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The Commissioner of Income Tax, Faridabad Versus M/s Ram Gopal and Sons

2015 (12) TMI 1070 - PUNJAB AND HARYANA HIGH COURT

TDS u/s 194C - Addition on account of labour charges - Held that:- As decided in Commissioner of Income Tax, Faridabad vs. M/s Ram Gopal & Sons [2015 (8) TMI 177 - PUNJAB & HARYANA HIGH COURT ] the assessee claimed deduction in respect of labour charges paid to about 50 labourers. The Assessing Officer reduced this amount having come to the conclusion that only a few labourers were traceable at the given addresses and some of the addresses were not even confirmed. The Tribunal kept in mind the g .....

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ndings of the CIT(A) and of the Tribunal are perverse or absurd. - Decided in favour of the assessee.

Addition on account of shortage in production - Held that:- As decided in Commissioner of Income Tax, Faridabad vs. M/s Ram Gopal & Sons [2015 (8) TMI 177 - PUNJAB & HARYANA HIGH COURT ] the Assessing Officer made an addition to the assessee's income having rejected the assessee's case that there was a shortage in production. The CIT(A) found, as a matter of fact, that the assessee ha .....

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nts to the three transporters mentioned in the assessment order for each order of transport executed by them. The assessee has no contract for transport with any transporter. Thus each GR Note becomes a separate contract and since the value of such contract does not exceed ₹ 20,000/- the assessee was not required to deduct tax at source from the said payments. It was further submitted that this is also borne out by the Board Circular No.715 dated 8.8.1995 - Decided in favour of the assesse .....

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Delhi (in short, the Tribunal ) in ITA No.20/DEL/2009 for the assessment year 2005-06, claiming following substantial question of law:- i) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in deleting the addition of ₹ 13,04,528/- made by the Assessing Officer on account of labour charges simply relying on the decision in assessee's own case in the assessment year 2001-02, without appreciating the facts brought on record by the Assessing .....

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ction 40(a)(ia) of the Income Tax Act, 1961 ignoring the legal position that the tax was required to be deducted on the payment of ₹ 8,59,481/- under section 194C and the assessee's non deduction of tax on the basis of Form No.15-I was against the provision of law? 3. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. Assessment was framed by the Assessing Officer at an income of ₹ 6,15,69,300/- under Section 143 (3) of the .....

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stances of two manufacturers of mehandi in Faridabad viz. M/s Kuriya Mal & Sons, Faridabad and M/s Ishar Dass Amir Chand, Faridabad claiming labour charges at 1.13% and 1.52% respectively. The Assessing Officer was of the opinion that the assessee had inflated the labour charges just to reduce its taxable income. The Assessing Officer thus allowed labour charges to the assessee on the basis of the same as claimed by the other two leading manufacturers of mehandi by adopting the figure of 1.5 .....

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/-. The revenue went in appeal before the Tribunal. The Tribunal following its own decision in the assessee's case for the earlier year, dismissed the appeal filed by the revenue and deleted the addition made by the Assessing Officer. The second issue was with regard to addition of ₹ 20,97,572/- under the head shortage in production. The Assessee had claimed shortage in production at 80,995 kgs. which corresponded to 7.19% of the production. In view of claim of abnormal high losses by .....

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the assessee for the assessment year 1995-96 upheld the order of the CIT(A). The third issue was with regard to addition of ₹ 8,59,481/- under section 40 (a)(ia) of the Act. The assessee had debited a sum of ₹ 9,41,982/- under the head 'freight inwards'. Out of these expenses, the assessee had made payment in excess of ₹ 50,000/- totalling ₹ 8,59,481/- to three transporters. The Assessing Officer was of the opinion that the assessee was liable to deduct tax at sou .....

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of ₹ 8,59,481/- inter alia holding that the assessee was not required to deduct tax at source in view of Circular No.715 dated 8.8.1995. The Tribunal dismissed the appeal filed by the revenue. Hence the instant appeal by the revenue. 4. Learned counsel for the parties are agreed that question No.(i) is covered by the decision of this Court dated 29.7.2015 in ITA No. 215 of 2014 (Commissioner of Income Tax, Faridabad vs. M/s Ram Gopal & Sons), in favour of the assessee and against the r .....

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our charges in earlier years. The deductions were allowed to the assessee. The quantum of expenditure can be compared to the production done by the labour. The labour was engaged on piece rate bases. It was found that there was a co-relation between the production as well as the number of labour engaged. The issue really is a question of fact and appreciation of facts. We are unable to say that this analysis and the findings of the CIT(A) and of the Tribunal are perverse or absurd. 5. As regards .....

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n to the assessee's income having rejected the assessee's case that there was a shortage in production. The CIT(A) found, as a matter of fact, that the assessee had been maintaining the complete details/particulars of opening stock, purchase, consumption, production and sales, which were in fact verified and accepted by the Assessing Officer. The finding is that the addition was made purely on imagination and assumptions without bringing any documentary material on record. The finding is .....

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act and since the value of such contract did not exceed ₹ 20,000/-, the assessee was not required to deduct tax at source from the said payments. Reliance was placed on Board Circular No.715 dated 8.8.1995. It was further recorded as under:- The assessee has made payments to the three transporters mentioned in the assessment order for each order of transport executed by them. The assessee has no contract for transport with any transporter. Thus each GR Note becomes a separate contract and .....

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at one time. But if the goods are transported continuously in pursuance of a contract for a specific period or quantity, each GR will not be a separate contract and all GRs relating to that period or quantity will be aggregated for the purpose of the TDS. It is not the case of the Assessing Officer that each GR is above ₹ 20,000/- and thus the assessee was required to deduct tax at source. This is a legal ground which can be taken up at any point of time in the appropriate proceedings. 3.2 .....

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idering those facts and Board's Circular No.715 dated 8.8.1995, the claim of the appellant is quite justified and correct. Thus the disallowance made by the AO is premature and without any solid finding or evidences. Rather the facts go in favour of the appellant. Hence the disallowance of ₹ 8,59,481/- stands deleted. 7. The Tribunal while upholding the findings recorded by the CIT (A) held as under:- The AO made this disallowance as no TDS was made as per provisions of section 194C fr .....

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e the above disallowance. 16. Before the learned CIT(A) it was submitted that the assessee has made payments to the three transporters mentioned in the assessment order for each order of transport executed by them. The assessee has no contract for transport with any transporter. Thus each GR Note becomes a separate contract and since the value of such contract does not exceed ₹ 20,000/- the assessee was not required to deduct tax at source from the said payments. It was further submitted t .....

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