TaxTMI 
TaxTMI 
2015 (11) TMI 746
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....ding that assessee sold more quantity than the purchases quantity." 2. Grounds No. (i) and (iii) of the revenue's appeal are against deleting the addition of Rs. 51,66,768/- made by the Assessing Officer U/s 69 of the Income Tax Act, 1961 (hereinafter referred as the Act) and Rs. 15,07,235/- made by him on account of unexplained investment by the Ld. CIT(A). The ld. Assessing Officer observed that the assessee is a contractor of Rajasthan State Electricity Board (in short the RSEB). The assessee is an individual and proprietor of Hind Construction. The assessee filed its original return of income declaring total income of Rs. 30,64,625/- on 29.09.2009. His case was scrutinized U/s 143(3) of the Act. M/s Hind Construction is a registered contractor of RSEB and engaged in the work of installation of underground cable for Jaipur VVNL, Ajmer VVNL and Jodhpur VVNL. The Assessing Officer observed that on verification of the trading and P&L account, there was no opening stock but on examination of sale book of the assessee, it was seen that a sale of Rs. 51,66,768/- of 101.813 KM of cable was made on 17/04/2008, while assessee had no stock of its own. Further the purchases made by the ....
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....rocedure adopted by the assessee was that after contract was awarded to him, he directed the contractor to arrange the goods as he was not a manufacturer. The electrical companies such as Jaipur Vidyut Vitran Nigam Limited then inspected the goods at the factory site of the supplier. After inspection, the goods were sent for testing at the laboratory of the electrical companies. After the sample was approved and communicated to the assessee, he raised the bill. However, goods were directly supplied by the contractor/supplier at the site of electrical companies. The assessee raised a challan for the actual quantity of goods supplied by his supplier directly to the electrical companies. On this challan, endorsement was made by the stores in charge of the electrical companies certifying the receipt of material. Under these circumstances, the appellant never kept any stock of goods at his premises and goods were directly supplied by the supplier at the site of electrical companies. The dispute in the present case was whether the assessee had undisclosed stock from which it supplied the goods on 17.04.2008 and thereafter the same was replenished by the purchases made on 18.04.2008 and 1....
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.... supply of the material than the invoiced quantity for which deduction was made by JVVNL. It happened many a times that when cable lines were being dismantled and the old cable was found to be in order and reusable, then the old cables were again reused alongwith the new cables. However, the assessee has raised the bill on the basis of actual quantity of goods being supplied by the supplier. After inspection, if the officials of JVVNL found out that old cable lines were again reinstalled then they made the necessary deductions from the bills. The A.O. had worked out the amount of undisclosed investment by holding that the assessee had failed to prove that the deductions made by JVVNL were in respect of the short supply of the material of 47.905 km. On the other hand, the counsel of the appellant has argued that the variation was on account of lesser supply of the material and partly the use of the old/dismantled cables for which the JVVNL had made the deductions under the head "RMD deductions". In support of this, the payment advice issued by JVVNL showing the RMD deduction were filed by the assessee. The details of deductions by JVVNL were provided to the A.O. vide letters dated 0....
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....ll is supplied, the assessee raises a Challan of the actual quantity of goods supplied by its supplier directly to the site of the electricity companies. (f) On this Challan endorsement is made by the store incharge of the electricity companies certifying the receipt of the material with the necessary details of the truck no. and the bill number through which the supplier of the assessee supplied the material. (g) Thereafter bill is passed for making necessary payment. 2. In the present case, the assessee procured the material to be supplied to the electricity company from Galaxy Concab India Private Limited. This material was inspected on 11-04- 2008, a sample was taken and it was tested in the laboratory on 17-04-2008. Once the material was passed, the same was communicated to the assessee and accordingly assessee raised the bill dated 17-04-2008 on the electricity company for the cable quantity of 101.813 KM informed by his supplier. 3. Thereafter the supplier dispatched the material directly to the site of the electricity company through four delivery challan no. 17 & 18 dated 18-04-2008 and 19 & 20 dated 19-04-2008. The delivery challan contain the details of the t....
