TaxTMI 
TaxTMI 
2010 (2) TMI 989
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....1 (hereinafter referred to as "the Act") vide his order dated December 24, 2007, for the assessment year 2005-06. The order under section 201(1), 201(1A) read with section 194C of the Act was framed by the Income-tax Officer, Anand vide his order dated May 15, 2007. First we will deal with Revenue's appeal I. T. A. No. 3792/Ahd/2008. The first issue in this appeal of the Revenue is against the order of Commissioner of Income-tax (Appeals) in partly deleting addition on account of payment made to Mukadams, which is falling within the ambit of section 194C of the Act. For this, the Revenue has raised the following ground No.1 : "(1) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (....
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.... stated as under : "Q. No. 4 Please explain the nature and identification of person to whom the payments were made. Please also show the supporting documentary proof regarding such expenses ? Ans. We are maintaining vouchers for each payment. The payments were given to one person who is in-charge or authorised by the labourer to take such payment on behalf of them and the signature of that person taken on voucher." During the course of survey, a question was posted that the TDS provisions are being violated by not deducting the same. Subsequently, a showcause notice was also issued under section 201 and 201(1A) of the Act dated February 21, 2007 repeating the same. The assessee replied vide letter dated May 8, 2007 stating the foll....
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....d/dispatched, names/details of owners of trucks is not known as drivers/cleaners are bringing/receive dispatch goods." The Assessing Officer noted in the assessment order that these labour activities are organized and maintained and controlled by one person locally known as "Mukadum". According to him, these payments were made to such mukadum and only record in respect of these payments maintained by the assessee is only vouchers and the copies of vouchers are kept on record. According to the Assessing Officer these vouchers are signed by the mukadum, who received the payments on day-to-day basis in cash. The Assessing Officer after referring the Board's Circular No. 433 dated September 25, 1985 ([1986] 157 ITR (St.) 27) stated that the ....
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....er of Income-tax (Appeals) allowed the claim of the assessee by stating that the payments have been received by the representatives of the labourers, who are mostly the employees of the assessee-company. The relevant finding in paragraph 5 of the appellate order reads as under : "5. I have gone through the order of the Assessing Officer and submissions of the authorised representative of the appellant-company. The payments have been received by the representative of the labourers who in most cases is an employee of the company. The appellant has produced before me the wage register which shows that the names mentioned in the annexure to the order are those of persons who are in regular employment of the company. In some cases evidence ha....
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.... detail or evidence to prove that the payee has shown the income and paid the tax in respect of these payments or payments are made directly to the labourers. Further he argued that during the course of the assessment proceedings when the Assessing Officer issued show-cause under section 201 and 201(1A) of the Act dated February 21, 2007, the assessee could not reply to the same. He stated that the Assessing Officer has rightly relied on the Board's Circular No. 433 dated September 25, 1985 ([1986] 157 ITR (St.) 27), which was issued in respect of payments made to mukadum, clarifying that payments made to the mukadum, are payments made to the contractors within the meaning of section 194C of the Act. He stated that even the circular covers ....
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....that the assessee instead made payments to labourers rather the assessee has made payment to the representative of the labourers through their mukadum, who are employees of the assessee. The individual payment is not exceeding the prescribed limit and once this is not the case, the assessee is not supposed to deduct tax under section 194C of the Act. Accordingly, this issue of the Revenue's appeal is dismissed. The next issue in this appeal of the Revenue is against the order of the Commissioner of Income-tax (Appeals) in deleting the addition of payment made to labourers in cash in violation of section 40A(3) of the Act. For this, the Revenue has raised ground No. 2 : "(2) On the facts and in the circumstances of the case and in law, th....