TMI Blog2012 (5) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... n 194C(1) and (2) of the IT Act would not apply to the case of the assessee. Since the expenditure has been actually paid and nothing remained payable as at the end of the A.Y. in the form of liability, therefore, provisions of section 40(a)(ia) are not applicable. - ITA No. 1207/PN/2010, CO No. 62/2011 - - - Dated:- 17-5-2012 - Shri I.C. Sudhir Judicial Member and Shri R.K. Panda Accountant Member Appellant by : Shri Alok Mishra Respondent by : Shri M.K.Kulkarni ORDER PER R.K. PANDA, AM The appeal filed by the Revenue and the CO filed by the Assessee are directed against the order dt. 10-06-2010 of the CIT(A)-III, Pune relating to Assessment Year 2005-06 . For the sake of convenience, these were heard together and are being disposed of by this common order. 2. Facts of the case in brief are that the Assessing Officer during the course of assessment proceedings observed that the labour payment expenses, transport charges and bore drilling expenses incurred by the assessee during the year under consideration included payments exceeding ₹ 50,000/- to each labour/subcontractor/ transporter. Such labour payment expenses, transport expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and ; (a) the Central Government or any State Government or (b) any local authority; or (c) any corporation established by or under a Central, State or Provincial Act; or (d) any company; or (e) any co-operative society; or (f) any authority, constituted in India or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both; or (g) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or (h) any trust; or (i) any university established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a university under section 3 of the University Grants Commission Act, 1936 (3 of 1956); or (j) any firm; shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law the small delay occurred be condoned and cross-objections be admitted for hearing. 2. On the facts and circumstances of the case and in law the ground of appeal taken by the AO in their appeal No. 1207-PUN-2010 regarding applicability of sec.194C (2) of the Act is not tenable in law as there is no sub-contract either oral or in writing for payments held to be subject to TDS and therefore, no disallowance can be made invoking sec 40(a)(ia) of the Act, 3. On the facts and circumstances of the case and in law the AO has failed to prove the existence of sub-contract in the instant case within the meaning of sec 194C(2) of the Act. The assessee-Respondent is not expected to prove a thing which is non-existent. The appeal of the Revenue in the circumstances be dismissed. 4. On the facts and circumstances of the case and in law and alternatively the assessee being individual in status was covered by sec.194C of the Act from 01-06-2007 only and therefore, for A.Y. 2005-06 was not obliged to deduct any tax at source as provided in that section. The appeal of the Revenue is, therefore not maintainable and it be dismissed. 5. On the facts and circumstances of the case an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges. The main purpose of introduction of this section in the Act was to make provisions for deduction of tax at sources from the payment made to contractors and sub-contractors in certain cases. Income tax is deductible at source from the income comprised in payments made by a person specified in this section. As per the original section 194C(1) of the IT Act, any person responsible for paying any sum to any contractor for carrying out any work in pursuance of a contract is required to deduct TDS. However, as per section 194C(2) of the IT Act, any person being a contractor responsible for payment of any sum to any sub-contractor in pursuance of a contract with the sub-contractor for carrying out any work is required to deduct tax at the time of payment. Sub-section (2) has later on made a provision according to which any individual or HUF and whose sales exceeds the monetary limits prescribed u/s. 44AB of the IT Act shall be liable to deduct income tax at the time of payment to sub-contractor. It may be noted here that by amendment with effect from 01-06-2007 by the Finance Act, 2007 an individual or HUF has also been added vide subclause (k) in section 194C (1) of the IT Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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