TaxTMI 
TaxTMI 
2016 (7) TMI 611
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.... That on the facts and circumstances of the case, Ld. CIT(A) has erred in holding that there was mere change of opinion, where the A.O. had totally overlooked the issue in the original assessment. iii) That on the facts and circumstances of the case, Ld. CIT(A) has erred to delete the addition made by the A.O. u/s. 40(a)(ia) by discussing the provision of section 194C(1), where the A.O. has applied the provision of section 194C(2) of the Act while making the disallowance u/s.40(a)(ia) of the Act. iv) That on the facts and circumstances of the case, Ld. CIT(A) has erred to apply the provision of section 194C(1) of the Act, where the assessee, being Contractor, made payment to sub-contractor and violated the provision of Section 194C(2) o....
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....ed tax at source while making payments towards Dyeing & Printing Charges to various parties as per ledger. Therefore. you are directed to show cause as to why Rs. 63,11,804/- claimed as 'Dyeing & Printing charges' should not disallowed U/s.40(a)(ia) of the IT. Act, 1961 and added back to the total income for the relevant A. Y under consideration. It is further confirmed that you are still assessed under this jurisdiction and no file has been transferred to Surat 1. T. office ". 5. In response to the notice issued u/s 148 of the Act the assessee sent a letter on 21.10.2005 requesting the AO to treat the return originally filed on 21.10.2005 as a return filed in response to notice u/s 148 of the Act. In the re-assessment proceedings the qu....
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....al assessment. The ld.A.O. had also verified books of a/c along with voucher of Dyeing & Printing charges which were produced by the Assessee before him and is deemd to have accepted the plea of the Assessee as he did not make any addition u/s.40(a)(ia) of the Act. 7. It was further submitted that as per Provisions of Section 194C of the Act as applicable for the Asst. Year 2005/06, no TDS was deductable by the individual or HUF from contractors. Only a contractor (being Individual or HUF) had to deduct tax @ l% on payments made to sub-contractor and this was the purport of proviso to Sec.194C(2) of the Act. It was submitted that the re-assessment proceeding u/s.147 was initiated on mere change of opinion, which is not permissible. The Ass....
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....s :- (a) CIT v. Kelvinator of India Ltd(2010) 320 ITR 561 (S.C.) (b) CIT v. Usha International Ltd (2012) 251 CTR 113 (FB) (Delhi) The Ground of appeal No.1 of the assessee is allowed and the reassessment order is cancelled. (2) The provisions of Section 194C as applicable during A. Y. 2005-06 did not cover the cases of Individuals and HUFs. The amendment relied upon by the A.O. came to force Jonly w.e.f. 0l.06.2007 when clause (k) was inserted in Section 194C(1) of the Act. The assessee has not made any payment to a sub-contractor. All his payments are to contractors. Thus the action of the A.O. in making a disallowance u/s.40(a)(ia) of the Act is misplaced. Reliance is placed on the following among others :- (a) CBDT Circular No.3 of....
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....nded to the assessee, who is an individual. From the reasons recorded by the AO u/s 148 of the Act it is clear that without any new material coming to the possession of the AO had merely a change of opinion, reassessment proceedings have been initiated by the AO. Such a course is not permissible as held by the Hon'ble Supreme Court in the case of CIT vs M/s. Kelvinator of India Ltd. (supra). We therefore are of the opinion that the conclusion of CIT(A) that initiation of re-assessment proceedings was merely a change of opinion and therefore invalid is just and proper and calls for no interference. We are of the view that the provision of section 194C (2) of the Act apply to a contractor and not to a person such as the assessee who was a tra....