PRINCIPAL COMMISSIONER OF INCOME TAX vs. SHRI TULSI RAM MODI

Date : 14/08/2015 Hon'ble Mr. Justice Ajay Rastogi Hon'ble Mr. Justice Anupinder Singh Grewal Mr. Nikhil Simlote Adv., for appellant.

Instant appeal is directed against order of the Income Tax Appellate Tribunal (“Tribunal”) dt.31.10.2014.

The respondent assessee is the proprietor of M/s. Riddhi Siddhi Industries & as alleged is engaged in sales of aluminum sections/profiles/ profiles, glass sheets, wooden/gypsum boards etc. It has been alleged by the assessee that installation of fitting of such material at customers' premises is undertaken by employing casual labourers. During the course of proceedings the AO was of the view that the amount paid by the assessee to the casual labourers was liable for TDS u/S 194C(3) & that being so the assessee became contractor & the casual labourers became sub-contractor, as such the assessee ought to have deducted TDS @1% on the payment made to sub-contractor and due to non- deduction of TDS, such amount paid by the assessee was disallowed u/S40(a)(ia) of the Act.

However, appeal came to be preferred by the assessee before the Commissioner of Income Tax (Appeals) & the appellate authority on appreciation of facts & looking to the nature of work undertaken by the assessee by employing casual labourers at the business premises of customers deleted the additions (2) by holding as under :- “(i) that the provisions of Section 194C and Section 40(a)(ia) of the Act were not applicable. (ii) besides the Section 40(a)(ia) of the Act was applicable to the amount outstanding at the end of the year in view of the ITAT special Bench decision in the case Merilyn Shipping & TTJ 888.”

According to CIT(A), such labourer hired by the assessee employed as casual labourers could not be considered to be sub- contractor and finally was of the view that the assessee was not liable to deduct TDS u/S 194C and the disllowance u/S 40(a) (ia) of the Act is not warranted.

However, order of the CIT appeals came to be further assailed by the revenue before the Tribunal & on re-appreciation of the evidence the Tribunal while confirming the view of CIT(Appeals) observed that no adverse inference can be derived from the auditors remark as it is only the statement of fact about wages and in any case auditors vague remarks cannot be construed as a conclusive statement and this is the job of AO to pursue the facts, circumstances and material in entirety and not to resort to piece meal observations and in the given facts & circumstances observed that the view expressed by CIT(Appeals) holding that the assessee was not liable to deduct TDS u/S 194C deserves (3) acceptance and there appears no violation of Sec.40 (a)(ia) of the Act.

After hearing counsel for appellant & taking note of the material on record, we are of the view that as regards applicability of the provisions of TDS u/S 194C of the Act is concerned, that has been examined on factual matrix in detail & the view expressed by CIT Appeals on appreciation of facts came to be confirmed by the Tribunal on re- appreciation of evidence & in our considered view there appears no substantial question of law emerges for our consideration in the instant appeal.

Consequently, the appeal fails and is hereby dismissed. (Anupinder Singh Grewal), J. (Ajay Rastogi),J. VS/ Certificate - All corrections have been incorporated in the judgment/order being emailed/Vijay Singh Shekhawat/PAJW