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2018 (6) TMI 601 - AT - Income TaxTDS u/s 194C - Disallowance u/s 40(a)(ia) - non-deduction of TDS on labour charges - liability of individual assessee with Tax Audit Obligation u/s 44AB - Held that:- Assessee submitted Income Tax Return on 29.11.2007 for Financial year 2006-07 and offered Gross total Income of ₹ 3,20,675/- (8.34% of ₹ 38,45,650/-) under Section 44AD and thus assessee offered profit more than the deemed profit of 8 percent. Therefore, Assessee is not liable to Deduct TDS u/s 194(C)(1) for the FY 2007-08 in respect of labour charges paid to the contractor as it was the first year of the assessee where the provisions of section 40(a)(ia) is made applicable to him - therefore, the provision of Section 40(a)(ia) for making disallowance of expenditure for no-deduction of TDS will not apply - Decided in favor of assessee. Taxability of amount on which TDS credit has been claimed - receipt of advances - Held that:- Where assessee receives an advance, then it would be liability for him, that is, an obligation for him and he will show this obligation in liability side of the Balance Sheet - in some case out of great caution some companies/assesses deduct TDS on advance payment for safe side, to avoid the future consequences etc, but this does not mean that advance is an income of the assessee, it will be an obligation/liability till the related work/service gets executed as per terms and conditions of the parties - thus we are of the view that as the assessee has claimed TDS on the advance, hence the TDS amount is deemed to be the income received during the year - addition should be restricted to the TDS amount to the extent of 1,37,931/- - hence appeal filed by revenue is dismissed.
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