Tribunal condones delay, allows appeal, deletes disallowance of Rs. 63,23,430, dismisses grounds related to Rs. 2,00,000.

The tribunal allowed the appeal, condoning the delay in filing the appeal and deleting the disallowance of Rs. 63,23,430. The grounds related to the disallowance of Rs. 2,00,000 were dismissed as not pressed.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Disallowance of Rs. 2,00,000 out of commission and insurance charges.
3. Disallowance of Rs. 63,23,430 on the ground of non-deduction of tax at source from payment made to contractor for purchase of materials.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The assessee filed the appeal with a delay of 33 days, attributing the delay to the heavy pressure of outstanding audits of cooperative banks that caused the CA to overlook the receipt of the impugned order. The tribunal considered the affidavit submitted by the CA of the assessee and found the cause of delay to be reasonable and beyond the control of the assessee. The delay was neither intentional nor deliberate but due to unavoidable reasons. Consequently, the tribunal condoned the delay of 33 days in filing the appeal.

2. Disallowance of Rs. 2,00,000 out of Commission and Insurance Charges:
The assessee raised grounds against the disallowance made by the AO of Rs. 2,00,000 out of commission and insurance charges paid. However, during the hearing, the assessee’s representative stated that these grounds were not pressed. The tribunal dismissed these grounds as not pressed.

3. Disallowance of Rs. 63,23,430 on the Ground of Non-Deduction of Tax at Source:
The primary issue was the disallowance under Section 40(a)(ia) of the Income-tax Act, 1961, for non-deduction of tax at source on an amount of Rs. 63,23,430 paid to a labour contractor for the supply of materials. The AO noted that while TDS was deducted on labour charges, no TDS was deducted on the payment for the supply of materials, treating it as a composite work contract. The assessee contended that the payment for materials was a reimbursement and not subject to TDS.

The tribunal examined the contract and found that it was exclusively for the supply of labour, with the assessee responsible for procuring materials. The materials were purchased in the name of the assessee, and the contractor had a limited role in ensuring the quality of materials. The tribunal concluded that the payment for materials was not part of the work contract and did not attract the provisions of Section 194C of the Act. The tribunal also noted that there was no element of income or profit for the contractor in the reimbursement of material costs. Consequently, the tribunal held that the disallowance made by the AO was not justified and deleted the disallowance of Rs. 63,23,430.

Conclusion:
The tribunal allowed the appeal of the assessee, condoning the delay in filing the appeal and deleting the disallowance of Rs. 63,23,430. The grounds related to the disallowance of Rs. 2,00,000 were dismissed as not pressed. The order was pronounced in the open court on 8th September 2016.

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