TaxTMI 
TaxTMI 
2016 (11) TMI 667
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....ent Jobs either state level or central level like railways and other Government undertakings since 1982-83. The ld AO observed that the assessee in its profit and loss account debited an amount of Rs. 2,04,79,685/- towards labour charges and details of the same were furnished by the assessee. The ld AO directed the assessee to explain why the labour payments made to 14 labour contractors should not be disallowed u/s 40(a)(ia) of the Act as the same were paid without deduction of tax at source . The assessee submitted the total number of labours working under each labour contractor / labour sardars and stated that the labours are coming from the remote villages and even inter state and they have no knowledge of Income Tax Act. It was submitted that the labour sardars were paid commission from the labour bill which is included in the labour payments. It was further submitted that no payment has been made over Rs. 20,000/- in cash and the overall limit of commission paid to each labour sardar also fall within the limit prescribed u/s 194C of the Act. Accordingly, it was claimed that the question of obligation to deduct tax at source does not arise. The ld....
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....ions of section 194C, viz. (i) there must be a contract must be for carrying out of any work, (iii) the work is to be carried through the contractor, (iv) the consideration for the contract should exceed the amount fixed by section 194C and (v) that the payment is made to the contractor for the work carried out by him. Therefore, section 40(a)(ia) cannot be read in isolation or to the exclusion of section 194C. In the instant case, the controversy was regarding the payments made for disbursement of labour charges to labour sardars. The appellant had specifically stated before the AO that there was no contract between the appellant and the labour sardars. Keeping in view the totality of the facts and circumstances of the case and the submissions of the assessee, I am of the firm opinion that in the instant case, the appellant does not fall within the ambit of section of 40(a)(ia) of the Act. I find force in the argument of the A/R of the appellant that the labour sardars in the instant case cannot be said to be labour contractors within the meaning of the provision of section 194C(2). In the circumstances, there is no requirement in law to deduct tax at source by the appellant under....
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....said ledger account and hence the primary evidences were indeed submitted by the assessee. He argued that the wage registers as called for by the ld AO would be maintained only for permanent labourers and not for temporary labourers. There is no direct contract entered into by the assessee and hence the payments made by the assessee is outside the ambit of provisions of section 194C of the Act. He placed reliance on the following decisions in support of his contentions :- (a) Order of Hon'ble Calcutta High Court in the case of CIT vs Stumm India in ITA No. 127 of 2009 dated 16.8.2010. (b) Decision of this Tribunal in the case of Samanwaya vs ACIT reported in 34 SOT 332 in ITA No. 484 (Kol) of 2008 dated 23.4.2009 . (c) Decision of this Tribunal in the case of ITO vs Saha Agency in ITA No. 2453/Kol/2013 dated 20.5.2016. (d) Decision of this Tribunal in the case of Seaking Enterprise vs ITO in ITA No. 1670/Kol/2009 dated 26.8.2016. (e) Decision of this Tribunal in the case of ACIT vs Supreme Construction in ITA No. 1252/Kol/2013 dated 7.9.2016. 7. We hav....
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....isallowance on the ground that there is no contract entered into by the assessee and the labour sardars. We find that the impugned issue is covered by the decision of the Hon'ble Calcutta High Court in the case of CIT vs Stumm India in ITA No. 127 of 2009 dated 16.8.2010 , wherein it was held that :- "The court: This appeal is sought to be preferred against the judgment and order of the Ld. Tribunal in relation to the assessment year 2005-06, dated October 24, 2008, being aggrieved by a portion of the same. It is urged before us that the learned Tribunal ought not to have accepted the judgment and order of the CIT (Appeal) who has quashed the disallowance of deduction of Rs. 41,33,710/- and on account of tax deduction at source. The learned Tribunal has recorded the fact that the department has not been able to bring any material on record to show that the assessee has made the payment to the transporters in pursuance of contract for carriage of goods of the assessee and the question of deduction at source under section 194C does not and cannot arise. In the absence of evidence of payment made by the assessee to the transporters, the assessee cannot be saddl....
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....abourers in their presence, though there is no written contract. In the absence of any documentary evidence, I can't call them as Labour Sardars but they are enjoying some special status before the assessee. All the payments were made through them as per Books of Accounts whereas the assessee produced the Muster Roll establishing through it that payments were made to the other co-labourers in their presence for the sake of convenience and the amounts were debited in their names only because the assessee can not keep track of all the labourers without the help of these labourers. Though the assessee claims them to be it's labour and these persons have deposed that they are the labourers, yet, I am not fully convinced with their plea that these persons are simply labourers and nothing more than that. From their appearance, dress, behavior and confidence, I am confident that they are the labour sardars, though they are denying this fact. Whether you admit or not but it can not be denied that these persons enjoy some privileged positions in comparison to other labourers." From the above it is amply clear that the AO himself is not sure and forming the opinion on hi....