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TMI Blog2016 (11) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... ike railways and other Government undertakings since 1982-83. The ld AO observed that the assessee in its profit and loss account debited an amount of Rs. 2,04,79,685/- towards labour charges and details of the same were furnished by the assessee. The ld AO directed the assessee to explain why the labour payments made to 14 labour contractors should not be disallowed u/s 40(a)(ia) of the Act as the same were paid without deduction of tax at source . The assessee submitted the total number of labours working under each labour contractor / labour sardars and stated that the labours are coming from the remote villages and even inter state and they have no knowledge of Income Tax Act. It was submitted that the labour sardars were paid commission from the labour bill which is included in the labour payments. It was further submitted that no payment has been made over Rs. 20,000/- in cash and the overall limit of commission paid to each labour sardar also fall within the limit prescribed u/s 194C of the Act. Accordingly, it was claimed that the question of obligation to deduct tax at source does not arise. The ld AO however found that the payments were made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be for carrying out of any work, (iii) the work is to be carried through the contractor, (iv) the consideration for the contract should exceed the amount fixed by section 194C and (v) that the payment is made to the contractor for the work carried out by him. Therefore, section 40(a)(ia) cannot be read in isolation or to the exclusion of section 194C. In the instant case, the controversy was regarding the payments made for disbursement of labour charges to labour sardars. The appellant had specifically stated before the AO that there was no contract between the appellant and the labour sardars. Keeping in view the totality of the facts and circumstances of the case and the submissions of the assessee, I am of the firm opinion that in the instant case, the appellant does not fall within the ambit of section of 40(a)(ia) of the Act. I find force in the argument of the A/R of the appellant that the labour sardars in the instant case cannot be said to be labour contractors within the meaning of the provision of section 194C(2). In the circumstances, there is no requirement in law to deduct tax at source by the appellant under the provisions of section 194C(2). I find in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; primary evidences were indeed submitted by the assessee. He argued that the wage registers as called for by the ld AO would be maintained only for permanent labourers and not for temporary labourers. There is no direct contract entered into by the assessee and hence the payments made by the assessee is outside the ambit of provisions of section 194C of the Act. He placed reliance on the following decisions in support of his contentions :- (a) Order of Hon'ble Calcutta High Court in the case of CIT vs Stumm India in ITA No. 127 of 2009 dated 16.8.2010. (b) Decision of this Tribunal in the case of Samanwaya vs ACIT reported in 34 SOT 332 in ITA No. 484 (Kol) of 2008 dated 23.4.2009 . (c) Decision of this Tribunal in the case of ITO vs Saha Agency in ITA No. 2453/Kol/2013 dated 20.5.2016. (d) Decision of this Tribunal in the case of Seaking Enterprise vs ITO in ITA No. 1670/Kol/2009 dated 26.8.2016. (e) Decision of this Tribunal in the case of ACIT vs Supreme Construction in ITA No. 1252/Kol/2013 dated 7.9.2016. 7. We have heard the rival submissions. The assessee had made payments of labour charges as below:- DETAILS OF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of Rs. 41,33,710/- and on account of tax deduction at source. The learned Tribunal has recorded the fact that the department has not been able to bring any material on record to show that the assessee has made the payment to the transporters in pursuance of contract for carriage of goods of the assessee and the question of deduction at source under section 194C does not and cannot arise. In the absence of evidence of payment made by the assessee to the transporters, the assessee cannot be saddled with the liability of deducting tax at source. Before us no other point has been urged not it is said that the aforesaid fact finding is truthful without any basis whatsoever." 7.2. We find that the decision of this tribunal in the case of Samanwaya vs ACIT reported in 34 SOT 332 in ITA No. 484 (Kol) of 2008 dated 23.4.2009 directly supports the case of the assessee wherein it was held that :- "We find that in this case, admittedly, the labour sardars in the present case has no locus standi as labour contractor as a labour sardar and a labour contractor are as different as chalk and cheese. We find that there was no contract between the assessee and the labour sardars for supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully convinced with their plea that these persons are simply labourers and nothing more than that. From their appearance, dress, behavior and confidence, I am confident that they are the labour sardars, though they are denying this fact. Whether you admit or not but it can not be denied that these persons enjoy some privileged positions in comparison to other labourers." From the above it is amply clear that the AO himself is not sure and forming the opinion on his own surmise and conjecture. In our considered view the ld. DR has not brought anything contrary to the findings of ld. CIT(A). In this connection we rely on the decision of ACIT vs. Kalindi Agro Biotech Ltd. (2012) 20 taxmann.com 339 where it was held that the provisions of Sec. 194C of the Act are applicable if the payment has been made to a contractor for the year exceeding Rs. 20,000/-. Similarly the jurisdictional ITAT, Kolkata in the case of Samanwaya Vs. ACIT 34 SOT 332 has held as under : "Business expenditure-Disallowance under s. 40(a)(ia)-Need for TDS under s. 194C relating to payments made for disbursement of labour charges to labour Sardars-Assessee had specifically stated before the lower authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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