TaxTMI 
TaxTMI 
2017 (5) TMI 358
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....ailable on record. 3. The only issue in this appeal of revenue is to be decided as to whether the CIT-A justified in deleting the addition of Rs. 1,26,52,944/- made on account of payment of wages to labour sardars for non deduction of TDS in the facts and circumstances of the case. 4. The brie facts of the case are that the assessee being an individual filed his e-return on 27-09-2010 disclosing total income of Rs. 21,29,065/- and that the assessee is engaged in contractual work. Statutory notices u/s. 143(2)/142(1) of the Act were issued. Against which, the ld.AR of assessee time to time appeared and furnished documents and explanations in support of assessee's filing of said return. During the assessment proceedings the AO found that the assessee made payment to the labour sardars/labour contractors without deduction of TDS, which is mandatory as per provisions of section 194C of the Act. The assessee claimed such expenditure of Rs. 1,26,52,944/- in his return. The assessee submitted before him that the labour sardars are neither the contractors nor the sub-contractors. The labour sardars are employed/deployed by the labour union to collect the money in bulk and distribute the ....
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....ged through Trade Union. Further contract is executed by him and he has not subcontracted any part of work to execute the contract. The fact is that the so called 'labour sardars 'are not suppliers of labourers but facilitators for payment of wages. 25. Considering all aspects the case as discussed above, I hold that the payments to labour sardars are not the ones falling in ambit of section 194C. Accordingly I direct Assessing Officer to delete the addition of Rs. 1,26,52,944/-. Ground 6 is accordingly allowed." 7. Before us the ld.DR fairly conceded and submits that it is a case where the Kolkata Tribunal passed various orders on this issue in favour of assessee, wherein the Tribunal held that the labour sardars/labour contractors neither beneficiaries nor the contractors/suppliers of labours. 8. Heard ld.DR and perused material available on record. We find that the Coordinate Bench of Kolkata Tribunal in the case of M/s. Kwality Construction by an order dt:14.10.2016 I.T.A No. 18/Kol/2014 Assessment Year: 2009-10. Relevant portion of findings are reproduced herein below for better realization:- 7.1. We find that the ld CITA had deleted the disallowance on the groun....
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....decision of this tribunal in the case of ACIT vs Supreme Construction in ITA No. 1252/Kol/2013 dated 7.9.2016 had held as under:- "9. We have heard rival contentions of both the parties and perused the materials available on record. At the outset, we find that AO has called the labour contractors by issuing summons u/s. 131 of the Act and their statements were duly recorded. The AO failed to bring anything on record that the labour charges were paid in pursuance of contract either in writing or the oral with the labour sardar. The AO has held that the assessee has not complied the provision of Sec. 194C r.w.s. 40(a)(ia) of the Act on the presumption and surmise. There is no evidence that the payments have been made to the contractors. We do not find any merit in the arguments placed by Ld. DR in this connection. The AO has given the clear finding in his order which is as follows : "In my opinion, all these labourers who are treated as Labour Sardars are enjoying some privileged position in the eyes of assessee because the assessee collects other ITA No. 18/Kol/2014 M/s. Kwality Construction, AY 2009-10 labourers through them, make payments to the other labourers in their presen....
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....of a contract which is the most important essence of a contract job and is a primary requirement for the application of s. 194C-- Labour Sardars in the present case has no locus standi as labour contractor as a labour Sardar and a labour contractor are as different as chalk and cheese--There was no contract between the assessee and the labour Sardars for supply of labourers and without which there cannot be any application of s. 194C and as such the invocation of provision of s. 40(a)(ia) is outside the scope and ambit of such enactment" Relying in the aforesaid decisions we find that there is nothing on record to suggest that the payment to labourers were paid to the contractors. On the contrary, assessee has made payment to labourers directly and in support of its claim, Ld. AR of assessee has produced the muster roll. In this regard, Ld. DR failed to bring any defect / information from the muster roll which suggested that the labour charges paid by assessee are subject to TDS. Since no cogent material has been brought on record, in our considered opinion, AO was not justified in invoking the provision of Sec. 194C r.w.s. 40(a)(ia) of the Act. In the background of the above dis....