2017 (6) TMI 248

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....ance of the assessee in its appeal is with regard to disallowance of Rs. 1,07,69,581/- by invoking section 40(a)(ia) of the Act and leviability of interest u/s.234A/234B/234D of the Act. 2.1 The assessee raised the following additional grounds for our adjudication. 1. The Commissioner of Income Tax (Appeals) erred in upholding the disallowance u/s 40(a)(ia) of payments made to the manufacturers observing that the payments in question were required to be made after deduction of tax and as the assessee had not done so such payments would not be an allowable expenditure in terms of the disqualification contained in the provisions of section 40(a)(ia). 2. The Petitioner I appellant submits that on the facts of her case the provisions o....

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....or M/s.Sakthi Masala (P) Ltd., and filed her ti on 01.09.2005 admitting a total income of Rs. 1,56,450/-, which was accepted u/s.143(1) of the Act. Subsequently, the case was selected for scrutiny and the assessment was completed u/s.143(3) of the Act on 31.12.2007 in which the AO disallowed a sum of Rs. 1,07,69,581/- u/s.40(a)(ia) of the Act on the ground that tax was not deducted in respect of payment of job work charges for production of appalam. Aggrieved by the order of ld. Assessing Officer, the assessee carried the appeal before the Ld.CIT(A). On appeal, the Ld.CIT(A) observed that the payments made to the sub contractors were in substance, not payments for purchase of goods, but payments in pursuance of a works contract. The provisi....

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....s), who, in turn, employed several people through whom the Appalams were produced. A sum of Rs.  1,07,69,581/- was shown as job work cooly expenses in the P&L A/c. According to Ld.CIT(A), no TDS was done in respect of these payments made through sub contactors. For non-deduction of TDS in respect of cooly payments, the assessee vide letter date 10.12.2007 put forth the following points before Ld.CIT(A). i) Individual payments will not exceed Rs.  50,000/-, all the labourers are native of villages and are illiterate ii) They are not employees of the assessee. Their work is seasonal. iii) The basis nature of appalam making is that of a cottage industries, in which there is constant mobility of labour. iv) In a cottage in....

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....ubcontractors.) 3.4 The assessee relied on the following case laws. i) BDA Ltd. Vs. ITO (TDS) in 281 ITR 99 (Bom.) ii) Teja Constructions Vs. ACIT (2010) 129 TTJ 57 (Hyd.)(UO) Ld.CIT(A) observed that assessee's case can be distinguished on facts from that of the case cited supra. Further, Ld.CIT(A), in his order extracting the provisions of the section 40(a)(ia) at the time of bill stage/Finance Act in Finance (No.2) Bill 2004 [268 ITR(St.)P.121, amendment to Sec.40(a)(ia) and Finance (No.2) Act, 2004 [269 ITR(St.)P.110 at page No.8 & 9, observed that in view of amended provisions of the Act, the amount payable would only attract the disallowance u/s.40(a)(ia) of the act. 3.5. According to Ld.CIT(A), in assessee's case, a sum....