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.... (Date) Total Bill Amount Security Deduction 35% as per agreement VAT Total Receivable TDS & WCT RMD PENALTY /DUTY Others WCT of the Previous Year 1 (17.4.2008) 5166268 1808194 206651 3564725 402827 363668 3 (4.5.2008) 2567937 898778 102717 1771877 1048251 180764 7 (17.5.2008) 2545305 890857 101812 1756260 92485 179172 9 (30.7.2008) 2561188 896416 102448 1767220 93062 180330 11 (4.8.2008) 2594576 908102 103784 1790258 94275 182640 10 (4.8.2008) 1270381 444633 50815 876563 46160 89426 15/16 (17.11.2008) 5084167 1779458 203367 3508075 184736 357889 19 (21.1.2009) 2536679 887838 101467 1750309 92171 271877 129754 Total 1805766 Copy of all the above bills is at. From the above table it can be noted that the JVVNL has made the deductions for lesser supply of the material/use of dis....
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....gory of bank or financial institution through provisions of Section 40(a)(ia) of the Act is squarely applicable as no TDS has been deducted on it. Therefore, the ld Assessing Officer made addition of Rs. 9,21,058/- U/s 40(a)(ia) of the Act. 8. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the Ld. CIT(A), who had allowed the appeal by observing that Section 40(a)(ia) of the Act is fiction of law, which required to be construed strictly. The language of Section 40(a)(ia) of the Act provides for non deductibility of certain amounts which is payable on which tax is deductible and such tax has not been deducted. Therefore, the non deductibility would arise only when tax is not deducted on an amount which is payable. If an amount has been actually paid without deduction of tax at source, section 40(a)(ia) would not apply on such payment. In Chapter XVII B, the liability of deduction of tax at source arises both at the time of payment or at the time of credit whichever is earlier U/s 40(a)(ia), the expenses are not allowable only when tax is not deducted on the payment outstanding at the year end. This view finds support from the recent d....
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....a Special Leave Petition (SLP) in the Supreme Court which was dismissed by the Supreme Court vide its order dt.02.07.2014. Thus, there are two views on this issue, one in favour of the assessee and other against the assessee. Considering these views, the various benches of Hon'ble ITAT, after considering the various amendment made to section 40(a)(ia) from time to time to remove the undue hardship and considering the decision of Supreme Court in case of CIT Vs. Vegetable Products Ltd. 88 ITR 192 where it is held that when two views are possible on an issue, the view in favour of the assessee has to be preferred deleted the disallowance. He also relied on the following case laws: (i) DCIT Vs. Ananda Marakala (2014) 150 ITD 323 (Bang.) (Trib.) (ii) ITO Vs. M/s Theekathir Press (Chennai)(Trib.) ITA No. 2076(Mds)2012 dt. 18.09.2013 The issue of applicability of TDS on amount payable as on 31st march only is also covered by the decision of the Hon'ble ITAT Jaipur Bench in case of JVVNL V. DCIT 123 TTJ 888 wherein it was held that section 40(a)(ia) applies only when the amount is payable and not where the expenditure is paid. Therefore where the assessee has made actual payment, th....
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.... results into undue hardship and therefore In order to reduce the hardship, it is proposed that in case of non-deduction or non-payment of TDS on payments made to residents as specified in section 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the amount of expenditure claimed." The Finance Minister while introducing the amendment in para 207 of the Budget Speech has stated as under:- "207. Currently, where an assessee fails to deduct and pay tax on specified payments to residents, 100 percent of such payments are not allowed as deduction while computing his income. This has caused undue hardship to taxpayers, particularly where the rate of tax is only 1 to 10%. Hence, I propose to provide that instead of 100 percent, only 30% of such payments will be disallowed." From the above it can be noted that the amendment made by FA (No.2) Act, 2014 w.e.f. 01.04.2015 is to remove unintended and undue hardship and therefore this amendment should be give retrospective effect as per the various decisions stated above. It is also submitted that the Supreme Court in case of CIT Vs. Vatika Township Pvt. Ltd. 109 DTR 33 has held that legislations which modify accrued....