TaxTMI 
TaxTMI 
2015 (5) TMI 640
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....out jurisdiction be deleted. 2. On the facts and in the circumstances of the case and in law the ld. CIT(A) erred in not following properly the interpretation of s. 40(a)(ia) starting the non-obsente clause "Nothwithstanding anything to the contrary in s. 30 to 38" and s. 40(a)(ia) being applicable in respect of deductions claimed without TDS. Since the payments claimed are "direct expenditure" under s. 28 & 29 therefore, disallowance made by A.O. and confirmed by the CIT(A) is illegal and without jurisdiction. The disallowance be quashed. 3. On the facts and in the circumstances of the case and in law the disallowance made of Rs. 1,03,72,141 invoking provisions of s. 40(a)(ia) r.w.s. 194C(2) for non-deduction of tax at source was not proper. It is contrary to the provisions of law. The payment comprised in the expenditure was already paid and there was no liability on account of such payment remaining at the end of the year. The disallowance be deleted. 4. On the facts and in the circumstances of the case and in law the ld. CIT(A) was not justified in confirming the addition of Rs. 1,55,42,485 made by the A.O. being "gross receipt" as such received by the appellant and since on....
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....the entire expenditure of Rs. 1,03,72,141/- was added to the income of the assessee. 5. The CIT(A) noted that the claim of the assessee was that the impugned payments were directly made to the labourers and there was no contract, either oral or written, between the assessee and the labourers to attract the provisions of section 194C(2) of the Act warranting the deduction of tax at source from such payments. The CIT(A) noted that the sum of Rs. 82,80,000/- was paid to Aurangabad Road sub-contractor payment and was debited as such to the Profit & Loss account. Another entry made by the assessee to the Profit & Loss account was of Aurangabad Site labour payment at Rs. 6,69,190/-. The CIT(A) in this regard observed that in case other amount of Rs. 82,80,000/- was also labour payment as claimed by the assessee it would have been included in the same account and not under separate account. Further, on a perusal of the vouchers, the CIT(A) noted that the vouchers have striking similarities and the signature of the alleged payees were same. Further, the payments to the persons were shown to have been made in cash and, therefore, the claim of the assessee was not amenable to independent ve....
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....e A.R. for the assessee that it had taken work order from Ashoka Build Con from whose receipts tax was deducted at source. The Assessing Officer employed labour and also machinery and tools and executed the contracts by employing labourers. Reliance was placed on the ratio laid down by the Hon'ble Gujarat High Court in CIT v. Prashant H. Shah . Further, it was pointed out by the A.R. that since the assessee had executed the work on its own, there was no liability to deduct tax at source. Reliance in this regard was placed upon the ratio laid down in CIT v. Vishnudutt Sharma. Our attention was drawn to work order placed at Pages 3 to 10 of the paper book. It was vehemently argued by the A.R. that there was no work contract with the service provider/labourers' Jamadar. The payment was made as per the labour laws. 7. The D.R., referring to the observations of the Assessing Officer pointed out that the payments were made through the labourers Jamadars who would be treated as sub-contractor. Admittedly, there was no written contract between the two. It was further pointed out by the D.R. that the payments were not made to individuals but subcontract was given to different perso....
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....persons and as such, the provisions of section 194C(2) of the Act were attracted. Since the assessee had failed to deduct tax at source out of said payments being made to the said persons, the provisions of section 40(a)(ia) of the Act were attracted and in view of non-deduction of tax at source, the said amount was not allowable as an expenditure. 11. The case of the assessee on the other hand was that, he was only responsible for the execution of the work and no part of such liability was fastened on the workers who were employed by the assessee on daily wages. As the relationship of contractor and subcontractor was missing, there was no liability to deduct tax at source. The assessee claims that the work was contracted by M/s. ABL in favour of the assessee and against the said receipts, tax was deducted at source by M/s.ABL. 12. The pre-amended provisions of section 194C(2) of the Act read as under:- "(2) Any person (being a contractor and not being an individual or a Hindu undivided family) responsible for paying any sum to any resident (hereinafter in this section referred to as the subcontractor) in pursuance of a contract with the sub-contractor for carrying out, or for t....
