TaxTMI 
TaxTMI 
2016 (11) TMI 604
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.... for assessment year 2009-10. The grounds raised by the Revenue per its appeal are as under:- "1. That on the fact and in the circumstances of the case, the Ld. CIT(A) erred din law in holding that the hire charges cannot be treated as rent for the purpose of provision of Section 40(a)(ia) of the Income Tax Act overlooking the fact that assessee himself treated the same as rent in his Return of income. 2. That on the facts and circumstances of the case, the Ld. CIT(A) erred in holding that the rent and payments to contractors are not hit by the provision of section 40(a)(ia) of the Income Tax Act without appreciating the fact that section 29 of the Income Tax Act enumerates the deduction to be allowed in computing business....
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.... 6,10,000.00. The AO during the course of assessment proceedings observed that assessee failed to deduct TDS on its expenses incurred towards hiring of Machines under section 194I of the Act and transport charges under section 194C of the Act. The AO also observed that assessee has made the payment exceeding Rs.20,000/- in cash other than crossed cheque or draft to the certain parties towards machine hire charges and therefore assessee has violated the provision of Sec.40A(3) of the Act. Such cash payment was amounting to Rs. 71,01,895/-. The AO found that total disallowance on account of non deduction of TDS is greater than the disallowance made u/s 40A (3) of the Act. Therefore, the AO also disallowed the payment on account of non dedu....
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....ome under the purview of section 30 to 37 of the Act. The recipients of the hire charges already included these payments in their accounts whereby the respective certificates have been filed to that effect. The assessee cannot be considered to be a defaulter us/s 201(1) of the Act i.e. not liable to deduct tax on those payments. There is also no loss to the revenue as such on these transactions since the amounts have already been shown as income in the recipient's hands. For the AY 2008-09, the AO treated the payments as direct cost i.e. sections 194AI and 194C not considered applicable. Case laws submitted have spelt out that views taken by the AO in one year cannot be reversed in the subsequent years unless there is material change in the....
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....13 and the present case pertains to the assessment year 2009-10, therefore the amendments are not applicable to the disputed transactions. Without prejudice to the above Ld. DR further submitted that in case relief in the instant case is given to the assessee for non-deduction of TDS then the addition u/s. 40A(3) should be confirmed for making the cash payment exceeding for Rs.20,000/-. The ld. DR relied in the order of AO. On the other hand, Ld. AR of the assessee filed paper book which is running from pages 1 to 41 and stated that the party to whom hiring charges were paid has shown its receipt in their respective IT return. The ld. AR in support of assessee's claim has submitted the certificates issued by Chartered Accountant which ar....
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....ive or retrospective in operation. On the other hand, submission was that the second proviso effective from April 1, 2013 went to show that the legislature was not in favour of creating undue hardship for assessee and that clause (ia) should not be construed as creating such hardship. The said limited submission of the assessee was dealt with by the Hon'ble High Court in paragraph 21 of its judgment. The question before Hon'ble Calcutta High Court was as to, whether clause (ia) only applied to amount outstanding at the end of the year and not in respect of payments actually made during the previous year or not? Hon'ble Calcutta High Court was pleased to hold that clause (ia) was applicable not only in respect to outstanding amou....
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....trospective effect w.e.f. 1st April, 2005, being a date from which Sec. 40(a)(ia) of the Act was inserted by the Finance (No.2) Act, 2004. In view of this, I am of the view that matter needs fresh adjudication in the light of the fact that the AO will carry out necessary verification in regard to related payments having been taken into account by the recipient in computation of its income and verification of payment of taxes in respect of such income and also filing of income tax return by the recipient. In term of the above, the second aspect argued by Ld. counsel is restored back to the file of the AO and assessee will provide all the details in terms of second proviso to sec. 40(a)(ia) of the Act." From the above precedents, we find t....