M/S. G. G. ENTEPRISE,DURGAPUR vs. ITO, WARD 1(2), DURGAPUR, DURGAPUR

The assessee’s former substantive grievance seeks to reverse both the lower authorities’ action invoking sec.40A(3) disallowance cash payment of business expenditure amounting to ₹3,19,900/-. Learned counsel states very fairly that the assessee no more wishes to press for its instant former M/s G.G. Enterprise Vs. ITO Wd-1(2), DGP Page 2 grievance keeping in mind smallness of the amount involved provided the same is not treated as a precedent in any other assessment year. We accept the assessee’s fair stand and affirm the impugned disallowance in above terms.

Next comes the latter issue of disallowance of hire charges amounting to ₹60,99,334/- made on account of non-deduction of TDS in both the lower authorities proceedings. There is no dispute that this assessee has paid the impugned hire charges without deducting TDS. The Revenue’s case therefore both the lower authorities reasoning is that it ought to have deducted TDS as the impugned payments being contractual / sub-contractual in nature. We do not see any such oral or written evidences in the case file suggesting assessee’s payees to have assumed its contractual liability regarding its transportation work. Hon'ble jurisdictional high court’s decision in Commissioner of Income Tax Kolkata-XVI vs. M/s Stumm India in of 2009 dated 16.08.2010 holds that the impugned disallowance in absence of such an agreement or contract between the parties; is not sustainable. We therefore direct the Assessing Officer to delete the impugned disallowance. Necessary computation shall follow as per law.