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Income Tax Officer, Ward 8 (3) , Pune Versus Shri Chandrakant J. Mandale, Prop. Bhagyalaxmi Builders & Contractors,

2015 (4) TMI 1140 - ITAT PUNE

Non deduction of tds - Addition on account of petty contract charges on account of hire charges - invoking section 40(a)(ia) - retrospectivity - Held that:- The Tribunal in the case of M/s Gaurimal Mahajan & Sons (2015 (3) TMI 770 - ITAT PUNE ) dealt with another argument of the assessee to the effect that the second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 w.e.f. 01.04.2013 be applied retrospectively. Notably, the said second proviso to section 40(a)(ia) of the .....

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with the directions of the Tribunal in the case of M/s Gaurimal Mahajan & Sons (supra) - ITA No.1708/PN/2012 - Dated:- 10-4-2015 - SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER Department by : Shri Rajesh Damor Assessee by : Shri Sharad Shah ORDER PER G. S. PANNU, AM The captioned appeal preferred by the Revenue against the order of the Commissioner of Income Tax (Appeals)-V, Pune dated 28.05.2012 which, in turn, has arisen from the order dated 22.12.2010 passed by t .....

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in the business of civil construction. During the year under consideration, assessee filed a return of income declaring total income of ₹ 9,06,137/- which was subject to a scrutiny assessment u/s 143(3) of the Act. The Assessing Officer noted that in the Profit & Loss Account, assessee had debited ₹ 18,23,975/- and ₹ 132, 52,950/- on account of petty contract charges and hire charges respectively without deduction of tax at source as per the requirement of section 194C of t .....

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the CIT(A) that there was no amount outstanding in the Balance Sheet as on 31.03.2008, and therefore no disallowance was required to be made. The CIT(A) agreed with the contentions of the assessee and by following the decision of the Visakhapatnam Special Bench of the Tribunal in the case of Merilyn Shipping & Transports vs. ACIT, 70 DTR 81 (Visakhapatnam) (SB) directed the Assessing Officer to delete the aforesaid impugned addition. Not being satisfied with the decision of the CIT(A), Reven .....

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e Paper Book filed on behalf of the assessee. We have also considered the various decisions brought to our notice by both the sides. There is no dispute to the fact that the assessee has not deducted TDS on an amount of ₹ 58,81,847/- for which the Assessing Officer applying the provisions of section 40(a)(ia) made addition of the above amount. We find the Ld.CIT(A) deleted the addition made by the Assessing Officer on the ground that provisions of section 40(a)(ia) are not applicable since .....

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l in the case of M/s Gaurimal Mahajan & Sons (supra) dealt with another argument of the assessee to the effect that the second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 w.e.f. 01.04.2013 be applied retrospectively. Notably, the said second proviso to section 40(a)(ia) of the Act prescribes that the disallowance u/s 40(a)(ia) of the Act could not be made if an assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the A .....

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Counsel for the assessee. We find the Cochin Bench of the Tribunal in the case of Antony D. Mundackal (Supra) relied on by Ld. Counsel for the assessee, had an occasion to decide an issue in the light of the above argument and has restored the issue to the file of the Assessing Officer with certain directions. The relevant observation of the Tribunal at Para 7 of the order read as under: 7. We have heard the rival contentions and carefully perused the record. According to the assessee, there is .....

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provisions of sec. 194C are wide enough to cover oral contracts also. A contract is normally reduced in writing in order to make clear the terms and conditions, obligations of the parties to the contract etc. If the conditions of contract are otherwise understood by the parties, in view of the repeated transactions, in our view, the absence of a written contract would not make any difference. In the instant case, the assessee is repeatedly given works to the polishing people and hence the terms .....

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r submitted that the assessee has included the cost of polishing works in the sale value of aluminium extrusions, without knowing tax implications. However, we notice that the assessee did not furnish any proof to substantiate the above said claims. The assessee, being a dealer in aluminium extrusions, has only supplied the products after carrying out the polishing works according to the taste and requirement of customers. It is only one of the many business techniques normally adopted by a busi .....

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s and polishing people, Accordingly, the claim that the assessee stands in a fiduciary capacity is also liable to be rejected. In this kind of factual situation, in our view, the existence or absence of profit element in the polishing works does not make any difference. 7.2 The Ld Counsel, by placing reliance on the decision of special bench in the case of Meryline Shipping and transports (supra) contended that the provisions of sec. 40(a)(ia) shall apply only to amount payable and not to the am .....

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reful perusal of the decision given by Hon'ble Allahabad High Court, we notice that the High Court has decided the issue referred to it on a different footing and has made a passing comment about the decision rendered by the Special Bench. Thus, the ratio of the said decision is different from that rendered in the case of Meryline Shipping and Transports by the Special bench. Hence, we are inclined to reject the contentions of the assessee on this point also. 7.3 The assessee placed reliance .....

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