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TMI Blog2014 (11) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... re us and has raised the following grounds:- 1. That the Ld. CIT (A) erred in law and in the facts of the case in conforming the order of the AO in disallowing Rs. 21,47,621/- being Labour/Carting Charges u/s 40 (a)(ia) of the act for failure to deduct tax at source u/s 194C of the Act. 2. That the Ld. CIT (A) erred in law and in the facts of the case in not only conforming the order of the AO but enhancing the disallowance to Rs. 4,34,719/- as JCB Rent u/s 40 (a)(ia) of the act for failure to deduct tax at source u/s 1941 of the Act. 3. That the Ld. CIT (A) erred in law and in the facts of the case in not appreciating the fact that the amount of tax deducted has been deposited before the due date of filing return of income. 4. That the Ld. CIT (A) erred in law and in the facts of the case in not appreciating the fact that the amount of payment for hiring JCB machine do not attract provisions of S. 1941 for the period under consideration. 5. That the Ld. CIT (A) erred in law and in the facts of the case in not appreciating the fact that the appellant himself being a sub-contractor was not liable to deduct tax at source u/s 194C of the act. 6. That the Ld. CIT (A) erred in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t if the amount of TDS is deposited on or before the due date of filing of return of income than the provisions of Section 40(a)(ia) will not apply. With respect to the payment of Rs. 31,427 made to Geo Dynamics and Rs. 50,000 made to Amrishbhai Pancholi, he submitted that though the Assessee has not deducted tax but if the payee has paid the tax than the Assessee cannot be considered to be "Assessee in default" and therefore no disallowance u/s 40(a)(ia) can be made in the case of Assessee and for this proposition he relied on the decision of Hon'ble Agra Tribunal in the case of Rajiv Kr. Agarwal (2014) 45 Taxman.com 555 (Agra). He therefore submitted that the issue where Assessee had not deducted TDS may be restored to the file of A.O for deciding the issue in the light of decision of Hon'ble Agra Bench. The ld. D.R. on the other hand supported the order of A.O and CIT(A). With respect to the submission of ld. A.R. that the matter be remitted to A.O, he objected to the suggestion of ld. A.R. 7. We have heard the rival submissions and perused the material on record. It is an undisputed fact that out of the total amount of 21,47,621/- listed at page 2 of the assessment order, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available before A.O and CIT(A). We therefore feel that the issue where the Assessee has not deducted TDS but the payee has paid the taxes needs to be re-examined by the A.O in the light of the aforesaid decision of Agra Tribunal and therefore set aside the issue to the file of A.O for him to decide the issue in the light of decision of Agra Tribunal and in accordance with law. Needless to state, that A.O shall grant adequate opportunity of hearing to the Assessee. We thus partly allow this ground of Assessee for statistical purposes. 2nd ground is with respect to disallowance of Rs. 4,34,719/- as JCB rent. 9. During the course of assessment proceedings, A.O noticed that Assessee had paid/credited machinery rent to Akshar Earth Movers on various dates but had deducted tax at 1% which according to the A.O should have been deducted at 10% u/s 194I of the Act. He accordingly worked out the disallowance u/s 40(a)(ia) r.w.s. 194I of the Act at Rs. 2,73,578/-. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A) who confirmed the addition made by the A.O by holding as under:- 5. The table on page 2 of the assessment order mentions 7 names. 6 have been discussed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 added by the AO in the table totaling to Rs. 21,47,621 is reduced and taken into consideration in Rs. 4,34,719 u/s.40(a)(ia). 10. Aggrieved by the order of CIT(A), Assessee is now in appeal before us. 11. Before us ld. A.R. reiterated the submissions made before A.O and CIT(A) and further submitted that even though Assessee might not have deducted TDS but if the payee has paid the tax, Assessee cannot be considered to be an "Assessee in default" for making disallowance u/s 40(a)(ia) and for this proposition he relied on the decision of Hon'ble Agra Bench in the case of Rajeev Kumar Agarwal (supra). He therefore submitted that the matter may be restored to the file of A.O to decide the issue in the light of decision in the case of Rajiv Kr. Agarwal vs. ACIT (supra). The ld. D.R. on the other hand supported the order of A.O and CIT(A). 12. We have heard the rival submissions and perused the material on record. Before us, ld. A.R. relying on the decision of Agra Tribunal in the case of Rajeev Agrawal (supra) has submitted that no disallowance can be made if the payee has already paid the taxes on the amounts paid by Assessee. We find that the Co-ordinate Bench of Agra Tribunal h ..... 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