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2015 (6) TMI 453 - ITAT AHMEDABAD

2015 (6) TMI 453 - ITAT AHMEDABAD - TMI - TDS u/s.194C on payments made to Sub- Sub Contractor - CIT(A) deleted disallowance - Held that:- As per section 194-C(2) of the Act, the contractor is required to deduct the tax on the payment made to the sub-contractor. In the case in hand, the undisputed fact is that the assessee has made the payments towards labour charges as a sub-contractor. Moreover, the Revenue has not brought any material on record suggesting that payments debited as labour expen .....

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cted against the order of the Ld.Commissioner of Income Tax(Appeals)-V, Surat. ( CIT(A) in short) dated 28/01/2011 pertaining to Assessment Year (AY) 2007-08. The Revenue has raised the following grounds of appeal:- 1. On the facts and in the circumstances and in law, the ld.CIT(A) has erred in deleting the addition made by the A.O. at ₹ 1,44,16,556/- after accepting the assessee s plea that sub contractor is not required to deduct TDS u/s.194C on payments made to Sub- Sub Contractor despi .....

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imed u/s.30-38 of the Act only whereas the assessee has claimed the exp.u/s.28. 3. On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition made by the AO at ₹ 1,44,16,556/- after holding that the provisions of section 28 are applicable in assessee s case instead of section 30-38 after placing reliance upon the non Jurisdictional ITAT Hyderabad decision delivered in the case of K.Srinivas Naidu Vs. ACIT 131 TTJ 17 Hyd. Further the facts .....

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provisions of section 40(a)(ia) of the Act for non-deduction of TDS on the labour payments. Against the said assessment order, the assessee filed an appeal before the ld.CIT(A), who after considering the submissions of the assessee, allowed the appeal; thereby the addition made on account of disallowance of labour payments by invoking the provisions of section 40(a)(ia) of the Act was deleted. Aggrieved by the order of the ld.CIT(A), now the Revenue is in appeal before us. 3. The only effective .....

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he assessee was not required to deduct the tax on such payments. He submitted that this finding of the ld.CIT(A) is not justified and against the provisions of law. 3.1. On the contrary, ld.counsel for the assessee supported the order of the ld.CIT(A) and submitted that there is no infirmity in the order of the ld.CIT(A). He placed reliance on the judgment of Hon ble Gujarat High Court rendered in the case of CIT vs. Prashant H. Shah reported at (2013) 29 taxmann.com 296 (Gujarat). Reliance has .....

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missions of the appellant. The A.O. action of disallowing the labour payment cannot be approved due to the following reasons: i. For the AY in consideration the provisions of sec. 194C(2) of the Act casted the responsibility on the contractor to deduct the TDS on any payment made to any sub-contractor. There are no provisions in the relevant section which cast responsibility on the sub-contractor to deduct TDS on any payment made to any person to whom the sub-contractor has subcontracted his wor .....

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imagined as payment out of contractual obligations. Even otherwise also none of the payments is in excess of the prescribed limit for deduction of tax. ii. There is a force in submissions of the appellant that direct expenses like labour charges are covered by provision of sec. 28(i) not by provisions of sec.40(a)(ia). This view has been confirmed in the case of K. Shrinivas Naidu vs. ACIT 131 TTJ 17 Hy.Bench. In view of the above position of law and facts the addition on account of disallowance .....

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12/2009, submitted that he did not file the TDS return and thereby inferring that he had failed to deduct the tax at source on the labour payments of ₹ 1,68,07,463/-. However, the contention of the assessee was that assessee being not a contractor, therefore the provisions of section 194C(2) of the Act was not applicable. The assessee also placed reliance on the judgement of Hon ble Gujarat High Court rendered in the case of CIT vs. Prashant H.Shah. The Hon ble Gujarat High Court in the sa .....

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