JOYDEB CHANDRA L/R SHRI RAJESH CHANDRA,KOLKATA vs. DCIT, CIR-33, KOLKATA, KOLKATA

This is an appeal filed by the assessee against the order of Ld. CIT(A)-9, Kolkata dated 04.02.2015 for AY 2010-11.

Briefly stated facts are that the assessee is a government contractor and filed his return of income on 05.10.2010 electronically declaring total income of Rs.1,49,92,490/-. On verification of books of accounts and documents produced by the assessee, the AO observed that the assessee made payments towards labour charges, repair charges, hire charges and installation charges for Rs.18,44,435/-, Rs.50,10,300, Rs.24,70,000/- and Rs.40,10,000/- respectively without deducting TDS. According to AO, the action of the assessee squarely attracts the provisions of Sec. 40(a)(ia) of the Act and, therefore, the AO added back the said amounts to the total income of the assessee. Aggrieved, assessee preferred appeal before the Ld. CIT(A) who confirmed the action of the AO and dismissed the appeal of the assessee. Aggrieved, assessee is before us.

We have heard rival submissions and gone through the facts and circumstances of the case. At the outset, it has been brought to our notice that at pages 2 and 3 of the assessment order the AO has given the details regarding payments made by the assessee, who is a contractor, which according to the AO, should be disallowed for violation for non-deduction of TDS and invoked sec. 40(a)(ia) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) and disallowed the expenditure claimed by the assessee. The main prayer of the assessee is that if the matter is remitted back to the file of the AO with a direction to verify as to whether the payees have in this case offered the amounts in question for taxation in their return of income, then no disallowance u/s. 40(a)(ia) of the Act should be made. We note that the Hon’ble Delhi High Court in the case of CIT Vs. Ansal Landmark Township Pvt. Ltd. 377 ITR 635 (Del) has taken the view that insertion of 2nd proviso to sec. 40(a)(ia) of the Act is retrospective and will apply from 01.04.2005, and, therefore, we find force in the prayer made before us. Therefore, we set aside the order of the Ld. CIT(A) on this issue and direct the AO to verify as to whether the payees in this case has disclosed the receipts in their respective returns and paid taxes thereon and in such an event, the disallowance u/s. 40(a)(ia) of the Act is not called for. We direct the AO to verify the said aspect and dispose of the issue accordingly.

In the result, the appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on 22nd December, 2017 Sd/- Sd/- (Dr. A. L. Saini) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 22nd December, 2017 Jd.(Sr.P.S.) Copy of the order forwarded to: 1. Appellant – Joydeb Chandra (Deceased) L/R Shri Rajesh Chandra, 7/1Al, Abhoy Halder Lane, Kolkata-700 012. Respondent – D.C.I.T., Circle-33, Kolkata. 2 3. The CIT(A) , Kolkata.