2015 (10) TMI 386

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....appeal, therefore, stand dismissed. 3. The second ground is against the confirmation of disallowance of Rs. 6,72,000/- made by the A.O u/s 40(a)(ia) of the Income-tax Act, 1961 (hereinafter also called 'the Act'). Briefly stated the facts of this ground are that the Assessing Officer found the assessee to have made payment of Rs. 6,72,000/- to M/s LDS Engineers on 31.3.2006 towards 'Excavation charges'. On being called upon to explain as to why no tax at source was deducted, the assessee tendered its explanation that LDS Engineers had requested the assessee for not making any deduction of tax at source due to the reasons explained in their letter, a copy of which was also placed before the A.O. Not convinced, the Assessing Officer held t....

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....Here it is pertinent to mention that the TDS was required to be deducted and deposited into the Govt. Account on or before the due date prescribed under sub section (1) of section 200 of I. Tax Act i.e. on or before the 7th day of the following month and in cases where TDS is deducted in the last month of financial year i.e. March 2006 then by the due date prescribed u/s 139(1) of I. Tax Act. Therefore, in view of the amended provisions of section 40(a)(ia) of the I. Tax Act, the aforesaid principal payment of Excavation charges paid to LDS Engineers on 31.3.2006 on which TDS was not deducted, amounting to Rs. 6,72,000/- is not deductible in the Profit & loss account. Therefore, the amount of Rs. 6,72,000/- is disallowed u/s 40(a)(ia) of I.....

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.... sought to be disallowed by him is covered within one of the relevant sections. Only when he makes up his mind that a particular payment made by the assessee requiring deduction of tax at source etc. under a particular section, has been made without such deduction etc., that he can put across his view to the assessee for showing cause as to why no disallowance be made under section 40(a)(ia) of the Act. Then the burden shifts on the assessee to exhibit the reasons as to how the payment made did not violate that section triggering disallowance u/s 40(a)(ia) of the Act. To put in simple words, the Assessing Officer, at the first instance, is under obligation to bring the payment made by the assessee within any of the relevant sections such as....

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....f work'. That is how, he proceeded in this para by holding that the deduction of tax at source was required to be made u/s 194C by taking it as 'work contract'. We are again at loss to appreciate as to how machinery given on a monthly rental can be construed as 'work contract', being a consideration for carriage of goods by any mode of transport, as has been canvassed by the ld. CIT(A). The ld. AR has relied on an order passed by the Delhi bench of the tribunal in ACIT Vs Sanjay Kumar (2011) 15 Taxmann.com 230 (Delhi) in which it has been held that the payment made by the assessee for taking cranes on lease on time basis, did not constitute payment with regard to 'works contract' as defined in sec. 194C and hence the assessee was not requir....