Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (5) TMI 536 - AT - Income TaxRevision u/s 263 - non-deduction of the tax at source in respect of finance charges or interest paid by the assessee to finance companies warranting, thus, disallowance u/s. 40(a)(ia) - non-verification of the assessee’s claim of wages, on which no provident fund stands contributed, including with the EPFO, so that the claim was apparently incorrect. HELD THAT:- The assessee has before the revisionary authority claimed to have engaged workers on daily wage basis. Apart from the fact that the same is only a manner of remuneration, the same amounts to contractual labour, on which, again, both ESI & EPF are applicable.The matter, as it appears, is no longer res integra, and the assessee’s argument, in law, inapplicable. As already noted a complete absence of verification by the AO of the assessee’s claims, i.e., even as to there being no continuous employment for 60 days, which is stated for the provisions of the EPF Act to be applicable. Why, there is even no confirmation by him of the said provisions. Even if the labour is contractual, hired direct or through the contractors, the same, as afore-noted, may attract EPF & ESI Acts, besides such payment being subject to tax deduction at source u/ss. 194C/194J, and which has a bearing on the deductibility of the expenditure through sec. 40(a)(ia). We are conscious and, accordingly, clarify that the ground of non-payment of EPF (or even ESI) on wages is relevant only insofar as, and to the extent, it is indicative of the said expenditure being not genuine, or incurred wholly and exclusively for business purposes. This is as it could well be that the assessee having incurred the said expenditure, has though violated the provisions of the ESI and/or EPF Act on either the whole or a part of the labour expenditure, in which either case, no part of the said expenditure, claimed u/s. 37(1), where genuine, could be disallowed. Nonverification apart, the assessee’s reply, ostensibly based on ‘facts’, that no part of the expenditure attracts EPF as it has engaged only casual labour on daily wage basis, reinforces the doubts about the genuineness of the expenditure, providing further relevance, as it were, thereto. This is also apart from the relevance of the said ground being, as afore-noted, not in dispute inasmuch as the same formed the basis of reassessment, which proceedings have since attained finality. The absence of any verification and, concomitant finding, i.e., qua genuineness of the (entire) expenditure, incurred in cash, by the assessing authority lends further relevance to the said ground, and which is also the reason for our having discussed the matter in some detail. Reference be drawn to the decision in Gee Vee Enterprises [1974 (10) TMI 29 - DELHI HIGH COURT]. We may therefore not be construed as having issued any finding/s, much less determined the matter, but only that, on the face of it, the claim of expenditure by the assessee cannot be accepted, while the same has been so without conducting even a preliminary verification, as with reference to the labour details and the applicable provisions of the EPF Act. That is, our purview and finding is that the matter requires proper verification, justifying the revision on the lines made. Nothing more and, nothing less. The matter shall be examined by the AO in its entirety, including the conduct of business in the past, as well as with reference to the specific issues, if any, facing construction industry, and for which reference could also be made by him to the enterprises in the organised sector; construction, it may be noted, has since been granted the status of an Industry. The onus to establish it’s claims, needless to add, is on the assessee. Assessee’s appeal is dismissed.
|