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TMI Blog2018 (6) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2014. 2. The grievances raised by the Revenue as follows: "1. Was the Ld. CIT(A) right in law and in facts in deleting the addition of Rs. 43,17,719/-, stating that the disallowance of entire labour charges just because of technical liability /role u/s 40(a)(ia) will result into absurd assessment of income, thereby going against the provisions of the Act. 2. That the Ld. CIT(A) has erred in deleting the addition of Rs. 43,17,719/-,thereby violating the ruling of the Hon'ble Calcutta High Court in the case of CIT vs Crescent Export Syndicate [216 taxman 258 (2013)], wherein it has been ruled that the fact that the impact of s.40(a)(ia) is harsh "is no ground to read the same in a manner which was not intended by the legislature". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the payment made to Labour Sardars. During the reassessment proceedings, the Assessing Officer received information u/s. 133(6) of the I.T. Act from Shri Shopujan Singh, one of the Labour Sardars, who confirmed that he had raised bill of Rs. 61,836/- and had a closing balance of Rs. 57,636/ as on 31.03.2008. Therefore, the Assessing Officer noted that there must be some written or verbal agreement between the assessee and the Labour Sardars, that is why, Sri Shopujan Singh has not taken payment like a daily paid labourer. Sri Shopujan Singh (Sardar) had worked throughout the Financial Year 2007-08 and maintained account and therefore he had a closing balance with the assessee. Therefore, the Assessing Officer noted that there is payee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceding the financial year in which sum is credited or paid to the account of the contractor, shall , at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier.[Enacted by the Finance Act, 2007 take effect from 1st day of June 2007] The ld Counsel also submitted that assessment year 2008-09 was the initial year of introduction of the clause (ia) to section 40(a) of the Act and there was no clarity on the subject, therefore, disallowance should be deleted. 7. We have given a careful consideration to the rival submissions and perused the materials available on records, we note that in the assessee's case under consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Rs. 6,93,039/- on account of non-deduction of TDS u/s 40(a)(ia) of the Act on account of advances given by the assessee. 9. The brief facts qua the issue are that during the assessment proceedings, the assessee has shown Gross Receipts from M/s. Dream Bake Pvt. Ltd. to the tune of Rs. 53,94,463/- instead of Rs. 60,87,502/-. The Assessing Officer received Information u/s. 133(6) of the I.T. Act 1961, from M/s. Dream Bake Private Limited that they have paid to the assessee during the Assessment Year 2008-09 Rs. 60,87,502/- and deducted TDS of Rs. 1,37,931/-. During the assessment proceedings, the assessee submitted that these payments were purely advances and advances received is not an income as no bill has been raised during the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld Counsel for the assessee has defended the order passed by the ld CIT(A). 11. We have heard learned arguments on both sides and we proceed to record our opinion on the issue under consideration. First of all, we think that it is worthwhile to quote the bare provisions of section 198 of the Income Tax Act 1961, which read as under: "Section 198:Tax deducted is income received. All sums deducted in accordance with the foregoing provisions of this Chapter shall, for the purpose of computing the income of an assessee, be deemed to be income received: Provided that the sum being the tax paid, under sub-section (1A) of section 192 for the purpose of computing the income of an assessee, shall not be deemed to be income received." From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the assessee, it will be an obligation/liability till the related work/service gets executed as per terms and conditions of the parties. This is the commercial principle. Therefore, we are of the view that as the assessee has claimed TDS on the advance, as we explained above that advance cannot be treated as income, hence the TDS amount is to be the deemed income received during the year. Thus, the addition should be restricted to the TDS amount to the extent of 1,37,931/-. That being so, we decline to interfere in the order passed by the ld. CIT(A) and his order on this issue is hereby upheld and the Ground raised by the Revenue on this issue is dismissed. 12. In the result, the appeal filed by the Revenue is dismissed. Order is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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