2015 (4) TMI 1140

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....rtaining to the assessment year 2008-09. 2. In this appeal, the solitary dispute is with regard to disallowance of Rs. 18,23,975/- on account of petty contract charges and Rs. 13,52,950/- on account of hire charges made by the Assessing Officer by invoking section 40(a)(ia) of the Act which has since been deleted by the CIT(A). 3. In brief, the relevant facts are that assessee is a civil contractor engaged in the business of civil construction. During the year under consideration, assessee filed a return of income declaring total income of Rs. 9,06,137/- which was subject to a scrutiny assessment u/s 143(3) of the Act. The Assessing Officer noted that in the Profit & Loss Account, assessee had debited Rs. 18,23,975/- and Rs. 132, 52,9....

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.... "8. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions brought to our notice by both the sides. There is no dispute to the fact that the assessee has not deducted TDS on an amount of Rs. 58,81,847/- for which the Assessing Officer applying the provisions of section 40(a)(ia) made addition of the above amount. We find the Ld.CIT(A) deleted the addition made by the Assessing Officer on the ground that provisions of section 40(a)(ia) are not applicable since no amount is payable at the end of the year. While doing so, he relied upon the decision of the Special Bench o....

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....ra) relied on by Ld. Counsel for the assessee, had an occasion to decide an issue in the light of the above argument and has restored the issue to the file of the Assessing Officer with certain directions. The relevant observation of the Tribunal at Para 7 of the order read as under: "7. We have heard the rival contentions and carefully perused the record. According to the assessee, there is no written contract between him and the persons doing polishing works. Accordingly, the assessee has contended before us that the provisions of sec. 194C shall not apply to the polishing charges. However, we notice that the assessing officer has given a clear finding that essential ingredients of a contract are very much available in the polish....

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....ter carrying out the polishing works according to the taste and requirement of customers. It is only one of the many business techniques normally adopted by a business man to improve his sales, since it will be very difficult for customers to identify the polishing people and get the work done by themselves. Hence, we are of the view that it may not be correct to argue that the contract existed between the customers and the polishing people. In fact, the customer may not have any contact with the polishing people in this type of transactions. Hence, it is hard to believe the claim of the assessee that he has acted as mere conduit pipe between the customers and polishing people, Accordingly, the claim that the assessee stands in a fiduciary ....

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....co-Cola beverages Ltd (supra) in order to contend that the revenue is not entitled to recover taxes, if the recipient has declared the payments in his return of income. We notice that the above said decision was rendered in the context of the provisions of sec. 201(1) and hence, we are of the view that the ratio of the said decision cannot be applied to the disallowance made u/s 40(a)(ia) of the Act, 7.4 The last contention of the assessee is that the second proviso to sec, 40(a)(ia) of the Act, inserted by the Finance Act, 2012 with effect from 1.4.2013 is clarificatory in nature and hence the benefit of the same should be applied retrospectively. However, the correctness of this contention has not been examined by the tax authori....