TaxTMI 
TaxTMI 
2011 (5) TMI 656
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.... that the book results are not rejected. 2. The ld CIT(A) erred on facts and in law in confirming the disallowance of Rs. 33,34,903/- u/s 40(a)(ia), being payments made to casual labourers. He ought to have appreciated that in the facts and circumstances of the case, sec. 194C itself is not applicable. In any case he ought to have appreciated the circumstances in which these payments were made and the business exigencies. 3. The ld CIT(A) erred on facts and in law in confirming disallowance of Rs. 12,17,005/- u/s 40(a)(ia), being payments made for hire for tractor and trolleys. He failed to appreciate that the provisions of sc. 194C were applicable for contract of carriage of goods and passengers only and not to hire simpliciter of tractor and trolleys." 3. In so far as Ground No 1 is concerned, it was a common point between parties that the issue has not been adjudicated by the Commissioner of Income-tax (Appeals), even though such an issue was raised by the assessee before the Commissioner of Income-tax (Appeals) by way of a Ground of appeal. Under these circumstances, the learned Counsel for the assessee submitted that assessee would be satisfied....
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....e labourers and the payment for each labour would not exceed Rs. 50,000/- during the year and in any case the recipients are not regular employees, but casual labourers and under these circumstances, the provisions of section 194C were not attracted. The claim of the assessee, all along has been that payments did not exceed Rs. 50,000/- in a year and, therefore, section 194C was not attracted. In support of the aforesaid proposition, the assessee also furnished confirmation from the workers, copies of which have also been placed in the Paper Book filed before us at pages 9 to 33. The Commissioner of Income-tax (Appeals) as well as the Assessing Officer has not accepted the plea of the assessee as, according to the authorities below, the impugned amount is liable for deduction of tax at source under section 194C of the Act. Even before us, the learned Departmental Representative has justified invoking of section 40(a)(ia) of the Act for disallowing the impugned amount as, according to him, such payments were liable for deduction of tax at source under section 194C of the Act, and accordingly the same was disallowable under section 40(a)(ia) of the Act. 6. Before us, the learned C....
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....n who receives the money and if the individual labourers are taken into consideration, the payments do not exceed Rs. 50,000/- in a year to each person. It has also been pointed out that the payments are made to casual labourers, who were not regular employees of the assessee and are working with the assessee on daily wage basis. The various persons who have received money have also put in their confirmations to the aforesaid effect, and such confirmations were before the Commissioner of Income-tax (Appeals) also, as is evident from the Paper Book filed by the assessee before us. Therefore, the plea of the assessee that the payment to each labour does not exceed Rs. 50,000/- per annum cannot be rejected outrightly in the absence of any evidence contrary to the confirmations of the recipients available on record The applicability of section 194C of the Act is thus to be examined in the aforesaid light. 9. Per the ratio of the Hon'ble Delhi High Court in the case of Dewan Chand (supra), the payment of daily wages to the casual employees cannot constitute contractual payments so as to be liable for deduction of tax in terms of section 194C of the Act. Therefore, under the facts and....
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....isallowed the corresponding expenditure by invoking section 40(a)(ia) of the Act. 14. The claim of the assessee before the Assessing Officer as well as before the CIT(A) was that the impugned payments were not on account of any transportation charges and that there was no contract for transport in pursuance to which such payments have been made. It was explained hat the assessee was hiring tractors, trolleys from nearby villages. It was submitted that impugned payments were made to hire tractor and trolleys and not for any transportation work. The assessee also submitted that the vouchers show that hire charges are paid on a per day basis and not per trip basis so as to constitute any transportation charges. Therefore, as per the assessee, provisions of section 194C were not applicable to the impugned payments debited under the head Transport and octroi charges'. The aforesaid explanation of the assessee did not find favour even with the Commissioner of Income-tax (Appeals) as, according to him, the arrangement in question fell within the expression 'work' for the purposes of section 194C of the Act on account of Explanation III to section 194C(1) of the Act. According to the Co....
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....ture is fair and proper. 17. We have carefully considered the rival submissions and perused the orders of the authorities below as well as other material placed in the Paper Book to which our attention has been drawn in the course of the hearing. In this case, assessee has debited an amount of Rs. 12,17,005/- under the head 'Transport and octroi charges', which as per the Revenue, required deduction of tax at source per section 194C of the Act and for non-deduction thereof, such expenditure was liable for disallowance in terms of section 40(a)(ia) of the Act. The plea of the Revenue that the assessee has debited the expenditure under the head 'Transport and octroi' and therefore it is to be construed as a payment for a transportation contract, in our view, is fallacious. The nature of the expenditure cannot be deduced merely on the basis of the treatment accorded in the account books, but it has to be decided on the basis of substantive character of the transaction. In this case, the assessee has claimed that the impugned expenditure is on account of hiring of tractors and trolleys on a day basis and does not involve any transportation contract. Quite clearly, an activity of hir....