TaxTMI 
TaxTMI 
2019 (8) TMI 1317
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....ce of the fact that there is no evidence of acceptance by the incumbent and moreover, since the assessee had shown expenses towards 'Salary' and 'Accounting Charges' separately in in the audited Profit & Loss A/c. proves that the plea of employeremployee relationship is only an afterthought on the port of the assessee to absolve himself from the provisions of Section 40(a (ia) of the Act. 2. That on the facts and in the circumstances of the case, the powers of the Id. CIT (A) are coterminus with those of the AO and once the AO. in his Remand Report pointed out that mere submission of evidence in support of payment of Rs. 80,000/does not absolve the assessee from deducting tax at source u/s.40(a) (ia), ld. CIT (A) should have either rejected the assessee's plea of mistake in the nature of payment keeping in view that the audited accounts of the assessee reflected the impugned payment as 'Commission' or asked for further remand from the AO. 3. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the addition of Rs. 1,51,83,363/u/ s.40(a)(ia) on account of Labour Charges without appreciating the facts an....
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....ct. There was a relationship between employer and employee between assessee and Sachindra Kumar Jha which attracts Section 192 of the Act. Hence, the provision of Sec 40(a)(ia) is not applicable in this case. Therefore, the addition made by the then AO was deleted by ld. CIT(A). On the other hand, Ld. DR for the Revenue submitted before us that the decision of Ld. CIT (A) is not accepted in this case because during the course of assessment proceedings the assessee failed to submit any suitable explanation as to why the TDS was not deducted u/s 194J of the I.T Act on payment of accounting charges. However, during the course of remand proceedings the assessee furnished a copy of appointment letter given to Shri Sachindra Kumar Jha to whom the accounting charges was paid but the assessee failed to establish whether the same offer of appointment was accepted by Shri Sachindra Kumar Jha or not. Therefore, considering the above mentioned factual findings, the decision of Ld. CIT (A), Kol is not accepted. However, on the other hand, the ld.AR relied on the impugned order of the ld. CIT(A). We note that the assessee made a payment of accounting charges to the part time Accountant, wh....
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....he details as per annexure it was found by AO that a list of 75 names was provided by the assessee wherein the addresses of only 10 persons were mentioned to whom such labour payments amounting to Rs. 87,46,572/- had been made. Further, the assessee disclosed an amount of Rs. 44,27,640/- shown as payment to 'Others' but no details were filed. The assessee was asked to file the details but he failed to do so. Moreover, during the course of assessment proceeding the assessee himself admitted that the tax was not deducted while making such payment. Therefore, the total amount of Rs. 1,51,83,363/- (Rs. 1,07,55,723/- + Rs. 44,27,640/-) was disallowed and added back to the total income of the assessee. 13. Aggrieved by the stand so taken by the AO, the assessee carried the matter in appeal before the ld. CIT(A), who has deleted the impugned addition. Aggrieved the Revenue is in appeal before us. 14. We have heard both the parties and perused the material available on record. We note that in this case, the alleged labour contractor is undoubtedly a labourer himself. He gets paid in same manner as other labourers. The entire affair is managed through Labour sardar. Further co....
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....4C of the I.T Act and deposit to the Central Govt. Account while making payment to the party. Therefore, the AO rightly pointed out the facts and addition was made as there was violation of provision of Sec 40(a)(ia) of the Act. On the other hand, Ld. Counsel for the assessee defended the order passed by the ld. CIT(A). 16. We note that the payment of Rs. 1,51,83,363/- was made by the assessee to the labourers through labour sardars, who is eventually a labour. We note that this issue is squarely covered by the judgment of the Co-ordinate Bench of ITAT, Kolkata, in ITA No. 582/Kol/2014 in the case of Dilip Saha's order dt. 5-5-2017, wherein the co-ordinate bench held that the payment made through labour sardars, who is suppliers of labours and he himself is also a labourer, the addition made u/s. 40(a)(ia) of the Act needs to be deleted. The finding of the co-ordinate bench in this regard is given below:- "5. The assessee challenged the same before the CITA. Before him the assessee reiterated the same submissions as made before the AO and in support of his contentions filed the following details: a) Certificate of Railway Contractors Labour Union (W.B), Katwa B....
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.... 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: 200910. 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 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 200506, 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 departm....
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....ind 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 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 colabourers 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 person....
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....ent 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 discussions and precedent we do not find any infirmity in the order of Ld. CIT(A) and accordingly we uphold the same. In the circumstances, this issue of Revenue's appeal is dismissed." Respectfully following the judicial precedents relied upon hereinabove, we do not find any reason to interfere with the order of the ld CITA and accordingly dismiss the ground of the revenue. 17. Respectfully following the judgment of the Co-ordinate Bench in the case of Kwality Construction (Supra), we are of the opinion that the CIT-A was justified in accepting the plea of assessee being the labour sardars are not suppliers of labours and as such he rightly deleted the impugned addition made u/s. 40(a)(ia) of the Act. We uph....
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..... We do not find any infirmity in the order of ld. CIT(A), hence, we uphold the order of ld. CIT(A). (2) Car: The assessee showed two cars referred as Car A & Car B in the relevant F.Y. 2012- 13 in his books of accounts. Car A was purchased in the year 2009-10 for Rs. 5,14,500/- for personal use. Later on, it was brought into the business invoking provision of Section 43C(1) of the Act and was recorded at its F.M.V. at Rs. 3,68,000/-. While going through the Explanation 5 to Section 43(1), the Ld. CIT (A) held that it is clearly mentioned how to record a property in the books of accounts clearly mentioned that it should at cost less depreciation. However, for other asset Explanation 5 to Section 43(1) is silent. Since, in the remand report the AO. has mentioned that the assessee has submitted the evidence in respect of car purchased by the necessary journal entry hence, it is clear that no financial transaction is involved. Therefore, the addition made by AO to the tune ofRs. 3,68,000/- was deleted by ld.CIT(A). We do not find any infirmity in the order of ld. CIT(A), hence, we uphold the order of ld. CIT(A). (3) Car B was purchased in the F.Y. 2012-13. However, the Cou....