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Assistant Commissioner of Income Tax, Burdwan Versus Dilip Saha, Burdwan

2017 (5) TMI 358 - ITAT KOLKATA

Non - prosecution - TDS u/s 194C - payment of wages to labour sardars for non deduction of TDS - addition u/s. 40(a)(ia) - Held that:- It is noticed that inspite of service of notices for the hearing even on 15-03- 2017 fixed by the Bench none appeared on behalf of the assessee nor any adjournment petition was filed. It appears that the assessee is not interested in prosecuting his case. In view of the above, following the decisions in the case of Multiplan India (P) Limited [1991 (5) TMI 120 - .....

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nue) This appeal of revenue is against the order dt: 30-01-2014 passed by the Commissioner of Income Tax-(Appeals), Asansol for the assessment year 2010-11. 2. It is noticed that none appeared on behalf of assessee. The ld. DR submits that the issue involved is that an addition was made by invoking the provisions of section 40(a)(ia) of the Act for non deduction of TDS on the payments made to Labour Sardars and the CIT-A deleted the addition by holding that the Labour Sardars are not labour supp .....

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facts of the case are that the assessee being an individual filed his e-return on 27-09-2010 disclosing total income of ₹ 21,29,065/- and that the assessee is engaged in contractual work. Statutory notices u/s. 143(2)/142(1) of the Act were issued. Against which, the ld.AR of assessee time to time appeared and furnished documents and explanations in support of assessee s filing of said return. During the assessment proceedings the AO found that the assessee made payment to the labour sarda .....

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in question. These labour sardars are remunerated by the union only for the job done. The collected money distributed amongst the labours/labourers by the labour sardars on behalf of assessee and as such deducting of TDS from the said payment amount does not arise at all. The AO was not satisfied with such explanation of the assessee and as such the provision of Section 194C is attracted. Accordingly, he proceeded to make an addition of ₹ 1,26,52,944/- u/s. 40(a)(ia) of the Act and added .....

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₹ 1,26,52,944/- by stating as under:- 23. Before me the same argument as made before Assessing Officer was repeated. In summary the same is as under:- a. The payment to alleged labour leaders are not to them but intended to labourers. b. As per prevailing practice and business control, payment was made through Trade Union (CITU) leaders who disburses to actual labourers. c. The contract the appellant is executing is an integrated one for railways and not labour contract exclusively. The w .....

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nt to labours were made at ₹ 130/- per day. c. Certain case decision in favour of assessee. 24. The matter is examined. In this case the alleged labour contractor is undoubtedly a labourer himself. He gets the same sum as any other labourer i.e. at ₹ 130/- per day. The entire affair is managed through Trade Union. Further contract is executed by him and he has not subcontracted any part of work to execute the contract. The fact is that the so called 'labour sardars 'are not s .....

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Tribunal held that the labour sardars/labour contractors neither beneficiaries nor the contractors/suppliers of labours. 8. Heard ld.DR and perused material available on record. We find that the Coordinate Bench of Kolkata Tribunal in the case of M/s. Kwality Construction by an order dt:14.10.2016 I.T.A No. 18/Kol/2014 Assessment Year: 2009-10. Relevant portion of findings are reproduced herein below for better realization:- 7.1. We find that the ld CITA had deleted the disallowance on the groun .....

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is urged before us that the learned Tribunal ought not to have accepted the judgment and order of the CIT (Appeal) who has quashed the disallowance of deduction of ₹ 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 .....

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irectly 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 supply of labourers and without which there cannot be any application of section 194C and as such the invocation of provision of section 40(a .....

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252/Kol/2013 dated 7.9.2016 had held as under:- "9. We have heard rival contentions of both the parties and perused the materials available on record. At the outset, we find that AO has called the labour contractors by issuing summons u/s. 131 of the Act and their statements were duly recorded. The AO failed to bring anything on record that the labour charges were paid in pursuance of contract either in writing or the oral with the labour sardar. The AO has held that the assessee has not co .....

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/Kol/2014 M/s. Kwality Construction, AY 2009-10 labourers through them, make payments to the other labourers in their presence, though there is no written contract. In the absence of any documentary evidence, I can't call them as Labour Sardars but they are enjoying some special status before the assessee. All the payments were made through them as per Books of Accounts whereas the assessee produced the Muster Roll establishing through it that payments were made to the other co-labourers in .....

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e 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 .....

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re the lower authorities that there is no contract between the assessee and the labour Sardars-Revenue authorities could not controvert the submission of the assessee in this respect- Even before the Tribunal, the Department could not bring out any evidence by producing cogent material in respect of any contract between the assessee and the labour Sardars to contradict the submission of the assessee that there was no contract between the assessee and the labour Sardar-A contractor or a sub-contr .....

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ision of s. 40(a)(ia) is outside the scope and ambit of such enactment" Relying in the aforesaid decisions we find that there is nothing on record to suggest that the payment to labourers were paid to the contractors. On the contrary, assessee has made payment to labourers directly and in support of its claim, Ld. AR of assessee has produced the muster roll. In this regard, Ld. DR failed to bring any defect / information from the muster roll which suggested that the labour charges paid by a .....

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