TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 858
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....34/Vizag/2018 against the orders of the Commissioner of Income-tax (Appeals)-2, Visakhapatnam vide order I. T. A. No. 81/2016-17/AC C-1,Kkd/2017-18 and I. T. A. No. 10423/ 2016-17/AC, C-1, Kkd/2017-18 dated December 21, 2017. (d) I. T. A. No. 139/Vizag/2017 against the orders of the Commissioner of Income-tax (Appeals)-2, Guntur vide I. T. A. No. 170/2015- 16 dated January 5, 2017. 1.1. Cross-objections Nos. 47-48/Vizag/2017 are filed by the assessee arising out of I. T. A. Nos. 139/Vizag/2017 and 138/Viz/2017 respectively in support of the orders of the Commissioner of Income-tax (Appeals) vide for the assessment year 2012-13. Since the issues involved in these appeals are identical, all the appeals are clubbed, heard together and disposed of in a common order for the sake of convenience as under. 2. The assessees are engaged in the business of transport and other allied shipping activities. The nature of the work of the assessees require a lot of labour within short notice of time and depends on the arrival of the cargo. For the assessment year under consideration, the assessees have incurred labour expenses and the payments were made through maistries who procured the labour....
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....rgued that the assessees have made the payments to the maistries who are none other than the labour contractors. Though there was no contract in writing, there was implied contract for supply of labour in which case, the assessee is obliged to deduct the TDS as provided under section 194C of the Income-tax Act. The learned Departmental representative also relied on the decision of the Income-tax Appellate Tribunal Mumbai "C" Bench in the case of ITO v. Gopal S. Rajput [2016] 65 taxmann.com 294 and the decision of the hon'ble Karnataka High Court in the case of Smt. J. Rama v. CIT [2012] 344 ITR 608 (Karn) and argued that the law does not stipulate the existence of written contract as a condition precedent for deduction of TDS. The contract may be in writing or it may be oral but the liability to deduct the tax at source arises when the recipient of the said amount receives payment in excess of Rs. 20,000. Therefore, argued that the assessee's case is squarely covered by the decisions cited supra and the assessee is liable for deduction of TDS and the order of the learned Commissioner of Income- tax (Appeals) required to be set aside and the order of the Assessing Officer ha....
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.... 2017- [2018] 407 ITR 42 (Guj) and argued that the hon'ble High Court held that in the absence of any contract between the assessee and a specified person for carrying out any work contemplated in this section, the provisions of TDS under section 194C are not attracted and no disallowance required to be made under section 40(a)(ia) of the Income-tax Act. The assessee also relied on the decision of the hon'ble High Court of Karnataka in the case of Karnataka Rural Infrastructure Development Ltd. v. ITO in Income-tax Appeal Nos. 26-31 of 2014 and 184-186 of 2014 dated August 18, 2014- [2015] 330 ITR 222 (Karn) and argued that the judgment of the hon'ble High Court supports the view of the assessee for non-deduction of tax at source. 6. We have heard the submissions of both the parties and perused the records of the authorities below. In the instant case, the assessee is engaged in labour oriented industry which requires the labour as and when the ship arrives within a short notice of time. The assessee identified some of the maistries or group leaders to procure the labour who can work as per the requirement of the job. As stated by the learned authorised representative,....
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.... in the case of Karnataka Rural Infrastructure Development Ltd. held that the assessee cannot go in search of employees and the responsibility is given to a person who brings the labour force called a group leader. He is also one among the workers who is engaged in the works. Further, the Kolkata Tribunal in the case of Dilip Shah in I. T. A. No. 582/Kol/2014 dated May 5, 2017 held that the assessee being the labour sardars are not suppliers of labour and confirmed the deletion of the addition made by the Assessing Officer. The learned Commissioner of Income-tax (Appeals) followed the decision of this Bench in the case of R. Subba Raju v. Addl CIT cited supra, wherein the co-ordinate Bench of this Tribunal held as under : "9. We have heard the rival submissions and carefully perused the orders of the authorities below, documents placed on record and the details of the disallowance made under sections 40A(3) and 40(a)(ia) of the Act given in the assessment orders and from its careful perusal, we find that major payments were made under the head 'labour charges'. Meaning thereby that the payments were made to meet the labour expenses incurred in construction activity. Adm....
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....(Appeals) in deleting the addition of section 40(a)(ia) in respect of the payment made to maistries. For ready reference, we extract paragraph No. 11 of the Tribunal order which reads as under : "11. We have heard both the parties, perused the materials avail able on record and gone through the orders of the authorities below. The Assessing Officer disallowed hamali charges and production charges by invoking the provisions of section 40(a)(ia) of the Act. The Assessing Officer was of the opinion that the assessee has made the payment to the mestri for supply of labourers, therefore, it attracts the provisions of section 194C of the Act, therefore, disallowed the amount under section 40(a)(ia) of the Act it was the contention of the assessee that the amounts paid towards hamali charges and production charges are not covered under section 194C of the Act. The assessee further submitted that these payments were made to daily workers employed in the factory for handling the materials and the payments were made on weekly/fortnightly basis. The payments were made through the mestri for the sake of convenience. Therefore, it cannot be construed as work contract to invoke the provisions ....