AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2012 (2) TMI 326
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.... the assessee stated that he has instructions from assessee not to contest this ground of appeal, hence he wants to withdraw this ground. Since Ld. DR has not objected, we dismiss this ground of appeal as withdrawn. 4. The second, third and fourth issue of assessee's appeal are against the order of CIT(A) disallowing the expenses to the tune of Rs.10,000/- each on account of "sales promotion, "staff fooding expenses" and "advertisement expenses". For this, assessee has raised following ground nos. 2, 3 and 4: "2. For that the Ld. CIT(A)-XII erred in law while disallowing the expenses to the tune of Rs.10,000/- on account of "Sales Promotion". 3. For that the Ld. CIT(A)-XII wrongly disallowed the expenses to the tune of Rs.10,000/- on account of "Staff Fooding Expenses". 4. For that the "Advertisement Expenses" to the tune of Rs.10,000/- was wrongly disallowed by the Ld. CIT(A)-XII." 5. We have heard rival submissions and gone through facts and circumstances of case. We find that Assessing Officer disallowed a sum of Rs.25,347/- as claim of expenditure on sales promotion was treated as not for business purpose and added the same to the income of assessee. Assessing Offic....
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....ithout the written consent of the Corporation Authority. But the Ld. Assessing Officer as well as the CIT(A)-XII denies to accept the above stated clue of the Agreement and taken the truck drivers as sub-contractors." Revenues raised following ground nos.1 and 2: "1) That under the facts & circumstances of the case, the Ld. CIT(A) erred in restricting the disallowance under the head "Transport Charges" to 10% resulting in deletion of addition of Rs.5,68,670/- without considering the findings of the A.O. "2. That under the facts & circumstances of the case, the Ld. CIT(A) erred in restricting the disallowance u/s. 40(a)(ia) to Rs.31,67,438/- resulting in deletion of addition of Rs.13,81,923/- without considering the findings of the A.O." 8. We have heard rival submissions and gone through facts and circumstances of case. The brief facts are that the assessee is engaged in the business of job contract and trading with Hindustan Paper Corporation Ltd, Assam and all receipts of the assessee are from this party only. The assessee has incurred expenditure mostly on account of purchase of bamboos, labour charges payment and transport charge payment. The assessee filed its return of in....
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....a disallowance @ 10% of total transport charges would meet the ends of justice. Accordingly, I direct the A.O to restrict the disallowance at 10% instead of 20%. The appellant gets a relief of Rs. 5,68,670/- on this issue. The ground of the appellant is partly allowed." The CIT(A) also restricted the disallowance u/s. 40(a)(ia) of the Act at Rs.31,67,480/- instead of disallowance made by Assessing Officer at Rs.45,49,361/- by giving following finding in para 8.2.3 (iv) of his appellate order: "iv. In view of the fact discussed, I am of the opinion that in the present case the appellant contractee has sub-contracted his contract works to the transport parties for carriage of goods and thus the appellant was liable to deduct tax in respect of parties where he aggregate payments exceeded more than Rs. 50000/- in the financial year under consideration. The A.O, however, disallowed Rs. 45,49,361/- (Rs. 56,80,701/- -- Rs.11,37,340/-) u/s. 40(a)(ia) of the Act. This is not factually correct as this includes parties where payments less than Rs. 20000/- were made. The appellant however submitted a list of parties in whose cases the aggregate of payments exceeds Rs.50000/- in the whole yea....
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...., or for both ; or (g) any society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India ; or (h) any trust ; or (i) any University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act, 1956 (3 of 1956), or (j) any firm, shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to-- (i) one per cent. in case of advertising, (ii) in any other case two per cent. of such sum as income-tax on income comprised therein. (2) Any person (being a contractor and not being an individual or a Hindu undivided family) responsible for paying any sum to any resident (hereafter in this section referred to as the sub-contractor) in pursuance of a contract with the sub-contractor for carrying out, or for the supply of labour for carrying out, the whole or any part of the work undertaken by the contractor or for supplying whether w....
