TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 831
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....nly issue in Revenue's appeal is that the Ld. CIT(A) erred in deleting the addition of Rs. 81,88,864/- made u/s. 40(a)(ia) of the Act. 3. Brief facts are that the assessee is engaged in the business of Embroidery & Jari work on contract basis. The return of income was filed on 31.10.2006 declaring total income at Rs. 8,01,830/-. The assessment was completed u/s. 143(3) of the Act on 12th December, 2008. In the course of assessment proceedings, the Assessing Officer noticed that the assessee has debited labour charges of Rs. 1,29,56,796/- to its profit and loss account and no TDS has been deducted by the assessee. Since the assessee failed to furnish in respect of TDS made u/s. 194C of the Act on labour charges, the AO disallowed Rs. 81,88,....
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....etion of disallowance made u/s. 40(a)(ia) is concerned. In respect of the confirmation of disallowance to the extent of @20% he submits that there is no justification in sustaining such disallowance without appreciating the fact that during the course of remand proceedings the assessee has produced the details of the parties to whom the payments have beenmade and they submitted their PAN card, Driving licence, Adhar Card and confirmation letters accepting the amounts received towards labour charges. 6. The Ld. Departmental Representative supports the orders of the AO. 7. Heard both sides, perused the orders of the lower authorities. The AO while completing the assessment noticed that assessee has not deducted TDS on labour charges and the....
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....g the workers. However, bank account details, were furnished by two out of the three persons only, which too were incomplete. The appellant however, stated that even though the payment has been made in lump sum to the main 'karigars', the same has been distributed to various workers as 'wages, and TDS is not applicable to wages. I, therefore, from the details furnished alongwith the remand report find that the appellant is carrying out embroidery and zari work through persons to whom he has made lump sum payment. It has not been disputed that payment has been made to 'karigars'. These payments are in lieu of services of 'karigars' taken by the appellant. Therefore, the nature of work carried out by the 'karig....
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.... sufficient opportunity is not pressed. Therefore the same is dismissed as not pressed. 10. In so far as the adhoc disallowance sustained by the Ld. CIT(A), the Ld. Counsel submits that the CIT(A) is not justified in confirming the disallowance without appreciating the fact that in the course of assessment proceedings, the assessee had produced the parties and they had submitted the PAN, bank account copy and also confirmed that they have received the labour charges. Therefore he submits that it cannot be said that the payment and incurring of expenses are not genuine. 11. The Ld. DR vehemently supports the orders of the lower authorities. 12. We find from the Ld. CIT(A)'s order that in the remand proceedings on examining the persons to ....
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....s appear in the annexure submitted by the assessee to whom he has claimed to have paid labour charge/wages. They have produced their ID proof viz. PAN card, Driving Iicence and Adhaar card (issued by Unique Identification Authority of India). They have agreed before me that they were the main 'Karigars' during the relevant period and received payments from the assessee by way of either in cheque or cash. At present they are not doing any work for the assessee. In order to ascertain whether they have actually received the payments for distribution amongst the workers, their pass books were called for examination. Copy of the books of Shaikh Alam. Mohammed for the period 1.1.2006 to 31.12. 2009 maintained with Development Credit Bank,....
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....pliance with the provisions of 194C of the Act on the payments made in lump sum to karigars, he has stated that no tax were deducted at source. He had also not obtained any certificate u/s 197 for non deduction or low deduction of TDS from the department. The assessee has stated the reason for non deduction TDS is that these payments do not fall under the category of contract. The assessee did not enter into any contract and as such there is no contract agreement between the assessee and the karigars. Further, the assessee has stated that even though the payment is made in lump sum to the main karigars, the same is distributed to various workers as wages on which TDS is not applicable. At the time of assessment stage the assessee had stated....