TMI Blog2011 (9) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... g similar so following same reasoning, disallowance in question are directed to be deleted. Addition on account of long term capital gains resorting to the provisions of section 50C - Held that:- We find that proper opportunity was provided to the assessee to putforth his grievance before the DVO. However, the assessee has not been able to take that opportunity. No other material was placed on record for rebutting the findings of the CIT(A). In view of this, we do not see any reason to interfere in the well reasoned of the CIT(A) and, accordingly, we uphold the same. Disallowance made out of sand and labour charges, out of petrol expenses and out of telephone expenses - personal expenses - Held that:- AO has made the disallowance on the ground that the element of personal use with regard to telephone, vehicle could not be ruled out. The bills with regard to labour charges were also not fully verifiable. However, to meet the ends of justice, the CIT(A) restricted the disallowance to 50% of the disallowance made by the AO on the ground the disallowance is on the higher side. In view of this, we uphold the same. - I.T.A. No. 1241/PN/2009, I.T.A. No. 185/PN/2010 - - - Dated:- 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , incorrect and contrary to the provisons and scheme of the Act. It further be held that the payments made to various parties which have been treated as payments to sub-contractors are not covered by the provisions of Chapter XVII of the Act. On the facts prevailing in the case and as per the provisions of law the disallowance/addition made by the A.O and that confirmed by the first appellate authority be deleted. It further be held that amount of ₹ 1,13,14,748.50 paid by the appellant is not hit by mischief of provisions of section 40(a)(ia) of the Act warranting disallowance in terms of the said section. Just and proper relief be granted to the appellant in this respect. 2. On facts and circumstances prevailing in the case and as per provisions of law, it be held that, the disallowance of ₹ 5,78,000/- pertaining to the payment made to the petty contractor disallowed by the A.O is unjustified and is contrary to the scheme and the provisions of the Act. The disallowance made by the A.O and confirmed by the first appellate authority be deleted. The appellant be granted just and proper relief in this respect. 3. On facts and circumstances prevailing in the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the appellant for the payments in question. The provisions of TDS are applicable only if the payments are made to subcontractors in terms of provisions of section 194C(2). (iii) The learned AR drew our attention towards sample copy of tender documents of Saguna where in one of the condition between the principal and the appellant in respect of the contract to be executed is that the appellant was prohibited to subcontract any part of his work without written permission of the architect/company. No such written permission was either taken by the appellant or granted to the appellant permitting to appoint subcontractor. The first appellate authority had called a remand report from the AO for the additional evidence submitted by the appellant and nothing contrary was found. (iv) The assessee also submitted copies of various tender copies, where it has been clearly stated to the effect that the appellant is prohibited from subcontracting without the written permission of the principal. (v) The appellant had engaged various agencies in the capacity of principal executor to execute work for him. The appellant was fully responsible for executing the main contract and the ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puting the income chargeable under the head profits and gains of business or profession . (a). In the case of any assessee --... (i).......... (ia) any interest, commission or brokerage[rent, royalty], fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or subcontractor, being resident, for carrying out any work (including supply of labour for carrying out any work) on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or after deduction (has not been paid on or before the due date specified in sub-section (1) of section 139. 5.2. The issue before us is whether payment has been made for centring, tiling and fabrication work amounts to payment to contractor or sub-contractor so as to invoke provisions of section 194C (2) for the purpose of TDS and allowability of same as per provisions of Section 40(a)(ia) of the Act. We find from the sample copy of tender document of Saguna where in one of the condition between the principal and the assessee in respect of the contract to be executed is that the assessee was prohibited to subcontract any part of his work wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract so as to attract the provisions of section 194C(2) of the Act and subsequently the rigour of section 40(a)(ia) would not come into play for executing centring, tiling and fabrication through different persons. In instant case, the control lies with the assessee and the alleged subcontractor are merely executing the work of centring and fabrication under the full control of the assessee itself. Even nomenclature used by parties as subcontract does not change the real spirit of contract. Under facts and circumstances, revenue authorities were not justified in making disallowance by invoking provisions of section 40(a)(ia) of the Act. Same is directed to be deleted. Similar disallowance has been made in the year 2006-07. Facts being similar so following same reasoning, disallowance in question are directed to be deleted. 6. The next issue is with regard to addition of ₹ 2,47,325 on account of long term capital gains for A.Y. 2005-06 made by the AO by resorting to the provisions of section 50C of the Act. 6.1. Briefly stated the facts are like this. The Assessing Officer noticed that the assessee had shown long term capital gains of ₹ 1,88,655 on sale of plots ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, learned D.R. supported the orders of the authorities below. 7.4 The issue raised in this ground is the same as that for the earlier year wherein it has been decided in favour of the assessee in preceding paragraphs of this order. Facts being similar, so for the same reasoning this issue is also decided in favour of the assessee. 8. The next issue in A.Y. 2006-07 is with regard to adhoc disallowance made out of sand and labour charges of ₹ 1,00,000, out of petrol expenses of ₹ 50,000 and out of telephone expenses of ₹ 20,000. 8.1. On verification of record, the AO noticed that some of the bills for the bills in respect of labour charges, petrol expenses and telephone expenses were not available and the vouchers were self made. The AO was of the opinion that element of personal use and non business use of telephone and vehicles could not be ruled out. Therefore, the AO made the disallowance of ₹ 1,00,000 out of labour charges, ₹ 50,000 out of petrol expenses and ₹ 20,000 out of telephone expenses. When the matter was carried on before the CIT(A), the disallowance was restricted to 50% of the total expenses. Aggrieved, the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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