NAWAL KISHORE RATHI,KOLKATA vs. ITO, WARD-35(2), KOLKATA, KOLKATA

The only issue that arises from my consideration is whether the Assessing Officer was right in disallowing the claim of the assessee of purchases made from M/s. Manisha Industries of Rs. 6,65,731/-. The Assessing Officer found that the payment in question was made for doing job work, i.e. powder coating on the material supplied by the assessee to M/s. Manisha Industries and that it was not for purchases. As the tax was not deducted at source u/s 194C of the Act, the disallowance was made by the A.O. u/s 40(a)(ia) of the Act. The assessee carried the matter in appeal. As the assessee had not appeared, the Learned First Appellant Authority passed an ex-parte order.

Before me, the learned counsel for the assessee submitted a copy of the return of income of M/s. Manisha Industries and a certificate that the amount in question was accounted for both in their books and was reflected in the return of income and taxes were paid on this receipt from the assessee. He wanted that second proviso to section 40(a)(ia) of the Act to be applied. He relied on certain case laws in his support.

As this legal argument was not taken before lower authorities, I set aside this issue to the file of the A.O. with the direction to verify whether M/s. Manisha Industries has accounted for this amount of Rs. 6,65,731/-, in its income and filed its return of income for the assessment years 2012-13. If it has done so, the Assessing Officer is directed to delete the addition made u/s 40(a)(ia) of the Act and accept the income returned by the assessee.

In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 25th May 2018.