TaxTMI 
TaxTMI 
2016 (6) TMI 331
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....e on the facts and in the law. On the facts and in the circumstances of the case he ought to have allowed deduction in A.Y. 2012 -13 itself. 2. The learned CIT(Appeals) has erred in ruling by confirming the addition of Piece Work Expense of Rs. 1,52,95,475/- u/s 40(a)(ia) in the year under appeal and allowed as deduction in subsequent year. While doing so the Honourable CIT-Appeal has ignored the fact that assessee is a small taxpayer. He is a civil contractor and 70% of the total contract was executed by way of sub-contract i.e. Piece Work. Thus, confirming such substantial amount in year under appeal and allowing in subsequent year will have adverse consequences and financial stress. 3. This results in shifting of the year in which ....
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.... learned Authorized Representatives in this regard. 4. Briefly, in the facts of the present case, the assessee was an individual engaged in the business of Government contract. In addition, the assessee had declared income from house property and other sources. The Assessing Officer on verification of the Profit & Loss Account noted that the assessee had incurred expenditure under the head 'Piece Work' amounting to Rs. 1.52 crores. The assessee was asked to produce the details. The assessee submitted that the piece work is similar to the sub-contract, where the contract or a part of it is executed by another person or a company. The assessee in this regard produced ledger extract of said expenditure in his books of account. The Assessing O....
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....ed to the income of the assessee. 5. The CIT(A) upheld the order of Assessing Officer by rejecting the plea of assessee with regard to the amount being paid during the year under consideration and nothing being payable at the end of year. In respect of second claim of the assessee of applicability of proviso to section 40(a)(ia) of the Act, he held that from the combined reading of section 40(a)(ia) of the Act and proviso to the said section clearly lays down that the deduction of expenditure was to be disallowed in the year in which it was incurred, but the same is to be allowed in the year in which the payee of the expenditure has filed return of income. In view thereof, the CIT(A) held that insertion of proviso to section 40(a)(ia) of t....
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....ving been paid by the assessee to the payee, did not attract the TDS provisions. We find no merit in the said claim of assessee, in view of various decisions rendered by Pune Bench of Tribunal and reference is being made to ITA No.1752/PN/2013, relating to assessment year 2007-08, order dated 20.02.2015. 8. Now, coming to the second aspect of the issue. The assessee claims that once he had made payments to the sub-contractor, who in turn, had accepted the same as its receipts and had paid taxes thereon and also furnished return of income under section 139(1) of the Act, then the assessee was prevented from deducting the tax at source. We find that the Finance Act, 2012 has inserted a proviso to section 40(a)(ia) of the Act, which inter ali....
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....r dated 16.12.2015, in turn following the ratio laid down by it in ACIT Vs. Bhavook Chandraprakash Tripathi (2015) 43 CCH 292 (Pune-Trib) have held that the proviso to section 40(a)(ia) of the Act is to be applied retrospectively to all pending assessments. The relevant findings of the Tribunal are as under:- "10. Now, coming to the second aspect of the issue i.e. new legal plea raised by the assessee in view of second proviso to section 40(a)(ia) of the Act, which was inserted by the Finance Act, 2012. The Tribunal in ACIT Vs. Bhavook Chandraprakash Tripathi (supra) while adjudicating similar issue had observed as under:- "4. Following the aforesaid precedent, we hereby reverse the decision of the CIT(A). However, at the time of heari....
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.... matter be restored back to the file of the Assessing Officer in the light of the order of the Tribunal dated 06,01.2014 (supra). The aforesaid plea of the respondent-assessee has not been seriously opposed by the Ld. Departmental Representative appearing for the Revenue. 5. Following the aforesaid precedent, we therefore deem it fit and proper to restore the matter back to the file of the Assessing Officer who shall consider the plea of the assessee based on the second proviso to section 40(a)(ia) of the Act inserted by the Finance Act w.e.f. 01.04.2013 in the light of the directions of the Tribunal contained in its order dated 06.01.2014 (supra). Needless to say, the Assessing Officer shall allow the assessee a reasonable opportunity o....