS , WE FIND THAT THE CROSS OBJECTION IS SUPPORT ING THE ORDER OF THE LD. CIT(A) FOR FOLLOWING THE DECISION OF THE SPECIAL BENCH IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORT (SUPRA) AND GROUND NOS. 1 AND 2 IN THE CROSS OBJECTION ARE SPECIFICALLY ON THIS DECISION OF THE SPECIAL BENCH. SO FAR AS GROUND NO. 3 IS CONCERNED, THE ASSESSEE HAS PLEADED THAT THE CIT(A) HAS GIVEN THE RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE I TAT IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORT (SUPRA) BUT HAS NOT ADJUDICATED THE CONTENTION OF THE ASSESSEE THAT SEC. 194C IS NOT APPLICABLE HENCE, IT IS PLEADED THAT THE ISSUE MAY BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER ON THE ISSUE OF APPLICABILITY OF SEC. 194C TO THE ASSESSEE. WE ARE ALREADY REMITTED THE ISSUE IN RESPECT OF APPLICABILITY OF SEC. 194C TO THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE. IN OUR OPINION THE CROSS OBJECTION S ARE FILED BY THE ASSESSEE IS INFRUCTUOUS. AC CORDINGLY, SAME IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 25 - 0 3 - 201 4 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 25 TH MARCH, 2014 COPY TO 1 ASSE SSEE 2 DEPARTMENT 3 THE CIT(A) , AURANGABAD 4 THE CIT, AURANGABAD 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE