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2017 (6) TMI 248 - ITAT CHENNAI

2017 (6) TMI 248 - ITAT CHENNAI - TMI - TDS u/s 194C - payments made to the manufacturers without TDS deduction - Disallowance invoking section 40(a)(ia) - whether the payees are not “sub-contractors” ? - leviability of interest u/s.234A/234B/234D - Held that:- Consedring the assessee's submission that the assessee is not a contractor as prescribed u/s.194C(2) of the Act and the previous year involved is 2004-05 relevant to assessment year 2005-06 and the provisions of the section 40(a)(ia) of t .....

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ts. - I.T.A.No. 1494/Mds./2011, And I.T.A.No.1535 /Mds./2011 - Dated:- 2-6-2017 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER, AND Shri Duvvuru RL Reddy, JUDICIAL MEMBER For The Assessee : Mr.T.N.Seetharaman, Advocate For The Revenue : Mr.Murali Mohan, Additional. CIT DR ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER These cross appeals of the assessee and the Revenue are directed against the order of the Commissioner of Income-tax (Appeals)-1, Madurai dated 13.06.2011 pertaining to assessment year .....

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eduction of tax and as the assessee had not done so such payments would not be an allowable expenditure in terms of the disqualification contained in the provisions of section 40(a)(ia). 2. The Petitioner I appellant submits that on the facts of her case the provisions of section 194C are not applicable; consequently, the disqualification contained in the provisions of section 40(a)(ia) are not attracted. 3. The Petitioner I appellant further submits that the payees are not sub-contractors withi .....

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d down in the following decisions: i. CIT vs. Poompuhar Shipping Corporation Ltd [(2006) 282 ITR 3 (Mad)] ii. Mythri Transport Corporation vs. ACIT [(2010) 1 ITR (Trib) 290 (Visakhapatnam)] iii. Kranti Road Transport P. Ltd vs. ACIT [(2012) 50 SOT 15 (Visakhapatnam)] iv. Prashant H Shah vs. ACIT [(2012) 52 SOT 69 (Ahmadabad) (URO)] v. Kavita Chug vs. Income Tax Officer [(2011) 44 SOT 95 (Kol) (URO)] 6. The Petitioner I appellant submits that the above Additional Grounds give rise to a question o .....

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.12.2007 in which the AO disallowed a sum of ₹ 1,07,69,581/- u/s.40(a)(ia) of the Act on the ground that tax was not deducted in respect of payment of job work charges for production of appalam. Aggrieved by the order of ld. Assessing Officer, the assessee carried the appeal before the Ld.CIT(A). On appeal, the Ld.CIT(A) observed that the payments made to the sub contractors were in substance, not payments for purchase of goods, but payments in pursuance of a works contract. The provisions .....

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.02.2010 remitted the matter back to the file of Ld.CIT(A) for consideration afresh while setting aside the order of Ld.CIT(A), for the reason that when matter remained part heard, Ld.CIT(A) passed the order on 24.02.2009 without considering the assessee s submission dated 02.03.2009. 3.2 In the next round, before Ld.CIT(A), the assessee reiterated the same additional grounds raising in the present appeal in ITA No.1494/Mds./2011 for our adjudication. 3.3. On appeal, the Ld.CIT(A) observed that .....

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ployed several people through whom the Appalams were produced. A sum of Rs. 1,07,69,581/- was shown as job work cooly expenses in the P&L A/c. According to Ld.CIT(A), no TDS was done in respect of these payments made through sub contactors. For non-deduction of TDS in respect of cooly payments, the assessee vide letter date 10.12.2007 put forth the following points before Ld.CIT(A). i) Individual payments will not exceed Rs. 50,000/-, all the labourers are native of villages and are illitera .....

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m and in column NO.17(f) of 44AB report the Chartered Accountnat of the assessee admitted as follows:- 17. Amounts debited to the P&L A/c being (f) amounts inadmissible u/s.40(a) - NIL (h) amount inadmissible u/s.40A(3) r.w.r.8D and computation thereof - NIL During the proceedings before Ld.CIT(A), the ld.A.R admitted that a sum of 18,10,611.50 is the amount outstanding payable towards wages. According to Ld.CIT(A), the main contention of assessee was that there was no contract, written or o .....

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o in turn, got the work done through many prsons. Outstanding wages payable in the liability side of balance sheet as on 31.03.2005 included the names of these intermediaries (subcontractors.) 3.4 The assessee relied on the following case laws. i) BDA Ltd. Vs. ITO (TDS) in 281 ITR 99 (Bom.) ii) Teja Constructions Vs. ACIT (2010) 129 TTJ 57 (Hyd.)(UO) Ld.CIT(A) observed that assessee s case can be distinguished on facts from that of the case cited supra. Further, Ld.CIT(A), in his order extractin .....

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his outstanding amount was payable on which TDS was not effected and paid, provisions of the section 40(a)(ia) of the act are clearly attracted to that extent in assessee s case. Further, Ld.CIT(A) observed that the sub-contractors (deductees) are not assessed to tax. Hence, the question of deductees accounting for such receipts will not arise. The AO noticed violations of assessee u/s.40A(3) of the Act. As per assessee s letter dated 30.09.2007, none of the sub-contractors were having bank acco .....

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