TMI Blog2020 (2) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... bour charges paid by the assessee. AO is therefore, directed to examine whether the labour charges paid by the assessee included reimbursement of the material and transportation cost and if it is found to be so, then after excluding such payment if the payment towards labour charges is less than ₹ 50,000/- to each of such persons, then TDS provisions would not be attracted. However, if the assessee is not able to produce the evidence in support of reimbursements, then the AO shall apply the provisions of section 40(a)(ia) to make the disallowance in respect of such payments. Appeal of assessee is partly allowed for statistical purposes. - I.T.A. No. 442/HYD/2012 (Assessment Year: 2007-08) - - - Dated:- 23-12-2019 - SMT. P. MADH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-Tax (Appeals) erred in applying the provisions of Sec.40(A)(3) to the amounts paid of ₹ 3,16,636/- and further erred in arriving at the disallowance of ₹ 63,327/- . 6. The learned Commissioner of Income-Tax (Appeals) erred in confirming the charging of Interest u/s.234B and u/s.234C of the I.T Act. 7. Any other ground that may be urged at the time of hearing . 2.1. At the time of hearing, the Ld.Counsel for the assessee submitted that the assessee does not wish to press Ground No.3 in view of the decision of the Hon'ble Supreme Court in the case of Palam Gas Service Vs. CIT [394 ITR 300] (SC) [Civil Appeal No. 5512 of 2017 dt. 03-05-2017]. Accordingly, the said Ground is rejected, as not pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 Priya Engg. Works 16,03,484 10 SS Kalani Engineering 2,56,511 11 VST Engineering 3,21,505 12 NV Fabricators 4,47,730 13 Laxmi Fabricators 2,43,575 14 Metal Engineers 55,070 15 S. Eswara Rao 1,58,000 16 PB Sivanarayana 1,00,000 17 R Srinivasa Rao 1,00,000 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouchers were maintained by the assessee in support of such claim. 3.2 With regard to three parties, to whom admittedly the payments were made in excess of ₹ 50,000/-, the AO held that the provisions of Section 194C of the Act were applicable but the assessee had claimed that disallowance of expenditure u/s.40(a)(ia) of the Act would not apply when the amount was actually paid. (However, this issue is not pressed by the assessee in this appeal). The AO accordingly made the disallowance u/s.40(a)(ia) of the Act of the entire expenditure of ₹ 56,26,265/- on which no TDS was made, according to him, the provisions of Section 194C of the Act were applicable to all the payments. 4. Aggrieved by the order of AO, the assessee prefe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portation cost which is reimbursed by the assessee along with the job work charges, is to be accepted, then the purchase cost of the material and transportation charges which are reimbursed by the assessee would not attract the TDS provisions, as the provisions of Section 194C of the Act would apply only to the works contract, i.e. only the job work performed by the respective parties. Thus, the transportation charges and the material cost if it is the reimbursement of charges by the assessee cannot be considered as part of the contract and the provisions of Section 40(a)(ia) of the Act would not apply to the component of cost of the material and transportation charges. However, the findings of AO and the CIT(A) are that the total of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s paid by the assessee. The AO is therefore, directed to examine whether the labour charges paid by the assessee included reimbursement of the material and transportation cost and if it is found to be so, then after excluding such payment if the payment towards labour charges is less than ₹ 50,000/- to each of such persons, then TDS provisions would not be attracted. However, if the assessee is not able to produce the evidence in support of reimbursements, then the AO shall apply the provisions of section 40(a)(ia) to make the disallowance in respect of such payments. 11. In the result, the appeal of assessee is partly allowed for statistical purposes. Order pronounced in the open court on 23rd December, 2019 - - TaxTMI - TM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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