TaxTMI 
TaxTMI 
2012 (10) TMI 1038
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....ntractor. During the year total contractual receipts of Rs. 5,76,23,108/- have been shown on which gross profit and net profit of Rs. 31,54,276/- and Rs. 19,52,991/- respectively have been declared. The AO made addition of Rs. 38,65,490/- on account of disallowance of hire charges. According to the assessment order, the assessee has paid the said amount to Shri Girraj Sharma, on which no TDS has been deducted. The assessee's submission that payment has been made to 39 parties for lifting of earth (MITTI) by tractors has not been accepted by the AO on the basis of labour account produced by the assessee. Therefore, disallowance was made as per section 40(a)(ia) of the IT Act. The assessee reiterated the same submissions before the ld. CIT(A) and also submitted that each payment in each case was below Rs. 1,20,000/-. Therefore, no TDS was required to be deducted from such parties. The assessee also submitted copy of the order u/s. 143(1) of Shri Girraj Sharma for assessment year 2008-09 and 2009-10 along with copy of return for the assessment year 2009-10 and 2010-11. The ld. CIT(A) considering the explanation of the assessee confirmed the addition. His findings in para 3.2 of the....
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.... State Bank of India A/c Cheque No.982883 Payment 15,00,000.00 1-2008 Dr Material purchase A/c Journal 65,464.00 Being material; purchase 1-2008 Cr State Bank of India A/c Cheque No. 982887 Payment 24,72,126.00 3-2008 Cr Cash Paymen 14,268.00 Being cash paid 39,86,394.00 39,86,394.00 Thus, the appellant's submissions that payment to different 39 parties requiring no TDS is not found acceptable. The fact that there is no written contract with Shri Girraj Sharma and the transactions have been done in pursuance of oral agreement does not absolve the appellant of the statutory requirement of deducting TDS at prescribed percentage in relation to payments made for hire charges incurred for transportation of earth. Thus, the provisions of sec. 40(a)(ia) are found clearly applicable in case of the appellant in respect of payments made to Sh. Girraj Sharma on which no TDS has been deducted. Accordingly, addition of Rs. 38,65,490/- made u/s. 40(a)(ia) is, hereby, confirmed." 3.1 The assessee also raised additional ground, in which the....
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..../Agr/2011 in the case of M/s. Pee Cee Cosma Sope Limited vide order dated 11.05.2012. The ld. Authorised Representative drew our attention on the relevant grounds of appeal of M/s. Pee Cee Cosma Sope Limited which are reproduced as under for ready reference:- "1. Because the Ld. CIT(A) has wrongly, illegally and arbitrarily confirmed the addition of Rs. 14,93,965/- made by the Assessing Officer by applying the provision of section 40(a)(ia) of the Act. The Ld. CIT(A) has erred in rejecting the appellant's submission and in ignoring the facts of the case. 2. Because the Ld. CIT(A) while confirming the addition of Rs. 14,93,965/- has erred in ignoring the legal position that section 40(a)(ia) is applicable only in the case where the amount is payable on the last day of previous year. All the payments as reimbursement of expenses has been made time to time during the year and n amount is payable on the last day of previous year. The addition on this ground is totally unwarranted and deserves to be deleted. 3. Because the Ld. CIT(A) has erred in not adjudicating ground no.5 taken before him." 10. The finding of I.T.A.T., Agra Bench in the said case pointed out by the ld. Au....