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....arrying on the work and there is no responsibility on the labour, except to do its work within the stipulated day or night, then such employment of labourers cannot part take the nature of sub-contract in the hands of the contractor, who has engaged the said persons to carry out a particular work in the manner the contractor so desires. 14. The case of the assessee before us was that it had been given certain work orders by M/s. ABL and in order to execute the said work orders which were purely labour oriented, it had engaged various labourers through Jamadar for carrying out the work to whom, the payments on day-to-day basis were being made, does not establish a sub-contract between the assessee and such labourers or the provider of the labourers. Such engagement of labourers by the assessee contractor, under which no risk and responsibility associated with the contract was passed on, does not establish the case of the Revenue that there was a sub-contract between the assessee and such labourers. 15. The perusal of the work order issued by M/s. ABL in favour of the assessee reflects that the assessee was enshrined with the job of supply of labour for earth work and transportatio....
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....y because the Jamadar in-charge of the labourers was collecting payments from the assessee and distributing the same to the labourers, does not establish the existence of sub-contract between the assessee and such Jamadar/labourers. The assessee was solely responsible for the execution of the work order and no part of such responsibility was fastened upon the Jamadar or labourers. The assessee had only availed the services of such Jamadar/Labourers for carrying out the job work and it in no way was case of relationship between the assessee contractor and the Jamadar/Labourers in the capacity of sub-contractor. In the absence of any understanding or contract between the parties, whether oral or written, there is no requirement under the Act to deduct tax at source out of such payments. The payments made by the assessee being relatable to the carrying on the business, are to be allowed as revenue expenditure in the hands of the assessee. 17. We find support from the ratio laid down by Hon'ble Gujarat High Court in Prashant H. Shah's case (supra) and in Vishnudutt Sharma's case (supra), copies of which are placed on record at pages 11 to 22 and 39 to 43 of the Paper Book.....
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.... it is a case of sub-contractor. Merely, in order to better manage its affairs vis-à-vis the different work orders received by it and such works being carried out at different places on account of different works, does not establish that the assessee had transferred any part of its responsibilities and obligations to the said persons. Merely because, the services of the labourers through Jamadar were utilized by the assessee does not establish that there was an understanding for transfer of responsibilities through the said persons to carry out any part of the job work, which was the sole responsibility of the assessee contractor. In the absence of the same, there was no sub-contract between the parties and hence, no requirement for deduction of tax at source where the assessee in order to execute its work orders had engaged the services of Labourers through Jamadar, the same cannot part take the nature of sub-contract in the absence of any obligation or responsibility being fastened upon the said Jamadar or Labourers. There is no merit in the orders of authorities below. Accordingly, we hold that the assessee is entitled to the claim of deduction of Rs. 1,03,72,141/-. 19. ....
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....eceipts from Flagship Infrastructure Pvt. Ltd. Since the assessee had closed its books of account on 31.03.2008 and all the expenses were already booked, the entire contact receipts of Rs. 1,55,42,485/- was added as income of the assessee under section 69C of the Act. The CIT(A) upheld the order of Assessing Officer. 22. The assessee is also aggrieved by non-grant of opportunity by the CIT(A) before taxing the gross of receipts vide ground of appeal No.6. The learned Authorized Representative for the assessee pointed out that the gross receipts could not be taxed in the hands of the assessee and only the profit element out of the said receipts to be taxed. 23. However, the learned Departmental Representative for the Revenue pointed out that where all the expenses had been claimed and allowed in the hands of the assessee, the gross receipts were to be added to the income of the assessee. Our attention was drawn to the observations of Assessing Officer in para 6 that the details of said receipts came to the knowledge of the Assessing Officer on the basis of e-TDS certificate. The learned Authorized Representative for the assessee in rejoinder pointed out that no expenses were booke....