M/S. NUTECH CONSTRUCTION,BHOPAL vs. THE DCIT 1(1), BHOPAL

Assessee has raised following grounds of appeal;

Briefly stated facts as culled out from the records are that the assessee is a partnership firm engaged in civil construction business. Return of income filed on 27.07.11 declaring total income of Rs.19,32,560/-. The case selected for scrutiny. Notices u/s 143(2) and u/s 142(1) of the Act duly served alongwith detailed questionnaire. The assessment u/s 143(3) of the Act was completed, assessing income at Rs.1,50,85,960/- after making disallowance u/s 40(a)(ia) of the Act for non deduction of TDS on sum of Rs.1,26,19,795/- and disallowance of deduction u/s 43B for payment of service tax and provident fund totaling at Rs.5,33,602/-

The assessee filed an appeal before the Ld. CIT(A) but could not succeed as both the additions were confirmed.

Now the assessee is in appeal before the Tribunal.

At the outset the Ld. Counsel submitted that the alleged payment at Rs.1,26,19,795/- which has been added to the income of the

We have heard the rival contentions and perused records placed before us.

As regards Ground No.2 disallowance of section 40(a)(ia) of the Act at Rs.1,26,19,795/- the alleged amount related to machine hire charges of Rs.43,10,869/- and freight and cartage expenses of Rs.83,08,926/-. The Tax Auditor mentioned in the Form 3CD annexed to tax audit report that the assessee has not deducted tax at source on these payments. During the course of hearing the Ld. Counsel has submitted that the alleged amount have been offered to tax by the payee. We observe that it has been consistently held by various co-ordinate Benches including the Co-ordinate Bench, ITAT, Agra in the case of Rajiv Kumar Agrawal v/s ACIT, ITA No.337/Agra/2013 order dated 29.5.2013 wherein it has been held that “the insertion of second proviso to section 40(a)(ia) is declarative and curative in nature and it has retrospective effect from 1st April,005 being the date from which sub clause i(a) of section 40(a) was inserted by the Finance (No.2) Act, 2004”. It has further held that “the scheme of Section 40 (ia), as we see it, is aimed and

We, therefore respectfully following the decision of Tribunal and in the given facts and circumstances of the case are of the view that if the payee i.e. persons receiving the impugned amount totaling to Rs.1,26,19,795/- have offered the alleged amount to tax by way of showing it as part of revenue in their books of accounts and taxes as applicable has been paid then there is no loss to the revenue. We accordingly deem it fit and proper to remit the matter of disallowances u/s 40(a)(ia) of the Act to the file of the Assessing Officer for fresh adjudication and also direct him to carry out necessary verifications of related payments as the same having been taken into account by the recipients in computation of their income, regarding payment of taxes and filing of income tax return. Necessary certificates from Chartered Accountant of the payee should also be obtained to this effect. Needless to mention that a proper opportunity of being heard is provided to the assessee. In the result Ground No.2 of the assessee’s appeal is allowed for statistical purposes.

Now we take up Ground No.3 relating to disallowance of deduction u/s 43B of the Act at Rs.5,33,602/- which inter alia includes service tax payment of Rs.1,60,418/- and provident fund payment of Rs.3,73,184/-. Even though the Ld. Counsel has been

We accordingly remit this issue of deduction u/s 43B to the file of the Assessing Officer and direct the assessee to produce the evidence of payment of service tax and provident fund at Rs.1,60,418/- and Rs.3,71,384/- respectively before the Assessing Officer and if they are found correct to the satisfaction of Assessing Officer then the impugned addition may be deleted. Needless to mention that a proper opportunity being heard is given to the assessee. Ground No.3 of the assessee’s appeal is allowed for statistical purposes.

In the result the appeal of the assessee is allowed for statistical purpose.