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....as already been decided by I.T.A.T., Agra Bench in the case of M/s. Pee Cee Cosma Sope Limited in ITA No.434/Agr/2011 order dated 11.05.2012. Since the facts are identical, therefore, to maintain consistency, we follow the above order dated 11.05.2012 of I.T.A.T. Agra Bench in the case of M/s. Pee Cee Cosma Sope Limited in ITA No.434/Agra/2011. In the light of that, the issue raised in ground nos.1 to 5 in ITA no.29/Agr/2009 in the case M/s. Pee Cee Soap & Chemicals (P) Limited and ground nos.1 to 5 in ITA No.28/Agr/2009 in the case of M/s. Suraj Bhan Agencies (P) Limited are decided accordingly with identical directions. The A.O. is directed accordingly." The ITAT, Vishakhapatnam Special Bench in the case of Merilyn Shipping & Transports vs. Addl. CIT (supra) held as under : "The provisions of section 40a(ia) cannot be invoked with respect to the aforesaid payments which were actually paid during the financial year but it can be invoked with respect to the amount which remained payable as on 31.3.2005 and no TDS was deducted therefrom." 5.1 Since in the case of the assessee, the payment in question is alleged to have been made during the curse of assessment year under app....
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....t for these expenses, normally vouchers are not completely maintained. These findings of the ld. CIT() have not been rebutted by the ld. Counsel for the assessee. The ld. CIT(A), however, considering that the assessee maintained proper books of account, which are also audited and substantial vouchers have been produced rightly reduced the disallowance from 20% to 5% on this issue. We, therefore, do not find any justification to interfere with the order of the ld. CIT(A) on these grounds of appeal of both the parties. The order of the ld. CIT(A) is maintained and ground No. 2 of appeal of the assessee and ground No. 3 of Revenue's appeal are, accordingly, dismissed. 7.1 There is no other effective ground of appeal in the appeal of the assessee. In the result, the appeal of the assessee is partly allowed for statistical purposes. Issue No.3 : 8. The Revenue on ground No.1 of its appeal challenged the deletion of addition of Rs. 42,70,290/- made u/s. 40(a)(ia) of the IT Act. The AO made above addition on account of disallowance of labour expenses. The assessee has shown payment of Rs. 40,45,290/- to M/s. Ravi Construction Co. and of Rs. 2,25,000/- to Mr. Uttam Singh as labour....
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.... Shri Uttam Singh is for supply of gitti is not found acceptable, as the said payment has admittedly been made for supply of labour by him; but at the same time, there is no evidence on record either to show that he has been paid in violation of provisions of sec. 40(a)(ia) or that he has made payment of Rs. 2,25,000/- to labour. A.O. is accordingly not found justified in making disallowance of Rs. 2,25,000/- made u/s. 40(a)(ia) for payment made to Shri Uttam Singh at Rs. 2,25,000/-. The same is, hereby, deleted. In respect of payment made to M/s. Ravi Construction for Rs. 40,45,290/-, it is seen that the appellant has entered into an agreement on 11.02.2006 with M/s. Ravi Construction Co., a partnership firm having registered office at Morena and administrative office at Gwalior making the appellant sub-contractor of M/s. Ravi Construction Co. who has been awarded contract works worth Rs. 3.94 crores by MPRRDA vide agreement dtd. 10.02.2006. The appellant has executed this work as sub-contractor @ 2% below than the rates quoted by M/s. Ravi Construction Co. Required TDS on this agreement for execution of works has also been deducted and deposited accordingly as per TDS certi....
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....deleted the addition by holding that none of the payments have exceeded the prescribed limit. It appears that the assessee has manipulated and concocted record just to circumvent the TDS provisions by debiting the amount in the name of Shri Uttam Singh. The ld. CIT(A) also without any reasons held that there is no violation of provisions of law. The assessee, therefore, made contrary plea. Therefore, the ld. CIT(A) without verifying the facts and without going through the findings of the AO should not have deleted the addition of Rs. 2,25,000/-. In the case of M/s. Ravi Construction Co. also, the AO found that the assessee has made payment to M/s. Ravi Construction Co. and not to the individual labourers. But before the ld. CIT(A), the assessee claimed that payments have been made to large of labourers which is below the prescribed limit. The copy of the account of Ravi Construction Co. also supports the case of the AO that in fact payment has been made to M/s. Ravi Construction Co. and not to the individual labourers. Therefore, the ld. CIT(A) was not justified in deleting the addition of Rs. 40,45,290/-. It was not the payment made to petty labourers. The assessee took contrary p....