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2015 (2) TMI 777 - ALLAHABAD HIGH COURTDisallowance u/s 40(a)(ia) - failure of the appellant to comply with Section 194C - assessee is proprietor of the business of sub-contractor for road construction - Held that:- Assessee is a sub-contractor, as per the agreement he was responsible for mixing of the material on given portion of the proposed road, he was not responsible to purchase the raw materials like sand, gitti etc. and it was purchased by the main contractor. Therefore, prima-facie the assessee was not responsible to deduct the TDS. - Decided in favour of assessee. Net profit computation - assessee has shown net profit rate @ 3.18% - books of account rejected - A.O. estimated the profit @ 8% and made addition confirmed by Tribunal - Held that:- As the raw material belongs to the main contractor and not to the assessee. Thus, there is a contradiction about the facts and same was not discussed in the Tribunal's order. In the case of Chandra Agrawal Vs. CIT, [1984 (1) TMI 45 - ORISSA High Court] it was observed that material supplied by the contractee cannot be taken into account. The profit rate should be estimated with reference to the net payment only after excluding the cost of material supplied to assessee in terms of the contract. The Tribunal has ignored the abovementioned factual as well as legal position. Restore the matter back for reconsideration - Decided in favour of assessee for statistical purposes.
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