9911796707
TMI Blog2022 (9) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... erry 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 and hence, we will take the facts from assessment year 2013-14. 3. Brief facts are that the assessee is engaged in the manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 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 value of the gold adopted by the assessee is adopted which works out to Rs. 1,10,45,260/- (4328.08 x 2552) (34,42,24,851/1,34,884=Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and have been paid lessor job charges. The making charges incurred during the year is Rs. 39,58,951/- and out of which a small amount of Rs. 5,40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 to any resident for carrying out any work in pursuance of a contract between the contractor and the bodies mentioned therein shall, at the time of cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red 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 1% as estimated by Revenue or it is 4.5% to 6% as claimed by assessee, it neither involves any payment or credit of such sum by way of cash, issue of c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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