TMI Blog2012 (10) TMI 1038X X X X Extracts X X X X X X X X Extracts X X X X ..... ,76,23,108/- have been shown on which gross profit and net profit of ₹ 31,54,276/- and ₹ 19,52,991/- respectively have been declared. The AO made addition of ₹ 38,65,490/- on account of disallowance of hire charges. According to the assessment order, the assessee has paid the said amount to Shri Girraj Sharma, on which no TDS has been deducted. The assessee s submission that payment has been made to 39 parties for lifting of earth (MITTI) by tractors has not been accepted by the AO on the basis of labour account produced by the assessee. Therefore, disallowance was made as per section 40(a)(ia) of the IT Act. The assessee reiterated the same submissions before the ld. CIT(A) and also submitted that each payment in each case was below ₹ 1,20,000/-. Therefore, no TDS was required to be deducted from such parties. The assessee also submitted copy of the order u/s. 143(1) of Shri Girraj Sharma for assessment year 2008-09 and 2009-10 along with copy of return for the assessment year 2009-10 and 2010-11. The ld. CIT(A) considering the explanation of the assessee confirmed the addition. His findings in para 3.2 of the appellate order are reproduced as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in respect of Shri Girraj Sharma stating that payment on account of hire charges has been made to him by cheque. The said copy of account of Shri Girraj Sharma is reproduced as under: Geraj Sharma (to be read as Girraj Sharma) Ledger Account 1 Apr. 2007 to 31 March 2008 Date Particulars Vch. Type Vch No. Debit Credit 11-2007 Dr Material purchase A/c Journal 55,440.00 Being material purchase 11-2007 Dr Hire charges Journal 38,65,490.00 Being hire charges paid 12-2007 Cr State Bank of India A/c Cheque No.982883 Payment 15,00,000.00 1-2008 Dr Material purchase A/c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch in the case of Merilyn Shipping Transports vs. Addl. CIT, 70 DTR 81. 4. On the other hand, though the ld. DR relied upon the order of the authorities below, but did not have any objection for admission of additional ground of appeal, which is legal in nature. 5. On consideration of the submissions of both the parties, we are of the view that the additional ground raised by the assessee is connected with ground No. 1 of appeal of the assessee and is legal in nature. The facts are already available on record to show that the assessee has made alleged payments of hire charges during the assessment year under appeal and such facts have been mentioned by the AO as well as the ld. CIT(A) in their orders and even the order of the ld. CIT(A) is very specific with regard to the fact of payment of ₹ 38,65,490/- in the assessment year under appeal. Therefore, the additional ground is admitted for hearing subject to verification of alleged payment by the AO. On consideration of the decision cited by the ld. Counsel for the assessee, we are of the view that the issue is covered by the order of ITAT, Agra Bench in the case of Suraj Bhan Agencies Pvt. Ltd. vs. DCIT (supra) in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been adjudicated. The ground no.5 taken before the CIT(A) which reads as under:- 5. Because without prejudice to the grounds as mentioned above section 40a(ia) is applicable only in the cases where the amount is payable on the last day of previous year. All the payments as reimbursement of expenses has been made time to time during the year and no amount is payable on the last day of previous year. On this ground also the addition is wrong, illegal and deserves to be deleted. 6. The above ground no.5 raised before the CIT(A) is identical to the ground no.2 raised before us. 7. In the light of above discussion and after considering totality of the facts of the case, we find that factual verification is required in the light of decision of I.T.A.T. cited supra. We, therefore, think it proper to send this issue back to the file of the Assessing Officer with the direction to verify the facts of the case and decide the issue in accordance with the decision of I.T.A.T., Special Bench Visakhapatnam after providing opportunity of hearing to the assessee. 11. The ld. Departmental Representative did not dispute regarding the facts of the cases under consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue on ground No.3 challenged the deletion of addition of ₹ 2,49,246/- on the same issue. The AO made disallowance of ₹ 3,32,661/- on account of 20% disallowance out of plant repairing and maintenance expenses, site and water expenses. The said disallowances have been made in the absence of complete vouchers in respect of above expenses. It was submitted before the ld. CIT(A) that adhoc addition has been made. The ld. CIT(A) found that books of account are audited and bills/vouchers have been produced before the AO. No defects have been pointed out in the books of account. The ld. CIT(A), considering the nature and turnover of business of the assessee along with the fact that vouchers in respect of these expenses are normally not maintained completely, held that 5% disallowance is justified and accordingly, restricted the addition of ₹ 83,515/- out of the addition of ₹ 3,32,661/-. The assessee as well as Revenue are in appeal on the above grounds. 7. On consideration of the rival submissions, we do not find any justification to interfere with the order of the ld. CIT(A) in restricting the part addition on this issue. The AO specifically noted that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l labourers employed by the assessee firm is approximate of 200 labourers to whom payment is made in cash periodically and individually for single labourer, the payment did not exceed ₹ 50,000/- to 60,000/- during the year. The assessee has maintained muster roll showing payment to individual employees. The same was also produced before the AO. It was submitted that the labour charges and wages fall under the head salary and TDS is only required on salary if salary paid/payable to individual person exceeds the taxable limit of ₹ 1,50,000/-. It was submitted that since payment to each labourer was below taxable limit, therefore, there was no obligation to deduct TDS. The addition is, therefore, liable to be deleted. The ld. CIT(A) considering the explanation of the assessee and the material on record deleted the addition. His findings in the appellate order in para 4.2 are reproduced as under: 4.2. Appellant s submissions have been considered carefully. As per copy of labour expenses account, the appellant has made cash payment on various dates as per its labour payment sheets maintained on the site. None of the amount is found exceeding the prescribed limit requiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requiring the assessee to deduct TDS in the case of Uttam Singh. In the case of Ravi Construction Co., the assessee is sub-contractor of this company and he had done work for them and the gross work done as per RA bill was ₹ 1,68,65,966/-, which is evident from PB-17 is account statement of assessee in the books of Ravi Construction Co., on which TDS has been deposited. Form 16A issued by this company is filed at page 19 of the Paper Book. As regards the payment of ₹ 40,45,290/- paid to M/s. Ravi Construction company for labour charges, this work was done by the principal company which was deposited and adjusted from the account of the assessee and no actual payment was made which is also evident from the copy of account in the books of the principal Company (PB 17 18). He has submitted that the ld. CIT(A) rightly deleted both the additions because there is no violation of section 40(a)(ia) of the IT Act. 10. On consideration of the rival submissions, we are of the view that the matter has not been properly considered by the ld. CIT(A). The AO found that the assessee has made payment to Mr. Uttam Singh for labour expenses and not for the purchase of Gitti. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing general entry. Therefore, the addition is unjustified. The ld. CIT(A) accepted the contention of the assessee by verifying the facts. The ld. CIT(A) on the basis of the bills, vouchers and details etc. found that no payments in cash have exceeded ₹ 20,000/- on any single day. Consolidated entry is passed at the end of the financial year and accordingly, addition was deleted. 12. On consideration of the rival submissions, we do not find any justification to interfere with the order of the ld. CIT(A) in deleting the addition. The ld. CIT(A) found in his findings that no payment made in cash exceeded ₹ 20,000/- on any single day. It is the departmental appeal and no material is produced before us to contradict the findings of the ld. CIT(A). Therefore, this ground of appeal of the Revenue is dismissed. In the result, ground No. 2 of appeal of the Revenue is dismissed. 12.1 There is no other point raised in the departmental appeal. In the result, the departmental appeal is partly allowed. 13. In the result, the appeal of the assessee is partly allowed for statistical purposes and departmental appeal is partly allowed. Order pronounced in the open court. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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