TMI Blog2013 (5) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- each was acceptable to the authorities below. It cannot be considered for disallowance u/s 40(a)(ia) to identify the deduction of tax at source u/s 194C in so far as it cannot be said that the sardars are to be subjected to deduction of tax at source only on part of their payments to the labourers whom they have identified. The authorities below therefore have not been able to establish the issue raised for disallowance u/s 40(a)(ia), in so far as, the provision of section 194C do not apply to the payments/expenditures incurred by the assessee. No hesitation in directing the AO to delete the disallowance - In favour of assessee. - ITA No. 1212/Kol/2011 - - - Dated:- 5-4-2013 - K.K. Gupta and Mahavir Singh, JJ. For the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the First Appellate Authority, who confirmed the addition against the payable amount to be disallowed u/s 40(a)(ia) of the Act by invoking the provision of section 194C of the IT Act against which the assessee is in appeal before us but the ld.CIT(A) deleted the disallowance on account of the paid amount amounting to Rs.11,36,278/-. 3. It was submitted by the ld. Counsel for the assessee that the ld. CIT(A) has erred in partly deleting the disallowance u/s 40(a)(ia) of the Act. He submitted that the whole amount being the payment to labourers amounting to Rs.20,82,203/- was by way of contract/obligation by invoking the provision of section 194C of the Act. It was AO's own finding that the amount paid and payable were to be considered u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a labour team cannot be subject to deduction of tax at source in so far as payments are to the labourers without entering into the contract with them in so far as a sum of Rs.50,000/- has to be considered for the individual payees and not the contractor. Similarly he submitted that in order to become a contractor the Munshis have to obtain a license under the Contract Labour (Regulation and Abolition)Act, 1970 Act in so far as he was not a contractor for labour supplier. He also relied on the decision of ITAT Kolkata Bench in the case of Samanwaa vs A.C.I.T., Circle-2, Burdwan reported in 34 SOT 332 that the disallowance of payments to labour sardars was held to be not disallowable u/s 40(a)(ia) of the IT Act in so far as the Revenue coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginning of the year. In other words section 40(a)(ia) is claimed as an expenditure under the mercantile system of accounting when the opening balance was more than the amount not disallowed in so far as the amount remained payable. So the issue as considered by the AO was not dealt with in accordance with the provision of the Income tax Act by the ld. CIT(A), clinching the issue in favour of the appellant that there was no cause for invoking the provision of section 194C of the Act for the purpose of disallowance u/s 40(a)(ia) of the Act. The claim made by the assessee on the total turn over amounting to Rs.35,90,188/-was when the labour charges were paid by the assessee were claimed at Rs.24,57,947/- were considered specifically for the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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