TMI Blog2022 (9) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other mode. But, in the present case before us the AO as well as CIT(A) has categorically noted that there is wastage charges and wastage to the extent of 4.5 to 6% varies in this trade as claimed by assessee. But, Revenue's contention is that the wastage is only 0.5% to 1%. Here only the issue is only claim of wastage and not any payment as envisaged in the provision of section 194C of the Act. Once, there is no payment there is no question of deduction of TDS U/S. 194C of the Act because there is no mandate in the Act for deduction of TDS without payment and that mode is also prescribed. The Tribunal i.e., the Co-ordinate Bench in the case of Siva Valli Vilas Jewellers Pvt. Ltd. [ 2021 (4) TMI 116 - ITAT CHENNAI ] has conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry in ITA No. 108 198/CIT(A)-PDY/2016-17 dated 06.03.2018. The assessment was framed by the DCIT, Pondicherry Circle, Pondicherry for the assessment years 2013-14 2014-15 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter the 'Act') vide orders dated 31.03.2016 27.12.2016. 2. The only common issue in these two appeals of assessee is as regards to the order of CIT(A) confirming the action of the AO in making disallowance of wastage claimed in manufacturing of gold ornaments by invoking the provisions of section 40(a)(ia) of the Act for non-deduction of TDS U/S. 194C of the Act. For this, assessee has raised various grounds which need not to be reproduced. The facts and circumstances are exactly identical in both the years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4C of the Act and accordingly estimated the wastage at 1%, excess wastage was treated as payment and disallowed by observing in para 3.6 as under:- 3.6 Finally, assessee's contention that tax need not be deducted at source when consideration is paid otherwise than by cash/cheque is not acceptable because even if prices by way of winnings, game shows, etc are paid partly in cash and kind. TDS needs to be deducted on the aggregate value of the cash and the price received in kind. Hence, in view of the above findings, the wastage is restricted to 1% of the gold retained by the goldsmith. Wastage in excess of this 1% is treated as gold in lieu of making charges which works out to 4328.08gm. For valuation of the same, closing stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions and gone through facts and circumstances of the case. We noted the fact that the assessee purchases old gold from the customers and the same are melted to get pure gold through goldsmiths. The assessee gets the jewellery made through goldsmiths to whom he pays making charges. The assessee in the process claims that there is wastage suffered to the extent of 4.5% to 6% of gold. The entire process is that the assessee had outsourced its manufacture to certain jewelers outside Pondicherry and pathars in Pondicherry. It could be seen that the jewelers have not claimed any wastage as they have made good the loss and have paid higher job charges which includes the value of wastage suffered. But the pathars have been allowed wastage an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this, now we have to turn to the provisions of section 194C of the Act. The relevant provision reads as under:- 194C: Any person responsible for paying any sum to any resident (hereinafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person 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 a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to- From the above provision, we noted that sub-section (1) of 194C of the Act lays down that any person responsible for paying any sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd gone through orders of the authorities below. The provisions of section 194C is applicable, when the assessee has paid or credited any charges covered thereunder. In case, no payment is debited or credited to respective parties account, then such payment cannot be considered within the ambit of section 194C or any other TDS provisions. In this case, the assessee has neither debited making charges into profit and loss account nor credit any amount to the respective parties account. Therefore, when no payment is made or amount is credited to respective parties account, then question of application of provisions of section 194C does not arise at all. 7. In view of the above, in the present case the issue of wastage whether it is 0.5% to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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