9911796707
TMI Blog2012 (3) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. 4. The assessee, Rishikesh Buildcon Pvt. Ltd. and Rishikesh Properties Pvt. Ltd. are group companies with common shareholders and directors. Another company namely, PGF Ltd. had awarded work to the three group companies including the assessee. 5. During the course of assessment proceedings in the year in question, it was noticed that PGF Ltd. had issued certificates of tax deduction at source in respect of work for an amount of Rs.4.85 crores. However, as per details filed by the assessee before the Assessing Officer, the assessee had carried out work worth Rs. 5.35 crores. Vide letters dated 14.11.2008 and 25.11.2008, the assessee was asked to explain the discrepancy. 6. In response to the said queries, the assessees filed a reply dated 5.12.2008. The relevant portion of the said reply reads as under : "1. Please refer to point 1 of your letter dated 25.11.2008 in which figures of TDS Certificate mentioned is wrong. The actual TDS Certificate (original copy of which has already been submitted to you) is for the work of Rs.5,35,00,000/- and the work carried out by us is Rs.4,85,00,000 as appearing in our P & L account because the work amounting to Rs.50,00,000/- was given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 40(a) of the Act if the deduction of TDS under relevant provisions of the I.T.Act has not been made. The A/R of the assessee has further argued that the Ld. A.O. though has invoked provisions of section 40(a) but the said payment has not been a part of expenses claimed by the assessee in its books of account as such the disallowance was uncalled for. In this regard that the A/R of the assessee argued before me that the Ld. A.O has erred in disallowing the sum of Rs.50,00.000/- (sic.) which merely represented payment to M/s Rishikesh Properties wrongly received from M/s PGF Ltd. by the assessee. In this regard that the A/R of the assessee argued before me that the Ld. A.O has erred in disallowing the sum of Rs.50,00,000/- which merely represented payment to M/s Rishikesh Properties wrongly received from M/s PGF Ltd. by the assessee." 10. At this stage we may merely record that the reasoning given by the Commissioner of Income Tax (Appeals) is unsustainable and cannot be accepted. We have quoted above the letter dated 5.12.2008 written by the assessee to the Assessing Officer. In the said letter they have stated that they had done work worth Rs.5.35 crores for PGF Ltd. They had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actor or otherwise as per books of accounts of the assessee. The provisions of section 40(a)(ia) are applicable only, as evident from the language that "amounts which are not deductible" which relate to an "amount payable to a contractor or sub-contractor for carrying out any work including supply of labour for carrying out any work)". And such amount has to be claimed in computing the income chargeable under the head "profits and gain of business and profession". Thus firstly it has to be an expenditure payable to a contractor or a sub-contractor for carrying out any work while in the present case payment has not been made by the respondent assessee to M/s. Rishikesh Properties Pvt. Ltd. for carrying out any work nor it is claimed as an expenditure under the head "profits and gain of business and profession". In fact Rs.50,00,000/- paid by the respondent assessee to M/s. Rishikesh Properties for the work done by them, assigned to them, by the same company i.e. M/s. PGF Limited. Thus it is an expenditure in the books of account of M/s PGF Ltd. for carrying out work for them and they are claiming this expenditure in order to declare their profit or loan as per P & L Account but not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interestingly AO made an addition u/s 40 (a) (ia) for an expenditure not claimed by assessee respondent. This section relate to disallowance of an expenditure claimed but not making addition for an amount not claimed at all. This itself clarify the position of non-applicability of section 40 (a) (ia) of the Income-tax Act." 12. As the aforesaid paragraphs, refer to para 6.4, we reproduce the said paragraph also for the sake of completeness : "6.4 We find that the issue has not been considered in proper perspective. Similar confusion has also arose in appeals by revenue in two other group cases which were also heard together with this appeal. To understand the controversy it is worthwhile to tabulate the work done by all the three group of companies together. The same is tabulated below : ITA No. Name of Contractor (Assessee) Work as per assessee Work as per contractee PGF Ltd. (Rs. In lacs) Diff. 2061/09 Rishikesh Properties Pvt. Ltd. 425 225 +200 2062/09 Rishikesh Buildcon Pvt. Ltd. 492 642 -150 2060/09 Rupa Promoters Pvt. Ltd. 485 535 -50 Total 1402 1402 Nil From the above table it is clear that all these group companies did contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the assessee to deduct TDS, the Tribunal went on a different reasoning and made out an entirely new case, which was not made out before the Assessing Officer. In the reasoning given by the Tribunal, it has been observed that the PGF Ltd. had awarded a contract to Rishikesh Properties Pvt. Ltd. amounting to Rs.4.25 crores. This obviously is contrary to the stand of PGF Ltd., who had stated that they have awarded work of Rs. 2.25 crores to Rishikesh Properties Pvt. Ltd. and Rs.5.35 crores to the assessee. It is also contrary to the stand of the assessee in the letter dated 5.12.2008. 14. On the basis that the assessee was awarded work worth Rs.4.85 crores, the Tribunal has held that the assessee had not made a payment of Rs.50 lakhs to Rishikesh Properties Pvt. Ltd. and therefore, provisions of Section 40 (a)(ia) were not attracted. It is apparent that there is an inherent contradiction between the findings recorded by the Tribunal and the findings recorded by the Assessing Officer with reference to the letter of the assessee dated 5.12.2008, which had not been adverted to by the Tribunal. Letter dated 5.12.2008, which was quoted in the assessment order has not been con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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