TMI Blog2011 (7) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... al filed by the Revenue. It is directed against the order passed by the ld. CIT (Appeals) dated 16th November, 2009 for assessment year 2006-07. 2. Grounds of appeal read as under :- "1. Whether on the facts and circumstances of the case the ld. CIT (Appeals) has erred in deleting the addition of Rs.55,67,964/- for non deduction of TDS ignoring the provisions of section 194C read with 40a(ia) of I. T. Act, 1961; 2. Whether on the facts and circumstances of the case the ld. CIT (Appeals) has erred in deleting the addition made on account of expenses ignoring the fact that the relevant vouchers were not produced and hence the same remained totally unverified and unproved. " 3.1 The assessee is an Individual and he is proprietor of M/s. Tyagi Associates and is engaged in the business of installation of Sugar Mill/Paper Mill/Power Plants on job work basis. During the course of assessment proceedings it was noticed by assessing officer that a sum of Rs.55,67,964/- was debited by the assessee in the profit and loss account under the head 'lease rent for crane'. According to assessing officer such payments made by the assessee for cranes were in the nature of payments made to cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar issued by the C.B.D.T. No. 558 dated 28th March, 1990 and also to the provisions of section 40(a)(ia) and has come to the conclusion that assessee is not entitled to deduction of the crane lease rent paid by the assessee from the income chargeable under the head 'business'. For non-deduction of tax at source under section 194C, the assessing officer made disallowance of Rs.55,67,964/-. 4. Apropos ground No. 2 the assessing officer made certain additions which were partly reduced by the ld. CIT (Appeals). Against such reduction the Department is aggrieved. The position is summarized as follows :- "Expenses Claimed at (Rs.) Disallowed by AO @ 20% (Rs.) Reduced/deleted by CIT (A) (Rs.) Business Promotion Expenses 1,90,395 38,079 Reduced to 15,000 Labour welfare 9,59,700 1,91,940 Reduced to 50,000 Telephone expenses 1,91,422 38,284 Reduced to 12,000 Vehicle running expenses 5,08,230 1,01,646 Reduced to 30,000 Medical expenses 2,57,561 51,512 Fully deleted. " 5.1 In appeal filed before the ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee failed to deduct tax at source from those payments under the provisions of section 194C of the Act. Relying upon the observations of the assessing officer in the assessment order it was vehemently pleaded by the ld. Sr. DR that disallowance was rightly made and the same has wrongly been deleted by the ld. CIT (Appeals). 7.2 With regard to second ground it was the submission of the ld. Sr. DR that the assessing officer had rightly disallowed 20 per cent of the expenditure as the same was not incurred wholly and exclusively for the purpose of business. He pleaded that ld. CIT (Appeals) has wrongly reduced the same and has wrongly deleted the disallowance made on account of medical expenses in their entirety. 8.1 On the other hand, apart from relying upon the submissions made before the ld. CIT (Appeals) and the findings recorded by him, it is the case of the ld. AR that the cranes obtained by the assessee on lease did not amount to any "work". Therefore, he pleaded that the ld. CIT (Appeals) has rightly held that the payment made by the assessee in this respect does not require any deduction of tax under section 194C of the Act. He submitted that while holding that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC); (iii) CIT v. Podar Cement (P.) Ltd. [1997] 226 ITR 625/92 Taxman 541 (SC); (iv) Manish Maheshwari v. Asstt. CIT [2007] 289 ITR 341/159 Taxman 258 (SC); (v) Union of India v. Onkar S. Kanwar [2002] 258 ITR 761/125 Taxman 281 (SC). 8.5 So as it relates to issue raised in second ground it has been the case of the ld. AR that details of all these expenses were filed before the assessing officer as well as before the ld. CIT (Appeals) and these details are placed at pages 22 to 37 of the paper book. He submitted that the disallowance has been made by the assessing officer without pointing out any specific disallowable item. He submitted that ad-hoc disallowances are not permissible as per decision of Hon'ble Punjab Haryana High Court in the case of Jhandu Mal Tara Chand Rice Mills v. CIT [1969] 73 ITR 192 (Punj. Har.). 9. We have carefully considered the rival submissions in the light of material placed before us. Section 194C (1) casts an obligation upon any person responsible for paying any sum to any resident (referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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