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2015 (3) TMI 1118 - ITAT MUMBAI

2015 (3) TMI 1118 - ITAT MUMBAI - TMI - Tds u/s 194C - non deduction of TDS - disallowance u/s. 40(a)(ia) - Held that:- We hold that section 40(a)(ia) is not attracted in respect of payment already made by the end of the previous year. The AO is directed to verify the claim of the assessee and if it is in line with the view taken herein the same may be considered accordingly. - Decided in favour of assessee. - ITA NO.2293/MUM/2013, ITA NO.2294/MUM/2013 - Dated:- 4-3-2015 - SHRI I.P. BANSAL, JUDI .....

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alidity of reopening of the assessment. However, during the course of hearing Ld. AR did not press any grounds except Ground No. 4(b) and the fact that he did not press other grounds is mentioned on the ground of appeal itself on the date of hearing. Ground No.4 in both the appeals read as under: Ground No.4: in ITA No.2293/Mum/2013: 4.0 The Ld. CIT(A) before confirming the disallowance u/s. 40(a)(ia) r.w.s. 194C of labour charges of ₹ 1,35,05,623/- ought to have appreciated the understate .....

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. 40(a)(ia) r.w.s. 194C of labour charges of ₹ 97,93,037/- ought to have appreciated the understated vital facts, being; a) There is no oral or written contract executed by the appellant with the labourers. b) The provision of Sec. 40(a)(ia) shall apply only in respect of the amounts payable at the end of the year and shall not apply on the amounts actually paid by the appellant during the year. c) The labour charges had been paid against the labour recoveries thereby having profit neutral .....

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t (Rs.) Labour charges on which TDS is not deducted (disallowed in assessment) ₹ 1,35,05,623 Less: Labour charges Paid Rs. (65,83,283) Balance Labour charges Payable on which TDS is not Deducted ₹ 69,22,340 A.Y. 2006-07: Particulars Amount (Rs.) Labour charges on which TDS is not deducted (disallowed in assessment) ₹ 97,93,037 Less: Labour charges Paid Rs. (96,65,685) Balance Labour charges Payable on which TDS is not Deducted ₹ 1,27,353 It was mentioned by Ld. AR that to .....

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years no disallowance should be made. 3.1 For the remaining amount, it was submitted by Ld. AR that disallowance may be upheld. It was further submitted by Ld.AR that for verification of the aforementioned facts the matter may be sent to the AO. 4. On the other hand, Ld. DR submitted that disallowance has to be made irrespective of the fact that whether payment is made during the year or not and for this purpose Ld. DR has relied upon the decision of Mumbai Tribunal in the case of ITO vs. Prati .....

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r contentions have carefully been considered. After careful consideration, respectfully following the decision of Co-ordinate Bench in the case of M/s. Vivil Exports P. Ltd. vs. ITO (supra), we delete the disallowance. For the sake of completeness relevant observation of the Tribunal from the said decision are reproduced below: 4. Though number of grounds were urged before us in the grounds of appeal annexed to Form No. 36, at the time of hearing the learned counsel for the assessee submitted th .....

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39;ble Allahabad High Court in the case of M/s. Vector Shipping Services (P) Ltd. wherein it was held that section 40(a)(ia) applies only to those amount which remains payable by the end of the previous year. In other words, in respect of payments already made section 40(a) (ia) is not attracted: - i. ACIT vs. M/s. Eskay Designs - ITA No. 1951/Mds/2012 dated 09.12.2013. ii. ITO vs. Theekathir Press - ITA No. 2076/Mds/2012 & CO No. 155/Mds/2013 dated 18.09.2013. The learned counsel for the as .....

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ccordingly the Chennai Bench held that section 40(a)(ia) is not attracted in respect of the amount already paid by the assessee. 5. The learned D.R., on the other hand, could not place before us any contrary judgement on this issue. Though the learned D.R. promised to file written submissions within one day, it was not filed. In other words, there is no contrary decision on this issue. 6. Having regard to the circumstances of the case, without going into the other aspects, which were in fact not .....

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assessee is treated as allowed for statistical purposes 5.1 Moreover, Hon ble Allahabad High Court in the case of CIT vs. Vector Shipping Services (P) Ltd.(supra) has held that for disallowing expenses from business and profession on the ground that TDS has not been deducted, amount should be payable and not which has been paid by end of the year. The said decision of Hon ble Allahabad High Court was made subject to Special Leave Petition filed before Hon ble Supreme Court and their Lordships vi .....

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