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2016 (11) TMI 604 - ITAT KOLKATA

2016 (11) TMI 604 - ITAT KOLKATA - TMI - TDS u/s 194C - non deduction of tds on machine hire charges and transport charges - Held that:- We find that the Amendment has come into effect with retrospective date and as per the amended provision if the payee has included the receipt in its books of account and has offered for taxes then the disallowance on account of non-deduction of TDS will not arise. In this view of the matter, we concur with the view of the Ld. CIT(A) where it was held that the .....

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eard to assessee. - ITA No. 2734/Kol/2013 - Dated:- 5-10-2016 - Shri Waseem Ahmed, Accountant Member And Shri S. S. Viswanethra Ravi, Judicial Member By Appellant : Sh. Md. Ghayas Uddin, JCIT-SR-DR By Respondent : Shri Sanjay Bhattacharya, FCA ORDER Per Waseem Ahmed, Accountant Member:- This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-XIX, Kolkata dated 06.09.2013. Assessment was framed by ITO Ward-41(1), Kolkata u/s 143(3) of the Income Tax Act, 1961 (here .....

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stances of the case, the Ld. CIT(A) erred in holding that the rent and payments to contractors are not hit by the provision of section 40(a)(ia) of the Income Tax Act without appreciating the fact that section 29 of the Income Tax Act enumerates the deduction to be allowed in computing business income and that the section 28 should not be read in isolation but with reference to section 29, sec. 30 to sec. 37 and sec. 40 sec. 40(a)(ia) and sec. 43 of the Income Tax Act, 1961 respectively. Sh Md. .....

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hereafter the case was selected for scrutiny as per action plan and subsequently notice u/s 143(2) r.ws. 142(1) was issued upon the assessee. The assessment was framed u/s 143(3) of the Act at a total income of ₹ 2,02,04,217.00 by disallowing certain expenses which are detailed in the grounds of appeal of Revenue as under. 3. The common issue raised by Revenue in this appeal is that Ld. CIT(A) erred in deleting the addition made by Assessing Officer on account of non deduction of Tax Deduc .....

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ection 194C of the Act. The AO also observed that assessee has made the payment exceeding ₹20,000/- in cash other than crossed cheque or draft to the certain parties towards machine hire charges and therefore assessee has violated the provision of Sec.40A(3) of the Act. Such cash payment was amounting to ₹ 71,01,895/-. The AO found that total disallowance on account of non deduction of TDS is greater than the disallowance made u/s 40A (3) of the Act. Therefore, the AO also disallowed .....

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whether the provision of section 40(a)(ia) will come into play or not. From the foregoing discussion in the matter, I find that the AO has hastily concluded that the hiring charges are of contractual in nature and decided the issue to be covered u/s. 194I of the Act without finding out the factual position in the matter. On the other hand the contention of the appellant lends much force on the issue that the payments made for hiring the machineries were not in the nature of contractual payments .....

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re charges will not come under the purview of section 30 to 37 of the Act. The recipients of the hire charges already included these payments in their accounts whereby the respective certificates have been filed to that effect. The assessee cannot be considered to be a defaulter us/s 201(1) of the Act i.e. not liable to deduct tax on those payments. There is also no loss to the revenue as such on these transactions since the amounts have already been shown as income in the recipient s hands. For .....

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gree with the arguments presented by the appellant and have no hesitation in treating the hire charges paid as items forming part of the trading accounts of the app. It was for the AO to prove that the provision of section 194I is attracted for invoking section 40(a)(ia) after ascertaining the facts and circumstances surrounding the appellant s case. Mere assumption in the matter will not justify his action which needs to be corroborated with conclusive proof and reasoning to make out his case. .....

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of section 194C of the Act therefore the provision of TDS are very much attracted to the disputed transactions. He further submitted that the Amendment to Sec. 201(1) was brought under the Statute by the Finance Act 2012 and it came into force with effect from 01.04.2013 and the present case pertains to the assessment year 2009-10, therefore the amendments are not applicable to the disputed transactions. Without prejudice to the above Ld. DR further submitted that in case relief in the instant c .....

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Accountant which are placed on pages 23 to 32 of the paper book. The ld. AR with regard to disallowance to be made u/s. 40A(3) of the Act has further submitted that major payments were made through cheque and the amount disallowed by AO u/s 40A(3) is not correct. Ld. AR of assessee requested the Bench to restore the matter back to the file of AO for fresh verification whether the payment has been made in violation of the provision of Sec. 40A(3) of the Act. The ld. AR relied in the order of ld. .....

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reproduced below:- … From the above, judgment of the Hon'ble jurisdictional High Court in the case of Peerlees Hospitax Hospital and Research Centre Ltd. Kolkata (supra) it is clear that Hon'ble jurisdictional High Court has not considered that the second proviso to Sec. 40(a)(ia) of the Act as inserted by the Finance Act, 2012 is retrospective or prospective. 9. It would thus appear that no submission was made before Hon'ble Calcutta High Court that the second proviso was cu .....

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pplied to amount outstanding at the end of the year and not in respect of payments actually made during the previous year or not? Hon'ble Calcutta High Court was pleased to hold that clause (ia) was applicable not only in respect to outstanding amounts but also amounts but also amounts paid. In deciding te said controversy, the Hon'ble Calcutta High Court was pleased to reject the submission on behalf of the assessee that the object behind the insertion of the second proviso with effect .....

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is curative and clarificatory did not arise for consideration in Crescent s case, was not debated before the Hon'ble Calcutta High Court. Hon'ble Supreme Court in the case of In State of Haryana v. Ranbir, (2006) 5 SCC 167, has discussed the concept of the biter dictum thus: A decision, it is well settled, is an authority for what it decides and not what can logically be deduced therefrom. The distinction between a dicta and obiter is well known..Obiter dicta is more or less presumably .....

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