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2022 (9) TMI 289 - AT - Income TaxTDS u/s 194C - wastage claimed in manufacturing of gold ornaments - disallowance of wastage claimed in manufacturing of gold ornaments by invoking the provisions of section 40(a)(ia) of the Act for non-deduction of TDS - AO treated this deemed wastage paid as job charges - deemed wastage in the eyes of Revenue is payment to the ornament manufacturers or goldsmiths or in local language called pathars - HELD THAT:- TDS U/S. 194C of the Act has to be deducted wherever there is credit of such sum to the account of the contractor or payment thereof in cash, by cheque, by draft or by any other mode. But, in the present case before us the AO as well as CIT(A) has categorically noted that there is wastage charges and wastage to the extent of 4.5 to 6% varies in this trade as claimed by assessee. But, Revenue's contention is that the wastage is only 0.5% to 1%. Here only the issue is only claim of wastage and not any payment as envisaged in the provision of section 194C of the Act. Once, there is no payment there is no question of deduction of TDS U/S. 194C of the Act because there is no mandate in the Act for deduction of TDS without payment and that mode is also prescribed. The Tribunal i.e., the Co-ordinate Bench in the case of Siva Valli Vilas Jewellers Pvt. Ltd. [2021 (4) TMI 116 - ITAT CHENNAI] has considered an identical issue and held that provisions of section 194C is applicable, when the assessee has paid or credited any charges covered thereunder. In case, no payment is debited or credited to respective parties account, then such payment cannot be considered within the ambit of section 194C or any other TDS provisions. In this case, the assessee has neither debited making charges into profit and loss account nor credit any amount to the respective parties account. Therefore, when no payment is made or amount is credited to respective parties account, then question of application of provisions of section 194C does not arise at all. Thus in the present case the issue of wastage whether it is 0.5% to 1% as estimated by Revenue or it is 4.5% to 6% as claimed by assessee, it neither involves any payment or credit of such sum by way of cash, issue of cheque or draft or by any other mode and hence does not liable for TDS u/s 194C of the Act. Hence, the disallowance made by AO and confirmed by CIT(A) is deleted. - Decided in favour of assessee.
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