TaxTMI 
TaxTMI 
2026 (5) TMI 1272
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....he disallowances of Rs.4,81,79,887/-, was confirmed as made by the ld. AO u/s 40(a)(ia) of the Act for failure to deduct TDS on the entire contract value u/s 194C of the Act. 3. The facts in brief are that the assessee is a partnership concern and is engaged in the business of sales and services of Air Conditioners. The assessee filed the return of income during the year declaring income of Rs.81,06,497/-. The case of the assessee was selected for scrutiny and statutory notices along with questionnaire were issued and the ld. AO observed from the details filed by the assessee that assessee has executed contracts in respect of installation and labor charges, aggregating to Rs.4,81,79,877/-. These Labour charges were Rs.1,84,43,781.61/- an....
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....ellant failed to produce invoices before the AO to prove the independent sale of materials. Segregating a composite contract into material and labour artificially to avoid TDS provisions is not permissible under the law. The appellant's reliance on the argument that section 40(a)(ia) applies only to amounts "payable" (and not "paid") is legally untenable. The Hon'ble Supreme Court in the case of Palam Gas Service vs. CIT has settled this issue, holding that the provisions of Section 40(a)(ia) apply to both amounts which remain payable andamounts already paid. Since the appellant failed to deduct TDS on the entire contract value as required u/s 1940, the disallowance was correctly invoked. The disallowance of Rs. 4,81,79,887/- is uph....
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....the contracts to the assessee so far as the purchases of material is concerned for the installation purposes. Therefore in our opinion, the assessee is not liable/supposed to deduct tax at source u/s 194C of the Act. Therefore, provisions of Section 40a(ia) of the Act are not applicable. 6. With respect to service charges incurred on the installation amounting to Rs.1,84,43,781/-, we note that the assessee has fully accounted for the expenses. We note that the assessee has deducted tax on the labour paid amounting to Rs.1,21,73,900/- at the rate of 2%. On Rs.2,28,555/- which also represented service charges, on which no tax was to be deducted as the payment credited or paid to the individual person did not exceed Rs.20,000/- during the f....
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....KOL/2016 for A.Y. 2011-12, wherein the co-ordinate bench has held as under:- "5. Latter issue before us is that of correctness of section 40 (a)(ia) disallowance of Rs. 1.79,800/- out of assessee's total claim of Rs., 3,05,364/-. His only argument before us is that section 40(a)(ia) as amended by Finance Act 2014 w.e.f. 01.04.2015 prescribing such disallowance to be restricted to 30% only than the entire amount of Rs. 1,79,800/-; applies with retrospective effect. Learned Departmental Representative vehemently opposes this legal plea. He pleads that the said proviso does not carry any retrospective effect. We find no force in Revenue's instant arguments as a coordinate bench of this tribunal in Shri Rajendra Yadav in ITA No.895/JP/....