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....ding the financial year in which such sum is credited or paid to the account of the contractor, shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to - (i) one per cent in case of advertising, (ii) in any other case two per cent, of such sum as income-tax on income comprised therein : Provided that no individual or a Hindu Undivided Family shall be liable to deduct income-tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu Undivided Family." 7. We find from the arguments of Ld.SR. DR that revenue want to invoke provisions of Sub-Section (2) of Section 194C for furtherance of this case but we are of the considered view that Section 194C(2) will apply to the payments made to Sub-Contractors by the Contractor and not by the assessee. In the present case, it is an admitted position that the assessee has made payments on advertisement to the Contractors and not to Sub-Contractors. Further as referred....
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....m the 1st day of June, 2007." 8. In view of the above clear provisions of Section 194(1) as existing in assessment years 2006-07 & 2007-08, i.e. relevant assessment years in the present appeals, it is clear that the assessee is under no obligation to deduct TDS on the expenditure of advertisement, as the assessee being an individual, and the claim of the assessee is as per provisions of law. Once the assessee is not liable to deduct TDS under the provision of Section 194C(1), the provisions of Section 40a(ia) for making disallowance of expenditure for non-deduction of TDS will not apply. We further find that, it is not the case of the revenue that the expenses are bogus or unreasonable or excessive but the disallowance is made merely for non-deduction of TDS. Accordingly, we are of the considered view that CIT(A) has rightly deleted the disallowance and we confirm the same." 10. As the issue raised by the assessee and revenue is exactly on similar facts in the present case, taking a consistent view, we are of the view that the amended provisions of section 194C(1) of the Act will not apply to the present assessment year on the assessee. Accordingly, this issue of the assessee's a....
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....isallowance under the head "Labour Charges" to 5% resulting in deletion of addition of Rs.21,32,910/- without considering the findings & materials brought on record by the A.O." The assessee has raised following ground no. 7: "7. For that the Ld. CIT(A)-XII has disallowed the expenses under "Labour Charges" amounting to Rs.7,10,969/- without any basis." 13. Brief facts are that the Assessing Officer required the assessee to explain expenses claimed at Rs.1,65,71,738/-. The Assessing Officer disallowed 20% of the expenses to prevent leakage of revenue as the assessee could not produce complete vouchers and even there was no signature of Station in Charge and even some of the vouchers were undated. It was found by Assessing Officer that these vouchers were signed by assessee himself. Even station in Charge refused to identify assessee and his business. Even there was no communication from some of the labourers i.e. 21 in nos, where notices issued were returned by DOPT with the comment 'not known'. Aggrieved, assessee preferred appeal before CIT(A), who restricted the disallowance at 5% by giving following finding: "As seen from the facts of the case, the station-in-charges statio....
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....owance to 5% instead of 2O% disallowance. Accordingly, the disallowance upto 5% of Rs.1,42,19.398/- amounting to Rs. 7,10.969/- is sustained. The appellant gets a relief of Rs.21,32,910/- on this ground. The ground of appeal is partly allowed." 14. We find that the lower authorities have made disallowance of 20% of labour expenses just to avoid revenue leakage as the vouchers are signed by the owner and not station in charge. It is also a charge by revenue that the labourers are not available at the given address and vouchers are self-made vouchers without date (some). From the above facts, we find that none of the authorities below have quantified the disallowance exactly on the basis of the defective vouchers and no enquiry was carried out by the Assessing Officer despite the fact that complete names and addresses of the labourers and supervisors to whom payments were made in cash was available before the Assessing Officer. Even now the assessee has filed completed details in assessee's paper book at pages 30 to 61 where complete list of labourers and supervisors is given with addresses. We find that without any basis disallowance cannot be made. The AO without carrying out any ....
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.... the appellant. As rightly observed, the labourers showing them as outstanding creditors is an odd feature and definitely cast a doubt on the genuineness of such creditors. Moreover the outstanding sundry creditors for labourers shown are abnormally high. A clear break up of sundry creditors for labour and goods has not been produced. The details produced do not give an idea about quantum of labour payments outstanding. The labourers being daily wage earners cannot wait so long to get their wages paid. Though the AR has given a chart showing break up of figures showing payments made in subsequent year, no evidences produced to the effect that payments were indeed made to labourers who were shown as outstanding. The contention that wage registers are maintained which are subjected to verification by HPCL and that entries in the books shown in the audited books confirm such liability is not tenable. As long as the payments to outstanding labourers remain unproved, the above contentions do not merit consideration. As regards the contention that in the earlier year the same had been accepted is again not acceptable as each year is independent unit of assessment. The findings are differ....